Investec Expands Business Banking with New Payment Solutions for South African Corporates

Investec, known for catering to high-net-worth individuals in South Africa, is broadening its business banking services. The Johannesburg-based lender, which also operates in the UK, is developing a new payments platform to handle high-volume, low-value transactions for its corporate clients. The move comes as Investec seeks to capture a larger share of South Africa’s transactional banking market, currently dominated by bigger banks.

Leveraging PayShap’s Infrastructure

The new payments offering leverages PayShap, a low-value, real-time payment platform launched by BankservAfrica. PayShap was initially designed to support person-to-person payments and drive financial inclusion in South Africa. However, it has been adapted by Investec for corporate payments, enabling businesses to efficiently process high-volume transactions at low cost. Investec’s Head of Corporate Payments, Kuben Naidoo, stated that this initiative positions the bank to tap into a lucrative revenue stream typically enjoyed by South Africa’s major banks.

Target Market and Expected Growth

Investec’s new payment system targets businesses with an annual turnover ranging from R30 million ($1.7 million) to R1.5 billion. These companies—such as retailers, mobile network operators, and third-party payment providers—frequently process high volumes of low-value transactions. Although Investec currently holds only 1.2% of South Africa’s transactional banking market for corporates, the bank sees considerable growth potential. Increasing its market share from 1% to 5% would substantially impact its revenue.

“The other banks make about R30 billion a year in profits from payments services,” Naidoo said. “If we were to go from 1% to 5%, for example, that’s a big deal.”

A New Suite of Payments Services

Investec has been building a transactional banking platform for about two years, with plans to launch a comprehensive suite of corporate payments services by 2026. Initially, the bank will introduce person-to-business and business-to-person payment solutions. A new “request-to-pay” feature, currently in pilot with five corporate clients, will roll out in early February 2024, allowing businesses to request payments directly from clients through mobile and digital channels.

South Africa’s Shifting Payment Landscape

With South Africa’s GDP growth averaging less than 1% over the past decade, Investec’s expansion aligns with its strategy to diversify revenue streams amid sluggish economic growth. The bank’s use of PayShap to facilitate low-cost digital payments reflects broader efforts by South African regulators to reduce cash dependency and modernize the financial system. The country aims to replicate the success of India’s Unified Payments Interface (UPI) and Brazil’s PIX, which have revolutionized digital payments with fast, secure transactions using cell numbers and QR codes.

By expanding its business banking capabilities, Investec aims to serve a broader corporate client base while gaining a larger foothold in South Africa’s transactional banking sector. This strategic shift not only enhances the bank’s competitive position but also supports national efforts to foster financial inclusion and economic resilience through digital transformation.