Crypto payments explosion in South Africa

Cryptocurrency exchanges Luno and VALR have recently expanded the platforms their payment systems support, increasing the number of South African merchants where users can pay with digital assets.

Luno said its customers can now transact using crypto at 31,000 merchants nationwide thanks to a partnership with Zapper.

Thanks to its integration with Zapper, Luno said its customer base can make payments to vendors such as FlySafair, fuel stations, and educational institutions.

Luno customers can use the Luno Pay app anywhere Zapper QR codes are offered as a payment method.

This can be done at a merchant points of sale or online and is valid for payments up to R100,000.

“We are delighted to be the first crypto asset service provider in South Africa to collaborate with Zapper,” said Luno business development manager Tarris Arnold.

“Currently, the biggest use case for crypto in South Africa is investment, but the ability to pay at such a wide variety of merchants using crypto is a giant step closer to the original vision of using crypto to pay for goods and services.”

Zapper CEO Mike Bryer said that the partnership forms part of Zapper’s mission to help merchants grow their businesses by adding over 5 million more South Africans to the payment network.

VALR, another prominent crypto exchange headquartered in Johannesburg, has also recently made progress in allowing its customers to make crypto payments.

Its users now have the option to pay using one of eleven cryptocurrencies on the online shopping platform Geewiz.

This can be done by selecting “Pay with crypto” at checkout and choosing “VALR”.

Given the increased use of cryptocurrency in South Africa, the South African Revenue Service (SARS) has significantly escalated its efforts to enhance tax compliance in the sector.

According to legal experts at Webber Wentzel, recent developments have seen the SARS turn its attention toward crypto traders, who are now receiving notices that their tax affairs are under review.

“These notifications are based on information obtained from various crypto asset exchanges, signalling a significant escalation in SARS’s efforts to enforce tax compliance within the burgeoning crypto sector,” they said.

“Following South Africa’s move to regulate financial service providers who provide financial services related to crypto assets, licensed crypto-asset exchanges are now required to provide certain information to regulators.”

They said SARS had warned traders that failure to provide requested information could be deemed a criminal offence under the Tax Administration Act. 

“This move underscores the tax authority’s ‘leave no stone unturned’ policy in its pursuit of revenue collection by any means necessary, and taxable profits from crypto trading are no exception,” they said. 

SARS is leveraging artificial intelligence (AI) technology to aid its crackdown on non-compliance. 

“However, the full extent of AI’s implementation in identifying non-compliant crypto traders remains uncertain,” the experts said. 

“This innovative approach reflects SARS’ commitment to modernising its enforcement mechanisms to address the complexities of digital asset trading.”