South Africa - International Franchise Association

For most payment processes, two reliable methods are used: Telegraphic Transfers (TT’s) or
S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunication).
In South Africa, all credits issued are subject to exchange control regulations, and in limited
cases, a South African import permit. South African exchange control regulations stipulate
that payment of imports may be effected only by authorized banks against submission by
their customers of documentary proof that the goods were imported into South Africa as
evidenced by invoices and shipping documents stamped by South African Customs. An
exception is, inter alia, when South African banks have opened documentary import letters of
credit in favor of foreign exporters. Payment in those instances may be effected against
presentation by the exporter of invoices and shipping documents to the foreign negotiating
bank before the goods have arrived in South Africa (but after they have left the United
States). If credit is available, payment will take place upon presentation of documents.
American exporters should offer quotations based on the f.o.b. value at the port of export. As
a general rule, such quotations should also include a statement of the actual charges for
freight and insurance plus any additional charges to the port of delivery. Quotations are
usually in terms of the currency of the country of origin.
The terms of payment for imported goods vary according to the type of buyer and the buyer's
access to capital. Large organizations such as the government or mining companies tend to
transact business on a sight-draft basis, while small companies tend to operate on
documents against acceptable terms.
Payment between 80 and 120 days after acceptance is most common, but terms may vary
between 30 and 180 days. For larger orders of capital equipment, longer terms are often
required. It is advisable to ship on a letter of credit, sight letter of credit, or 30-day letter of
credit basis that the importer can use as a negotiating instrument to expedite the payment
transfer. The payment transfer can be affected within 24 to 48 hours after the importer
presents a valid import permit and proper documents to his or her bank.
How Does the Banking System Operate Return to top
South Africa's well-developed banking system resembles Britain's system rather than that of
the United States. It consists of three key elements:
• the South African Reserve Bank (the country's central bank),
• private sector banks (commercial banks, merchant banks, and general banks), and
• mutual banks.
South African banks hold the first six places among the top 100 banks on the continent of
Africa.
Four large banks dominate, with Standard Bank of South Africa, Nedcor, ABSA
(Amalgamated Bank of South Africa, now owned by Barclays PLC), and FirstRand Bank
collectively accounting for around 85 percent of banking services in South Africa. A new
banking entity, Capitec has made significant inroads into the unbanked and entry-level
banking segment.
In total, there are approximately 70 foreign banks operating in South Africa, either via
representative offices, branches, subsidiaries or joint ventures with local companies. These
are listed here:
http://www.resbank.co.za/RegulationAndSupervision/BankSupervision/Pages/SouthAfricanR