New regulations effective since 30 September 2024 have transformed how consumers send and receive money between Namibia, South Africa, Eswatini, and Lesotho, better known as the Common Monetary Area (CMA).
“These changes represent a significant advancement to our cross-border payment systems,” explained Brian Katjaerua, CEO of the Bankers Association of Namibia (BAN).
“While customers need to adapt to new processes, these improvements create a more secure and efficient banking environment for all,” said Katjaerua.
New way to send money
The previous system of direct electronic transfers (EFTs) between CMA countries has come to an end. All cross-border payments now use the SWIFT-based transaction. SWIFT is an acronym for Global Payment Society for Worldwide Interbank Financial Telecommunications and allows consumers to send money through their bank’s online platform, mobile app, or local branch.
Monthly debit orders
If consumers had automatic debit orders from South African companies (like insurance payments), these stopped working on 30 September. This means consumers have to set up alternative payment methods such as direct payments, stop orders, or scheduled payments.
“We recognise this is a major shift for customers who regularly send money across borders, however, SWIFT-based transactions bring us in line with international banking standards and provide better protection for consumers.”
Clear fee structure
The new regulations set maximum fees charged for sending and receiving money. For sending under N$1 million, the maximum fee is N$20 while sending N$1 million to N$5 million will incur a maximum fee of N$30. For receiving under N$1 million, the maximum fee is N$25 while those receiving N$1 million to N$5 million will be charged a maximum of N$35.
“We’ve worked hard to ensure these charges come with reasonable, regulated fees. Our goal is to maintain affordable access to cross-border banking services while enhancing security,” Katjaerua noted.
Action required by consumers
Meanwhile, if consumers have South African debit orders, they should contact their banks to discuss new payment options and reach out to companies to arrange alternative payment methods. This might involve setting up direct payments, stop orders, or scheduled payments to ensure regular commitments are met.
For future payments, it’s crucial to update beneficiary information on banking platforms. Consumers should be prepared to provide more detailed information about the purpose of transactions and plan ahead for potentially longer processing times. Banks now require more comprehensive documentation for cross-border transactions, so having all information ready will help streamline the process and avoid unnecessary delays.
Katjaerua added; “We strongly encourage customers to be proactive by updating your payment arrangements, especially if you have regular debit orders from South African companies.”
Securing cross-border transactions
The banking charges are part of new regulations (PSD-9 and PSDIR-9) designed to make cross-border transactions more secure and better regulated. While this means some extra steps in the payment process, it also means better protection for consumers’ money.
“Our member banks are committed to helping customers through this transition,” Katjaerua assured. “While there may be some initial adjustments, these charges will create a more robust and secure banking system for everyone.”
The BAN CEO urged consumers to contact their banks directly if they are unsure how these changes affect their specific banking arrangements. The banks can guide consumers through updating payment methods and beneficiary information.
“While these changes might seem inconvenient at first, they’re designed to make cross-border transactions more secure and regulated,” Katjaerua concluded.