Home / TechForum / Embedded finance: Managing responsibility between platforms and providers Embedded finance: Managing responsibility between platforms and providers By Lerato Lamola, Partner, Webber Wentzel Issued by Webber Wentzel Johannesburg, 13 Nov 2026 Lerato Lamola, Partner at Webber Wentzel. As the pace of change within the digital payments ecosystem has quickened, the regulatory tension between organisations that offer customers financial solutions (platforms) and the service providers these companies use to execute these services (typically banks but more recently retailers) has only grown and become more complex. This tension, characterised by the maxim that regulation always follows innovation, can be broken down into several categories, including legal responsibility, operational accountability and which party ultimately carries customer risk. In South Africa, the Reserve Bank (SARB) in June 2026 published the Third Draft of the Authorisation Framework, the final version intended to become law before the end of November 2026, with its focus the regulations that govern the country’s digital payment framework. These regulations have a significant bearing on how embedded finance – the inclusion or integration of financial services into non-financial applications or platforms – are assessed from a regulatory and governance perspective. The Draft Framework has sought to adopt a position that does not treat embedded finance offerings in a static manner. Instead, the proposed regulations rely on an activity-based or “eye test” approach where the nature of the payment service provided, rather than whether or not the provider is a non-financial or financial institution, determines the applicable regulatory environment. Furthermore, the draft regulations give life to the responsibilities and governance associated with embedded finance in specific ways, including: The use of a banking partner not automatically providing regulatory certainty for non-financial institutions. While non-bank payment providers have traditionally leveraged banking partnerships to access the National Payment System (NPS), the future regulations envisage a dual-path regime for both bank-supported payment institutions and independently authorised payment organisations. Drawing on the importance of the payment activity performed, different activities create different regulatory obligations. Identified activities include initiating a payment, receiving payment instructions, issuing electronic money, clearing and settlement, third-party payments and remittance. Platforms need to understand what functions they perform, what functions its banking partner performs and, depending on the performed activity, whether or not specific regulatory arrangements are required. Platform providers should have a detailed understanding of how their product or service practically functions The regulatory framework as proposed by the SARB immediately creates a push and pull effect for platform operators to consider once payments, credit or other financial services are embedded into their product or service. Answering the question, “Do we have a licensed financial services partner?” is no longer sufficient to provide clarity on a platform’s regulatory obligations relating to embedded financial services. Rather, providers should dedicate time and focus on the regulated activities they independently perform versus those performed by their banking partner, mapping these operations in detail if they have not done so already. Simply put, a platform that only initiates payments may have different regulatory responsibilities and compliance to complete versus one that receives funds on behalf of their customers. Addressing this complexity means understanding the minutia of the regulations that govern every service they provide. Practically speaking, this can be broken down into questions such as: Who is the banking partner for each element of their service? Does the platform perform any regulated payment activity? What is the platform receiving from the banking partner? Sponsorship, infrastructure or regulated services? Where do customer funds sit? With the platform or with the banking provider? Does a plan exist to address an outcome where service volumes change or expand, thereby changing a platform’s regulatory position? These questions also have implications for how a platform publicly positions itself in relation to its customers. While a platform may externally offer a particular financial service, their commercial description may not accurately describe its real-world regulatory position and obligations. A platform calling itself a “digital wallet” or other related term is meaningless against the regulatory and governance considerations that may indeed apply to its operations. Embedded finance and regulatory responsibility in action: Buy now, pay later An excellent example of how regulations affect embedded finance operators is buy now, pay later (BNPL) offerings. BNPLs have become highly popular in South Africa and arguably more so in other African markets because they allow customers to spread payments over a defined period, with retailers partnering with BNPL providers if they do not wish to manage the service in-house. At a high level, legislation that may affect which responsibilities a BNPL provider may carry from a governance and compliance point of view include legislation that covers consumer credit, financial services, consumer protection and data protection. How embedded finance is integrated into a platform has important ramifications on how the platform itself is treated from a regulatory perspective. Described in an alternative manner, what the product is and who does what between the platform and the banking or financing partner matter a great deal. The gravest mistake a platform can make is assume that all credit-related responsibilities and obligations lie with the lender or banking partner on the basis that the lender supplies the platform the liquidity it requires to offer the service. A practical checklist of responsibility, governance and compliance As the embedded finance regulatory environment evolves to a state where the nature of the activity executed becomes the primary weathervane of regulatory responsibility, platforms should be highly intentional and informed when entering into contractual relationships with banking providers or alternative financial partners. Divisions of responsibility should be documented in a written arrangement, with this division drawn from the platform’s operating model and framework. Escalation arrangements should also merit significant consideration given the interoperability of the service provided between the platform and banking provider from a customer perspective. Viewed as a checklist, platforms can begin by assessing which activities each party performs and what licences, registrations or other related arrangements are required. They can then assess how the parties interact within the customer relationship, who handles customer data, who handles customer complaints, who monitors transactions for fraudulent activity and credit status checks, to name but a few. In all these aspects and during the negotiation between a platform and a provider (whether a bank or a retailer), legal advice should be sought so that all parties have a clear understanding of where their regulatory and compliance responsibilities begin and end. The publication of the Draft Framework will bring a material shift to the South African payments ecosystem, and all entities who have touch points with the National Payment Systems should consider its potential impact on their business environment. 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