Nedbank has issued a reminder to South Africans about the importance of adhering to regulatory requirements governing the use of credit, debit, and virtual cards. The bank highlighted that failing to comply with these rules could lead to serious consequences, including financial penalties from the South African Reserve Bank (SARB) and the South African Revenue Service (SARS).
Key Takeaways
- Regulatory Compliance is Non-Negotiable: South Africans must adhere to strict rules when using credit, debit, and virtual cards, especially for international transactions, to avoid penalties from the SARB and SARS.
- Specific Restrictions Apply: Cardholders are prohibited from engaging in online gambling, are subject to limits on foreign transactions and imports, and cannot fund foreign currency accounts via cards. Non-compliance may lead to fines, frozen funds, or confiscation of assets.
- Enhanced Security Measures are in Progress: To combat rising card fraud, measures like disabling debit card swipe transactions at toll gates and introducing contactless payment systems are being implemented, ensuring safer transactions for customers.
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Regulatory Responsibilities for Cardholders
Nedbank emphasised that all cards issued in South Africa are subject to specific regulatory limitations and obligations, particularly when used for international transactions. The responsibility to follow these regulations lies solely with the cardholder. Any lapses or unintentional breaches may lead to freezing of funds, hefty fines, and reputational damage for individuals found violating the rules. Failure to do so may result in the SARB imposing fines or withholding funds, alongside potential penalties from SARS.
To assist customers in avoiding these penalties, Nedbank outlined four key rules that must be adhered to:
Gambling Activities Are Prohibited
Cardholders are strictly prohibited from using their credit, debit, or virtual cards to participate in online lotteries, gambling, or sports betting activities with providers based outside of South Africa. Any winnings from such activities will be confiscated and handed over to the Gambling Board of South Africa. The bank stressed that enforcement agencies are actively monitoring transactions to identify non-compliance, meaning violators could face swift action without warning.
Foreign Transaction Limits Apply
All foreign transactions conducted using South African-issued cards are counted towards the cardholder’s Single Discretionary Allowance (SDA). The SDA permits South Africans to transfer funds abroad for legal purposes without requiring an advance international tax (AIT) clearance from SARS. However, cardholders must ensure they do not exceed the annual SDA limit of R1 million. This cap applies to all foreign card payments and cash withdrawals, reinforcing the importance of responsible financial planning when using cards internationally.
Restrictions on Imports and Subscriptions
When using a card to pay for imports, subscriptions, or services not related to foreign travel, the transaction value may not exceed R50 000 per payment. Furthermore, splitting a payment exceeding R50 000 into smaller transactions to bypass this restriction is prohibited. Cardholders are also required to pay any applicable import duties and comply with customs requirements when making such purchases. Nedbank urged its customers to keep records of all international transactions to avoid disputes or misinterpretations during regulatory checks.
Funding Foreign Currency Accounts Is Forbidden
Cardholders are not permitted to use their credit, debit, or virtual cards to fund foreign currency accounts, whether these accounts are held locally or abroad. Funding activities for international trading, investments, or cryptocurrency wallets also fall under this restriction. Instead, such transactions must be processed through authorised dealers or banks using swift payments or cross-border transfers in line with prescribed regulations. The bank noted that non-compliance in this area could result in significant disruptions to personal investments, including the seizure of funds held in contravention of these rules.
Nedbank advised customers to regularly monitor updates from the SARB and SARS to stay informed about any changes or amendments to rules governing foreign transactions and investment allowances.
Ongoing Efforts to Ensure Compliance and Prevent Fraud
This recent communication marks the second warning Nedbank has issued to customers within the same week. Earlier, the bank alerted customers about the disabling of debit card swipe transactions at toll gates due to rising incidents of fraud. Fraudulent activities, including card cloning, have seen a sharp rise in recent months, prompting the bank to take immediate action to safeguard its customers. This measure, effective from 20 January 2025, aims to enhance customer security and mitigate risks associated with card cloning at toll gates.
Although debit card swipe functionality will no longer be available, customers can still make toll gate payments using credit cards, garage cards, cash, or electronic tags. In addition, toll gates are gradually transitioning to tap-and-go functionality, allowing for contactless payments with debit cards, credit cards, and smart devices linked to payment apps. The bank assured customers that these upgrades would streamline the toll payment process while significantly improving security.
Enhanced Security Measures for Toll Gate Payments
Nedbank’s measures align with broader efforts within the banking industry to improve payment security. According to First National Bank (FNB), contactless payment systems at toll gates will reduce the risk of fraud by allowing customers to retain possession of their cards or devices during transactions. FNB stated that the introduction of these systems is part of a larger initiative to modernise payment infrastructure across South Africa, ensuring safer and more efficient transactions for consumers. This development aims to provide both convenience and peace of mind for motorists making payments on the go.
These warnings and adjustments underline the importance of understanding and adhering to regulatory and security measures, ensuring that South Africans can use their cards responsibly and safely both locally and internationally. With financial institutions ramping up security and compliance enforcement, customers are reminded that vigilance and adherence to the rules are no longer optional—they are essential.
Conclusion
Nedbank’s recent warnings underscore the critical importance of understanding and complying with financial regulations. With increased enforcement and new security measures, South African cardholders must stay informed and proactive to avoid penalties and safeguard their financial interests. Whether it’s adhering to transaction limits, avoiding prohibited activities, or embracing new payment technologies, responsible card use is essential in today’s evolving financial landscape.
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