Instant EFT explained: how pay-by-bank works in South Africa
Instant EFT explained: how pay-by-bank checkout works in South Africa, how it differs from manual EFT and PayShap, costs, risks and when to offer it.
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- CentraPoint Team
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Instant EFT is a checkout payment method where the customer pays directly from their bank account and a payment provider confirms the payment to the merchant immediately, so you don't wait for funds to reflect or chase a proof of payment. The customer selects their bank, authenticates, approves the amount, and the merchant receives a real-time success notification.
It's popular in South Africa because a large share of consumers bank online but don't have, or don't want to use, a credit card for online purchases. Providers such as Ozow, PayFast, Stitch, Peach Payments and others offer instant EFT or pay-by-bank options, each with its own flow and pricing.
How an instant EFT payment works
- Checkout. The customer chooses "Instant EFT" or "Pay by bank" on your checkout page or payment link.
- Bank selection. They choose their bank from a list.
- Authentication. Depending on the provider and bank, they log in through the provider's secure interface or are redirected to approve in their banking app, and confirm with an OTP or in-app approval.
- Payment. The payment is made from their account to the provider (or to you), with the reference pre-filled.
- Confirmation. The provider notifies your system in real time (usually by webhook), and the order or invoice is marked paid.
- Settlement. The provider pays out the collected funds to your bank account on its settlement schedule, less fees.
The key point: you trust the provider's confirmation, not a customer-supplied POP.
Instant EFT vs manual EFT vs PayShap
| Manual EFT | Instant EFT | PayShap | |
|---|---|---|---|
| What it is | Customer captures your bank details and pays | Provider-mediated bank payment at checkout | Real-time inter-bank payment launched by the banking industry |
| Who confirms | You, by checking your bank account | The payment provider, instantly | Payer and payee banks, in real time |
| Reference accuracy | Customer types it (often wrong) | Pre-filled by the provider | Customer enters details or uses a ShapID |
| Built for online checkout | No | Yes | Mainly person-to-person and bank-app payments |
| Merchant fee | Your bank's deposit fees | Provider fee per transaction | Payer bank fee; merchant acceptance options vary |
| Proof of payment needed | Usually | No | Not typically |
PayShap is part of the South African Reserve Bank's payments modernisation programme and is offered by participating banks. It's a separate rail from provider-based instant EFT; how it's packaged for merchant checkout depends on your bank or payment provider. Check the SARB's National Payment System pages for background.
Benefits for merchants
- Immediate confirmation: ship goods, activate an account or confirm a booking straight away.
- Fewer reconciliation headaches: references are pre-filled and the provider tells your system which order was paid.
- No card needed: reaches customers without credit cards.
- Lower fraud exposure than manual EFT: no fake POPs (see EFT proof of payment).
- No chargebacks in the card sense, although refunds and payment errors still need handling.
Limitations to be aware of
- Once-off only. Instant EFT is customer-initiated; it can't be used to pull recurring payments. For subscriptions use a debit order or card on file. See EFT vs debit order vs card.
- Bank coverage varies. Not every provider supports every bank or account type equally well.
- Customer trust. Some customers are wary of authenticating their bank through a third party. A clear explanation and recognisable provider help.
- Transaction limits. Customers' own bank limits for online payments may block large amounts.
- Fees. Usually a percentage or a fee per transaction, sometimes with a minimum. Compare current published pricing.
When to offer instant EFT
Instant EFT works well for:
- E-commerce stores with many customers who don't use cards online.
- Paying invoices through a payment link (B2B and B2C).
- Once-off amounts where manual EFT would create reconciliation work: registration fees, deposits, annual subscriptions.
- Settling arrears after a failed debit order.
It's less useful for small, frequent recurring amounts (use debit orders or card on file) or for customers outside South Africa.
Implementation checklist
- Choose a provider that supports your customers' main banks
- Use webhooks to mark invoices or orders paid automatically, rather than relying on redirects
- Show the provider's name clearly at checkout to build trust
- Offer card as an alternative in the same checkout
- Reconcile provider settlements (net of fees) against your bank statement; see how to reconcile EFT payments
- Define a refund process: refunds normally go back via the provider or by EFT to the original account
How CentraPoint helps
CentraPoint connects to several gateways that offer instant EFT and pay-by-bank (including Ozow, PayFast, Peach and Paystack, depending on your setup) alongside card and manual EFT. Customers pay from a hosted checkout page or payment link, the gateway's webhook marks the invoice paid, and settlements can be reconciled against your bank statement. See the gateways page and the payment links docs.
Frequently asked questions
Is instant EFT safe?
Reputable instant EFT providers use encryption and bank-grade authentication, and the customer approves each payment. Customers should only pay through well-known providers on the merchant's genuine checkout page.
How fast does the merchant get the money from an instant EFT?
The payment is confirmed instantly, but settlement to your bank account follows the provider's payout schedule, which may be daily or on another cycle depending on your agreement.
Can instant EFT be used for recurring payments?
No. Each instant EFT is a once-off payment the customer initiates. For recurring billing use debit orders or tokenised card payments.
Is instant EFT the same as PayShap?
No. Instant EFT is a checkout method run by payment providers. PayShap is an inter-bank real-time payment service offered by participating South African banks.
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