Unlocking PayShap’s Potential: Lessons for digital adoption from UPI and Pix
July 8, 2025
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1. Introduction
In 2024, India’s Unified Payments Interface (UPI), supported by the National Payments Corporation of India (NPCI) under the Reserve Bank of India, and Brazil’s Pix, developed by the Central Bank of Brazil, together accounted for over 60% of all real-time payment transactions globally. These open banking initiatives have set new global benchmarks for scale, accessibility, and innovation in the digital payments landscape. In contrast, South Africa’s PayShap is still in its early stages, representing a promising but currently limited effort to advance financial inclusion and digitalisation. By examining the key drivers behind the success of UPI and Pix, South Africa has the opportunity to adapt these models to its unique context. Doing so could not only accelerate the adoption and impact of PayShap but also support broader national goals of financial inclusion, digital transformation, and economic participation.
2. Background Analysis
Before we can effectively compare UPI and Pix with PayShap, it is essential to first develop a clear understanding of each system and the key features that have shaped their development.
2.1. Unified Payments Interface (UPI)
Launched in August 2016 by the NPCI, UPI began with modest traction, processing just 2.65 million transactions in its early days. However, adoption accelerated rapidly, with monthly transaction volumes growing from 4.16 million in January 2017 to 145.46 million by December of the same year. UPI enables real-time, account-to-account transfers using virtual payment addresses or QR codes through UPI-enabled apps. Its interoperable framework supports seamless transactions across more than 600 banks and third-party platforms such as Google Pay, PhonePe, and Amazon Pay. By 2024, UPI was processing approximately 15 billion transactions per month, making it one of the most widely used digital payment systems globally.
A key driver of UPI’s rapid growth was strong government support. The 2016 demonetisation, which withdrew ₹500 and ₹1,000 notes, comprising a sizeable portion of the cash in circulation, acted as a major catalyst, nudging millions towards digital payments. This shift was further accelerated by the Covid-19 pandemic, which increased the demand for contactless transactions. National initiatives such as Digital India, Make in India, and Startup India also played a critical role by embedding digital infrastructure across sectors like healthcare, education, and agriculture while fostering a climate of innovation and entrepreneurship.
Another key element of UPI’s success was the rise in smartphone penetration and internet access. The overall telephone density in India was 75.13% in March 2014. This number rose to roughly 84.49% in October 2024.
UPI’s success is underpinned by five core elements: open infrastructure, multi-party access, ease of use, strong data privacy, and a balanced regulatory framework. Its open architecture empowers both banks and fintech companies to build apps on the platform, enabling users to transact seamlessly regardless of the provider. Additionally, UPI places high priority on data protection - third-party apps are prohibited from accessing or monetising individual transaction data which protects users. Furthermore, UPI’s transaction limits vary by use case. For most personal payments, the cap is ₹1,00,000 (around R22,000). This increases to ₹2,00,000 (approximately R44,000) for certain categories like capital markets and foreign remittances. For high-value transactions such as taxes, education, or medical expenses, users can transfer up to ₹5,00,000 (about R110,000) in a single transaction. These higher thresholds are especially useful for businesses managing large payments regularly.
2.2. Pix
Brazil’s Pix has rapidly grown into the world’s second most used real-time digital payment system, accounting for about 15% of all real-time transactions globally. Since its launch in November 2020, it has experienced a remarkable 243% increase in transaction volume, with widespread adoption across all income groups. By the end of 2024, Pix was processing over 6 billion transactions per month. Notably, within just 15 months of its launch, it had already reached 114 million individual users, roughly 67% of Brazil’s adult population. By the end of 2021, 381 million aliases had been created (Figure 3). Two years after launch, by late 2022, around 133 million Brazilians (77% of the adult population) had used Pix, and 11.9 million businesses had adopted the platform. Today, it stands as the most widely used payment method in Brazil, surpassing cash, debit cards, and credit cards.
Designed to enable seamless fund transfers between several types of accounts, Pix operates on a simplified infrastructure with minimal intermediaries, resulting in lower transaction and acceptance costs. It supports transactions across P2P, P2B, B2B, P2G, and B2G channels. For unregistered devices, Pix transactions are capped at R$1,000 (~ R3,000) daily, with higher-value transfers permitted only on registered devices. During nighttime hours (between 8:00 PM and 6:00 AM), a general transaction cap of R$1,000 (~R3,000) applies to reduce vulnerability to fraud during off-peak periods. Cash withdrawals via Pix, known as Pix Saque and Pix Troco, are limited to R$3,000 (~R9,000) during the day and R$1,000 (~R3,000) at night. Additionally, users can customise their transaction limits through online banking platforms. These regulations aim to maintain the convenience of instant payments while introducing safeguards to protect consumers and financial institutions.
In March 2025, the Central Bank of Brazil introduced new regulations to strengthen the security of Pix. Banks and payment institutions are now required to ensure that Pix keys match the official records in the CPF and CNPJ databases maintained by the Federal Revenue Service of Brazil. Keys associated with “suspended”, “cancelled”, “null”, or otherwise inactive record statuses will not be allowed to have Pix keys registered in the Brazil Central Banks database. To further safeguard the system, two key measures were introduced: users can no longer edit random Pix keys (any changes now require deletion and re-registration), and email-based keys can no longer be claimed by anyone other than the original registrant, closing a previously exploitable loophole. However, mobile number-based keys remain transferable due to frequent changes in prepaid phone ownership. Together, these updates aim to improve the integrity, resilience, and user trust in the Pix ecosystem.
2.3. PayShap
Launched in March 2023, PayShap represents a significant step towards advancing social and financial inclusion in South Africa. Designed as a fast, secure, and accessible alternative to cash, PayShap aims to broaden access to financial services for individuals and businesses alike. Its development was a collaborative effort, driven by key stakeholders including the South African Reserve Bank (SARB), the Payments Association of South Africa (PASA), the Banking Association of South Africa (BASA), BankservAfrica, and the country’s ten largest banks, with PwC serving as the Industry Project Management Office.
At the heart of PayShap is the Rapid Payments Programme (RPP), South Africa’s foundational payments infrastructure built to enable real-time, interoperable transactions across the banking ecosystem. While RPP provides the “rails” for instant payments, PayShap is the consumer-facing layer that delivers these capabilities in a simple, user-friendly form.
Since its launch, PayShap has registered 4.5 million unique IDs, indicating a growing base of users. While South Africa’s adoption curve is slower by comparison, PayShap signifies meaningful progress towards a more inclusive, interoperable payments environment, laying the groundwork for deeper digital transformation in the years to come.
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3. Timeline comparision: Brazil's Pix and India's UPI
- UPI took about four years to become widely adopted, while Pix achieved rapid adoption within a year of launch.
- UPI processed over 139 billion transactions in 2024, whereas Pix processed 42 billion transactions in 2023.
- UPI is expanding internationally with agreements in countries like France and Singapore. Pix is also gaining international interest, with countries like Italy considering its adoption.
- Both systems have introduced features like recurring payments and credit integration, with UPI offering AutoPay and Pix launching Pix Automatico and planning Pix Parcelado.
PayShap timeline
- 2017: A research initiative explored global real-time payment systems to guide South Africa’s modernisation strategy.
- 2018: The South African Reserve Bank released its National Payment System Framework, leading to the creation of 'Project Future' - a vision for a modernised payments system.
- 2019: The payments industry validated a case for change, highlighting the social and economic benefits of rapid payments.
- 2020: Industry participants collaborated on the design of the Rapid Payments Platform, endorsed by PASA’s Electronic Payments Council.
- 2021: Technical construction of the platform began.
- 2022: Operational processes were completed, and the platform was officially named PayShap.
- 2023: PayShap launched on 13 March, available at 9 major banks including Absa, Capitec, FNB, Nedbank, and Standard Bank.
- 2024:
- PayShap Request launched, enabling real-time payment requests.
- In one year (13 March 2023 – 29 Feb 2024) – there were over 14 million PayShap transactions.
- The platform celebrated its first anniversary with broader bank participation and continued innovation in person-to-person payments. Users can access PayShap at Absa, African Bank, Capitec Bank, Discovery Bank, FNB, Investec, Nedbank, Sasfin, Standard Bank, and TymeBank.
- PayShap Request launched, enabling real-time payment requests.
- 2025:
- 136 million PayShap transactions to date totalled at R100 billion rands.
- 4.5 million PayShap IDs registered.
3.1. Key factors behind the success of UPI and Pix
The success of India's Unified Payments Interface (UPI) and Brazil's Pix can be attributed to a combination of shared foundational strategies and unique country-specific initiatives. Both systems have revolutionised digital payments in their respective countries by leveraging interoperability, regulatory support, and technological advancements. Below is a comprehensive analysis of the factors contributing to their widespread adoption and impact.
4. Shared success factors of both UPI and Pix:
1. Central bank leadership and regulatory support
Both UPI and Pix benefited from strong regulatory frameworks established by their respective central banks, India’s Reserve Bank and Brazil’s Central Bank. These institutions provided essential leadership and regulatory clarity, ensuring widespread institutional participation and fostering user confidence in the platforms.
2. Interoperability and open architecture
The open and interoperable design of both systems made it easy for users to send and receive money across different banks and third-party platforms. This meant people could transact freely, no matter which financial institution they used. By encouraging collaboration between banks, non-bank entities, and government institutions, the system promoted consistency, accessibility, and a smoother user experience.
3. Cost-free transactions for users
A defining feature of both systems was the elimination of transaction fees for users, significantly reducing the cost of digital payments. This made the platforms particularly attractive to both consumers and merchants, encouraging adoption among previously underserved populations.
4. User-Centric design and accessibility
Both UPI and Pix were designed with simplicity and accessibility in mind. Their mobile-first approach, along with intuitive transaction methods (such as phone numbers and QR codes), ensured that even users with minimal technical knowledge or accessibility could engage in digital payments. Additionally, the systems’ 24/7 availability further enhanced their accessibility.
4.1. The success of non-banking apps (The case of UPI - PhonePe and Paytm)
Non-bank platforms such as PhonePe and Paytm have played a pivotal role in the success of UPI, harnessing its open infrastructure to scale rapidly and deliver wide-ranging financial services. While UPI provides the underlying real-time payment rails, these apps have layered user-centric innovations on top, extending far beyond basic peer-to-peer transfers.
PhonePe, for instance, introduced offerings like Credit Line on UPI, enabling short-term loans at checkout, and was among the first to facilitate cross-border UPI payments in countries such as the UAE and Singapore, appealing particularly to Indian travellers. Paytm, on the other hand, positioned itself as a multifunctional “super app,” integrating UPI with services including mobile top-ups, utility bill payments, travel bookings, insurance, and mutual fund investments.
Backed by deep-pocketed investors (Walmart and Flipkart in the case of PhonePe, and SoftBank and Ant Group for Paytm) both companies pursued aggressive growth strategies. These included cashback campaigns, merchant incentives, and significant investment in user acquisition. These efforts not only drove seven rapid adoption but also embedded digital payments into everyday consumer routines. By 2023, PhonePe alone had processed over $1 trillion in TPV and reported its first annual profit in FY24 - demonstrating that non-bank fintechs can achieve both scale and sustainability within the UPI ecosystem.
As Third-Party App Providers (TPAPs), PhonePe and Paytm connect to UPI through sponsor banks, using the same API infrastructure as traditional financial institutions. The National Payments Corporation of India (NPCI) facilitated this growth by offering developer-friendly APIs, detailed documentation, sandbox environments, and zero user fees - allowing TPAPs to focus on front-end innovation and user experience rather than backend complexity.
4.2. Lessons for PayShap from UPI and Pix
Drawing on the successes of India’s UPI and Brazil’s Pix, South Africa’s PayShap has considerable room to grow, particularly in terms of user adoption, transaction volumes, and the overall maturity of its digital payment’s ecosystem. The following strategic recommendations highlight key lessons that could accelerate PayShap’s development and foster more inclusive, widespread use.
1. Broaden Participation Beyond Banks
Right now, access to PayShap is limited to banks, which may constrain long-term innovation and reach. Opening the ecosystem to non-bank participants, such as fintechs, mobile money operators, and mobile network providers, can drive competition, enhance user experience, and extend access to underserved sectors. India’s UPI benefited from the inclusion of third-party app providers like Google Pay, PhonePe, and Paytm, which built intuitive, value-added services on top of shared infrastructure. Their involvement simplified digital payments for consumers and accelerated adoption at scale.
2. Implement Standardised, Low or Zero Transaction Fees
The current variability in PayShap fees across banks can deter users, especially those in low-income brackets who are more price sensitive. Adopting a standardised low-fee or zero-cost model to users, as seen in UPI and Pix, would remove a critical barrier to adoption and position PayShap as a true alternative to cash for everyday transactions.
3. Simplify Payments Through Proxy Features
A frictionless user experience is essential for digital payments to gain traction. Both UPI and Pix enabled proxy-based payments, such as using phone numbers or QR codes instead of account details, which made digital transactions far more user-friendly. PayShap’s introduction of the ShapID proxy is a promising step, but greater investment is needed in public education, streamlined onboarding, and improving visibility of this feature to encourage widespread usage.
4. Drive Merchant Adoption (Especially in the Informal Sector)
Merchant acceptance is critical to embedding digital payments in everyday commerce, particularly within South Africa’s informal sector. To achieve this, South Africa should introduce incentives such as free onboarding and easy integration into mobile and POS platforms. In both India and Brazil, large-scale merchant acquisition campaigns created a dense acceptance network, making digital payments convenient, habitual, and mainstream.
5. Harness Government Support and Public Awareness Campaigns
Government involvement played a significant role in scaling both UPI and Pix. In India, the post-demonetisation push and visible public-sector commitment helped legitimise and normalise digital payments. Similarly, South Africa could integrate PayShap into public service delivery, such as social grant disbursements, and invest in national awareness campaigns. These efforts would boost trust, signal policy alignment, and drive mass adoption.
6. Build a Developer-Friendly Innovation Ecosystem
UPI’s growth was significantly enabled by the NPCI’s open, developer-oriented approach, which included clear documentation, sandbox environments, and stable APIs. This allowed fintechs to innovate quickly without needing to build infrastructure from scratch. South Africa should adopt a similar strategy for PayShap by fostering a vibrant developer ecosystem, one that invites experimentation and supports the creation of diverse, user-focused services that extend the platform’s utility.
5. Conclusion
PayShap is a meaningful step toward a more inclusive and efficient payment landscape in South Africa. Yet, compared to global role models like UPI and Pix, its adoption and reach remain limited. These systems show that robust infrastructure alone is not enough, but that success depends on a broader strategy that includes regulatory openness, user-centred design, public-private collaboration, and a commitment to digital inclusion.
The experiences of India and Brazil highlight the importance of interoperability, third-party innovation, zero-cost user models, and alignment with national digital strategies. South Africa can adapt these principles to suit its own socio-economic context and accelerate PayShap’s progress.
To match the trajectory of UPI or Pix, PayShap must evolve beyond its bank-centric origins and nurture an open, competitive environment, one that welcomes fintechs, mobile operators, and developers. This should be supported by sustained public awareness, targeted education campaigns, and incentives for merchant adoption, particularly in the informal sector.
With these changes, PayShap has the potential not only to scale but to become a cornerstone of financial inclusion and digital transformation in South Africa, helping to unlock broader socio-economic development and greater economic participation.
Citations
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Morgan Botha
