Business Day
BU S I N E S S DAY.CO. Z A
Friday 26 September 2025
Business Law & Tax Review
Gift card changes: you can bank on it Bank’s proposed new rules set to treat many gift cards more like financial products By ANGELA ITZIKOWITZ, ERA GUNNING & AMELIA WARREN ENS
For more than a decade, South African gift cards have existed largely within the consumer protection space. Section 63 of the Consumer Protection Act 68 of 2008 (CPA) treats a gift card as a “pre-paid certificate, card, credit, voucher or similar device” issued by a supplier that undertakes to provide goods or services up to the stored value. The CPA guarantees, among other things, a minimum three-year validity period and prohibits the early expiry of the residual balance. Crucially, however, the CPA’s remit is limited: it was drafted on the assumption the same party that issues the voucher is also the merchant that ultimately redeems it. That assumption is increasingly out of step with modern payment architectures, and the South African Reserve Bank (Bank) has now signalled a decisive shift.
The regulatory fault line: ‘closed loop’ versus ‘payment activity’ A draft directive currently under consideration introduces the concept of a “closed-loop payment system or payment activity” — a payment arrangement that is not interoperable with other payment systems and in which the service provider to the payer is the same entity (or group) as the service provider to the payee. Examples cited by the Bank include mobile money vouchers and store-of-value wallets — products that are
A significant segment … is poised to fall under direct Bank regulation. Issuers who wish to maintain the simplicity of a traditional gift certificate must keep their products genuinely single merchant and nontransferable functionally indistinguishable from many retail gift cards. Under the proposed framework, no person may operate a closed-loop system unless registered by the Bank, and registration carries ongoing prudential, operational and risk management obligations. Gift cards that operate in a multimerchant ecosystem (for example, shopping mall cards, airline alliance cards or network branded “openloop” prepaid cards) already fit squarely within the definition of “payment instruments” and will almost certainly be swept into the broader “issuance of payment instruments” activity contemplated by the Bank. Even traditional single-merchant vouchers risk regulatory capture if the Bank concludes that the issuer is providing a “store of value” or “money remittance” service by accepting funds in advance and facilitating later redemption.
123RF — SIRGUNCHIK
Interaction with the Consumer Protection Act Section 10(1) of the Financial Sector Regulation Act 9 of 2017 stipulates that the CPA does not apply to any function or transaction that is “subject to the National Payment System Act or a financial sector law, and which is regulated by the Financial Sector Conduct Authority”. Once the forthcoming payment system reforms are promulgated, gift cards that fall within a Bankregulated payment activity will migrate out of the CPA’s protective envelope. In practice, two parallel regimes will emerge: ● Pure loyalty or single-merchant vouchers that do not constitute a “payment activity” (because the issuer remains the only accepting merchant and no transfer of funds occurs) will continue to be governed by section 63 of the CPA. ● Gift cards functioning as a payment instrument or store of value — particularly those that allow redemption across multiple merchants, top-ups, peer-to-peer transfers or cash-out — will trigger Bank registration, transaction caps (currently envisaged at R5,000 per day/R50,000 per month), and stringent segregation of client funds.
Implications for issuers and merchants ● Licensing and prudential compliance — issuers of regulated gift cards will have to apply for authorisation as a “payment institution”, maintain ring-fenced trust or settlement accounts, and submit to Bank supervision. ● Fica obligations — draft PCC 118A designates money- or value-transfer service providers, including issuers of payment instruments, as “accountable institutions”, triggering full customer due diligence, transaction monitoring and reporting duties. ● Business model redesign — the ability to earn float interest, offer cash-out functionality or allow
multiple reloads may be curtailed unless issuers obtain additional permissions or restructure products to remain strictly within the CPA’s gift card exemption.
The road ahead The Bank’s Vision 2025 expressly targets fragmentation caused by closed-loop payment products. While not every voucher will require Bank authorisation, the regulatory perimeter is tightening. Stakeholders should therefore map each gift card programme against the Bank’s defined payment activities, assess whether funds are ever transferable beyond a single merchant and begin designing compliance frameworks that accommodate Bank registration, Financial Intelligence Centre onboarding and operational resilience standards. A significant segment of the South African gift card market is poised to fall under direct Bank regulation. Issuers who wish to maintain the simplicity of a traditional gift certificate must keep their products genuinely single merchant and nontransferable; those who aspire to broader functionality must prepare for life as a regulated payment institution.
Gift cards functioning as a payment instrument or store of value will trigger Bank registration, transaction caps and stringent segregation of client funds
SCA confirms liquidators’ role under uncompleted contracts By CHARLISE FINCH & WERNER LOTTER Herold Gie
In a recent judgment, the Supreme Court of Appeal (SCA) considered a payment made to Pick n Pay by attorneys acting for a franchisee under a sale of business agreement, after the business was placed in liquidation. The high court held the payment was affected by the concursus creditorum (meeting of creditors) and ordered Pick n Pay to repay the liquidators. The SCA upheld this ruling, confirming that once a company is liquidated, only the liquidators may perform or enforce obligations under uncompleted contracts. The liquidators had sought to set aside the payment as a voidable disposition and demanded repayment with interest and costs. Pick n Pay opposed the application, arguing the liquidators had not disclosed a valid cause of action, had used incorrect provisions of the Insolvency Act and should have brought an action, not an application. It also claimed the payment was made under an executory contract that the liquidators had accepted, making it immune to the concursus. The high court rejected these arguments. Pick n Pay appealed, arguing the high court should have upheld its preliminary objections. It said the liquidators had admitted the contract was executory and they should be bound by it. It also argued it had enforceable rights under clause 6. The liquidators maintained the contract had been completed upon payment and transfer of the business, and that clause 6’s mandate ended at liquidation. Any payment to Pick n Pay after that was unlawful. The SCA held the affidavits did disclose a valid cause based on the concursus creditorum and found that liquidators are not bound to perform uncompleted contracts unless they elect to do so. The court stressed the purpose of the concursus: equal treatment of all creditors. Any contractual rights or obligations must be exercised by the liquidator, not other parties. Although Pick n Pay was not a party to the sale agreement, it had rights under it. However, the mandate given to the attorneys to issue payments lapsed upon liquidation. Pick n Pay’s instruction was no longer valid, and the attorneys were not permitted to act on it. The SCA held that the contract was not executory. The business had been transferred, and the attorneys’ role was limited to paying out proceeds. This did not amount to continued performance under an uncompleted contract. The payment to Pick n Pay after liquidation was therefore unlawful and had to be repaid. This judgment is a warning to creditors and parties transacting with companies in financial distress. It reaffirms only liquidators can perform or enforce rights under uncompleted contracts post-liquidation. Payments made without their authority are vulnerable to challenge and reversal. Any mandate or instruction regarding payments from an insolvent estate lapses upon liquidation. Liquidators have sole control of the insolvent estate’s assets and liabilities. Creditors must engage with them directly and avoid unilateral action that may invalidate their claims. The decision upholds fairness and transparency in the administration of insolvent estates and promotes legal certainty in dealings with companies under liquidation.