Collecting ZAR is hard. Here’s what PSPs and international merchants should consider

Anyone who's expanded into a new market knows the same approach that worked at home doesn't transfer cleanly. Different rules, customers, and infrastructure. In payments specifically, the dangerous assumption is that the model which works elsewhere (get the right licence and third-party collection is solved) carries over to South Africa.

The challenges aren't currency conversion or speed. They're bigger, and more legal, than both of those:

• Third-party collection licensing
• Exchange controls
• Domestic-only liquidity
• FICA

The first challenge is that there's no direct route for a foreign entity or platform to acquire a third-party collection licence. Access runs through a sponsoring bank's willingness to back you, and that can be a harder bar for a foreign platform to clear. Collecting funds on behalf of a client falls under South Africa's National Payment System Act as a regulated function. A foreign PSP can open a South African bank account, but that doesn't give it the standing to aggregate and hold funds for someone else's customers. That authority sits with PASA, through a Third-Party Payment Provider licence.

South Africa also still runs exchange controls. ZAR doesn't move across borders the way GBP or USD does. Every cross-border movement is administered by the South African Reserve Bank through Authorised Dealers (a bank holding that mandate), with reporting obligations attached to the transaction. Routing ZAR isn't as straightforward as routing EUR, the oversight sits with those Authorised Dealers, and the mix of rails a payments team would normally choose between isn't as broad.

Then there's ‘the plumbing’. ZAR liquidity and settlement infrastructure is overwhelmingly domestic. Few banks outside South Africa hold meaningful ZAR nostro capacity. ZAR settlement is concentrated through a small set of South African banks acting as correspondent gateways for the rest of the world, and correspondent banking capacity across the continent has been contracting for over a decade. The Bank for International Settlements estimates active correspondent relationships fell globally, by 3% in 2019 and about 22% between 2011 and 2019, with Africa among the hardest hit.

FICA obligations attach to whoever is holding the money. Collecting ZAR from South African customers means becoming, in substance, an accountable institution. This requires KYC, KYB, source-of-funds checks, and ongoing monitoring. A foreign entity without accountable institution status in South Africa cannot legally pool customer funds into a collection account. Some try anyway, routing around the problem with personal accounts or informal aggregators, which trades a licensing problem for a fraud and compliance one.

Though none of these acts as a single, hard blocker, they create friction at each step. Because collection, conversion, and settlement can't happen as one clean step, funds can sit in transit longer than they should. Every extra day is FX exposure on a currency that's always moving. Businesses absorb the risk without deciding to take it on, accepting it as the cost of doing business.

Holding a TPPP licence, an SARB mandate, and primary FIC accountable institution status, FiveWest closes this gap. Our TPPP licence gives us the standing to collect ZAR on a client's behalf. Our SARB mandate means every cross-border movement is compliant from day one. Accountable institution status means KYC, KYB, and monitoring obligations sit with us. And because collection happens through a South African foundation rather than a foreign nostro chain, funds aren't reliant on thin correspondent capacity; onward settlement runs through FiveWest's own liquidity network across 30+ currencies spanning Africa, Asia, and major global pairs.

If you're considering collecting ZAR or have already entered the South African market, send us a message, let's see how we can make the process less complex and more compliant for you.