New banking regulation to affect Namibians’ cross-border transactions

All transactions between Namibia and countries in the Common Monetary Area (CMA) will be treated as international transactions from 15 April.

In the past, these transactions were treated as domestic business.

The CMA consists of Namibia, South Africa, Botswana, Lesotho and Eswatini.

Before, payments between banks in Namibia and nearby countries were treated as if conducted within South Africa.

These transactions would, however, soon be treated as international payments, or Swift (Society of Worldwide Interbank Financial Telecommunications) transactions.

This involves a secure messaging network that banks and other financial institutions worldwide use to send information securely and quickly, especially in relation to international transactions.

These new changes come as the Bank of Namibia effected new regulations, changing how electronic fund transfers (EFTs) are handled between Namibia and other countries in the CMA.

In the interim, commercial banks and service providers have already started notifying the transacting public of the new changes.

Most commercial bank clients of First National Bank Namibia and Standard Bank have started receiving short messages about the new regulations.

The same has also seen service providers, including medical aid services, notifying their local clients through formal emails.

Under the bank’s determination on the conduct of EFT transactions in the National Payment System (PSD-9), these payments will be treated as international transactions.

Central bank spokesperson Kazembire Zemburuka earlier this week explained the impact of this regulation, saying: “The bank’s regulations don’t necessarily require these payments to be routed through the Swift system, which is typically used for international transactions. Banks have some flexibility in how they process these.”

This new regulation will come into effect on 15 April after being issued by the central bank in 2022.

To comply with the new rules and international standards, most banks have chosen to use the SADC-RTGS system, which also relies on Swift.

However, this may cause some delays, as the SADC-RTGS system uses Swift rails, which could slow things down.

Zemburuka said customer service is a priority during this transition.

“We aren’t forcing banks to use Swift, we are encouraging them to find ways to keep things smooth for their customers.”

There are no specific guidelines on processing times.

“Banks will set their own internal procedures for handling these payments,” Zemburuka said.

For specific types of payments, like medical claims, Zemburuka suggested contacting one’s bank directly.

“The Bank of Namibia hasn’t mandated any specific solutions, so the banks would need to figure this out on their own.”

As these changes take effect, banks and other stakeholders in the CMA would need to adapt to ensure efficient and compliant cross-border transactions.

Nammed, a medical aid fund in Namibia, is also making changes to how its members pay medical bills in South Africa.

These changes are designed to comply with new regulations and improve efficiency.

Members can now choose to settle invoices in South Africa for up to N$10 000.

According to Gert Grobler, the principal officer at Nammed, Swift transfers would be used for larger amounts, which typically takes a few hours to reach South African accounts.

Grobler says it is not Nammed’s responsibility to remind healthcare providers to complete Balance of Payment (BOP) forms, and the time frame for receiving funds remains the discretion of the healthcare provider.

To reduce administrative burdens and bank fees, Nammed would also be switching to monthly Swift transfers to South Africa, instead of weekly transfers.

Due to Namibian regulations introduced in 2021, Namibian businesses can no longer receive payments directly from South Africa.

Nammed members with South African bank accounts will be contacted to help them transition their banking details to Namibian accounts.

“We are committed to following Namibian laws and regulations,” Grobler says.

“We won’t use international payment systems that do not comply with Namibian rules. Instead, we’re developing a new system for Swift transfers that adheres to local laws.”

According to FNB Namibia payments manager Albert Matongela, clients would need to capture and process payments on the foreign exchange (forex) tab on the existing online banking platform or FNB app when making cross-border payments from FNB to other CMA countries.

He advises clients to delete existing EFT cross-border recipients or beneficiary lists, including EFT folders and EFT bulk payment files.

“Clients would need to re-enter all beneficiaries as global payment recipients, providing details like the beneficiary’s bank name, branch name, Swift code, physical address and reason for payment.”

Matongela says global payments can only be made from transactional accounts, not credit cards.

“Additionally, Pay2Cell and scheduled payment functionalities are unavailable for these transactions.”

– email:shania@namibian.com.naTwitter:@ShaniaLazarus