South Africa’s prepaid card and digital wallet market is valued at $13.5 billion as of 2026, with an anticipated compound annual growth rate of 11.9%, reaching $21.2 billion by 2030[1]. Capitec’s per wallet transactions increased by 103% to R335 million by the year ending February 2026, while FNB’s digital wallets saw more than R21 billion in payments[2][3]. This is not a two-bank story – Absa has reported an increase in the use of digital wallets, particularly Google Pay and Samsung Pay, while Nedbank’s Money app reached around three million active users as of 2025[4]. There is consumer appetite for digital tools that simplify payments, and the infrastructure is in place to support it, but right now, access to the market is challenging for service providers.
Every South African major retail bank now offers some form of digital wallet capability, but on the non-bank side, the picture is considerably more fragmented. As of December 2025, the FSCA had received 512 Crypto Asset Service Provider (CASP) license applications, of which 300 were approved and 121 voluntarily withdrawn following regulatory engagement. This number reflects how many entities are now seeking to operate in a space that sits adjacent to, or within, the digital wallet market, including stablecoin issuers, eZAR wallet operators and crypto-linked payment platforms. It’s a crowded field with widely varying levels of compliance maturity behind each solution.
The regulatory framework trying to govern all of this is still being consolidated. The South African Reserve Bank (SARB) published two draft documents for public comment – the Draft Exemption Notice under the Banks Act, and a Draft Directive on specific payment activities in the national payment system[5][6]. The Draft Exemption Notice “exempts the payment activities…which involve the pooling of funds into a store of value or payment account from the definition of ‘the business of a bank’ as set out in the Banks Act”. Law firm Webber Wentzel states that entities providing digital wallets or other store-of-value products need to test whether their activities fall within this exemption because the goal is to carve these wallet-like activities out of the full banking license perimeter, as long as they comply with the parallel directive and authorisation framework.
In short, the objective is to give companies offering digital wallet solutions the ability to operate within the market as long as they operate within SARB’s regulatory framework. This framework asks that companies have good governance, client-fund safeguards, regulatory reporting, and adhere to rigorous consumer protection requirements. However, neither of these drafts has taken effect as yet – their enactment date has been pushed out to the third quarter of 2036. For financial institutions, this delay has a minimal impact, but for non-bank companies that want to offer digital wallets, they are in scope for regulation, but the rules that could formally authorise them are still in draft.
Would-be digital wallet service providers are living in limbo, where they have to design solutions as if the draft frameworks were in play, but without having a final and tested authorisation pathway. Banks, meanwhile, will be mostly adapting existing processes to suit.
The compliance demands attached to authorisation aren’t light either. Under FICA, any entity that meets the definition of an accountable institution cannot establish a business relationship or conduct a single transaction above R5,000 with an anonymous client. The regulation is not scaled for the different tiers of operators that are entering the market – a babysitting app that wants to accept payments faces materially the same compliance architecture as a bank.
It is impossible to avoid KYC friction, regardless of which rails you use, because the compliance burden is essentially universal across payment modalities. SARB is actively closing the gaps where workarounds have emerged, where third-party payment providers (TPPPs) hold funds beyond the permitted window or where gift cards are used without customer due diligence. Even if a new entrant to the market invests in AI-driven KYC or KYB systems to reduce this operational burden, POPIA’s protections against automated decision-making ensure that human oversight is mandatory. This creates a cost floor that cannot be engineered out of the way.
The result? A catch-22 that holds digital wallet operators in limbo between innovation and regulation. Building ahead of the final SARB framework means accepting the risk that your compliance architecture may need to be substantially reworked but waiting for the legislation to finalise means ceding ground to competitors who are already in the market. What’s confirmed is that SARB is tightening the guardrails before it opens the national payment system to broader participation, which means the rules are only going to get more demanding. Innovating in this environment without a clear read on where the lines are being drawn is a gamble.
Yet, there are operators finding traction despite the slipperiness of the slope. Partnering with established players that already have the licenses and carry the compliance infrastructure is opening the door to market entry on a solid and compliant foundation. The simple answer is not to wait for the regulation to catch up, but to launch innovative solutions with a reliable and trusted partner that allows you to move with confidence inside a framework that’s still being written.
