Investec eyes low-value payments market

The lender is using the infrastructure of PayShap to build out its new banking offering: Kuben Naidoo.

Investec, a lender that focuses on high-net worth individuals in South Africa, is expanding its business banking unit with a payments system for its corporate clients to process high-volume, low-value payments.

The lender is using the infrastructure of PayShap – South Africa’s new low-value, real-time rapid payments platform – to build out its new banking offering, Kuben Naidoo, the bank’s head of corporate payments, said in an interview. Naidoo joined the Johannesburg-based company in June, after more than a decade at the South African Reserve Bank, where his roles included that of deputy governor and head of the country’s banking regulator.

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Investec, which is also listed in and has operations in the UK, has been pursuing the clients of its bigger South African rivals and seeking new sources of income in recent years to offset sluggish growth in Africa’s most industrialised economy. Gross domestic product has expanded by an average of less than 1% over the past decade.

The firm’s new offering will include person-to-business and business-to-person payments services. It started to build a transactional banking platform about two years ago and plans to offer a full suite of payments services for corporates in 2026, Naidoo said.

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Consumer companies like retailers and mobile network operators as well as third-party payment providers typically process high volumes of low value transactions. The specialist bank is targeting businesses with an annual turnover of R30 million ($1.7 million) to R1.5 billion for its new payments offering, Naidoo said.

Bank profits

Investec’s share of the transactional banking market for corporates is roughly 1.2%.

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“The other banks make about R30 billion a year in profits from payments services,” Naidoo said. “We have a very small share of that so if we were to go from 1% to 5%, for example, that’s a big deal,” he said.

PayShap, run by clearing house BankservAfrica, was initially designed to facilitate person-to-person payments, deepen financial inclusion and reduce the use of cash. Regulators want it to mirror the success of India’s Unified Payments Interface, or UPI, and Brazil’s PIX, both of which allow for instant, low-cost payments using cellphone numbers and QR codes.

Investec is piloting a new request-to-pay feature with five corporate clients and expects to roll the service out in early February, Naidoo said without naming the companies.

© 2024 Bloomberg

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