London-based fintech giant Revolut is preparing to enter the South African market, reportedly seeking a full banking license.
While it currently has a large global user base, it however lacks a banking license in any African country.
A successful entry into South Africa could serve as a launchpad for broader expansion across the continent.
However, this expansion could face some challenges from the regulatory landscape, tax system, and labour market.
For a better understanding of what this means for Revolut, we spoke with a tax educator, Andre Bothma, whose insights have been inculcated into the article.
Who is Revolut?
Revolut is a UK-based financial technology company founded in 2015 by Nikolay Storonsky and Vlad Yatsenko.
Initially offering prepaid cards and currency exchange, it has evolved into a neobank providing a wide range of services.
The company offers multi-currency accounts, debit and virtual cards, stock and crypto trading, international money transfers, savings and budgeting tools, insurance, and business banking services.
It has rapidly expanded its digital banking services, attracting over 45 million customers across 38 countries.
In 2024, it achieved a valuation of $45 billion, positioning itself alongside financial giants like Deutsche Bank and Barclays.
Double taxation
Revolut’s expansion into South Africa raises important questions about its tax obligations, particularly whether it will face double taxation.
South Africa operates on a residence-based tax system, meaning tax residents are taxed on their worldwide income, while foreign companies with a local presence may still be taxed on income sourced within the country.
According to Andre Bothma, whether Revolut faces double taxation depends on how it structures its entry.
“If they register, for example, as a separate company ‘Revolut South Africa’ that company would be required to submit tax returns and financial statements that comply with CIPC regulations,
So, it depends on how the entity structures itself in South Africa, similar to how Amazon South Africa or other international companies operate.” He explained.
Bothma also added that multinational companies like Amazon and Google have had to navigate similar tax compliance challenges in South Africa.
He also clarified that double taxation is rarely an outright financial burden, as tax treaties and planning strategies typically mitigate the risk.
“If Revolut registers in South Africa, they will first have to handle compliance. The issue of double taxation will also be considered, but double taxation is often something that companies consult around, it’s not something they automatically have to pay,”
There is no such thing as an unavoidable double taxation burden. Most countries have mechanisms for tax credits, meaning that if you pay tax in another country, you can receive tax credits in South Africa.
So, while double taxation will be a factor to consider, I don’t think it will be a significant problem for Revolut.” He further stated.
South Africa has several double taxation agreements (DTAs) that allow companies to claim tax credits for taxes paid in another jurisdiction, reducing the likelihood of Revolut being taxed twice on the same income.
Additionally, South Africa’s exchange control regulations, managed by the South African Reserve Bank (SARB), could impact how Revolut handles cross-border transactions and profit repatriation.
Ultimately, the extent to which Revolut faces double taxation will depend on its corporate structure and how effectively it leverages existing tax treaties.
Bureaucratic and compliance challenge
South Africa’s exchange controls, overseen by the South African Reserve Bank (SARB), can also pose challenges for fintech companies that rely on international transactions and multi-currency accounts.
Bothma pointed out that companies already operate under these rules.
“Companies like Luno and others in South Africa already comply with exchange control rules set by the South African Reserve Bank. Revolut would likely follow the same procedures” He explained.
He also noted that since Revolut operates in online payments, they would have to register with local banks and comply with reporting requirements, just like other financial services companies operating in South Africa.
However, given the history of foreign businesses struggling with these restrictions, Revolut will need a clear compliance strategy.
South Africa’s financial sector is one of the most tightly regulated on the continent.
Firms must obtain approvals from SARB, the Financial Sector Conduct Authority (FSCA), and SARS, a process that can involve long delays.
For Revolut, this means navigating licensing requirements, anti-money laundering (AML) rules, and know-your-customer (KYC) compliance, each of which could slow its market entry.
Data protection and privacy
Another regulatory hurdle Revolut will need to contend with is data protection.
South Africa’s Protection of Personal Information Act (POPIA) imposes stringent rules on how companies collect, store, and process personal data.
Since Revolut operates in the digital banking space, where user data is fundamental to its services, the company will need to ensure that its data-driven banking model aligns with POPIA.
Non-compliance could lead to fines or operational restrictions, so Revolut will have to devise a compliance strategy that adheres to these laws.
Given that South Africa has been tightening its grip on data sovereignty, Revolut will have to stay vigilant and responsive to changes in the regulatory landscape to avoid any disruptions to its operations.
Bureaucratic delays and launch timeline
Beyond these legal and regulatory issues, South Africa’s bureaucratic system can also pose significant challenges for foreign businesses.
The country’s bureaucracy is known for being slow and cumbersome, with companies often facing long delays in receiving approvals from regulatory bodies.
In the financial services sector, this scrutiny can be particularly rigorous, with businesses undergoing detailed examinations before they can begin operations.
For Revolut, these bureaucratic delays could push its launch timeline further than anticipated, meaning it will need to plan accordingly and anticipate these challenges as part of its strategy.
Political and economic risks
Revolut’s entry into South Africa also comes at a time of political and economic uncertainty.
The country is grappling with power shortages, a sluggish economy, and a high unemployment rate of over 32%.
These economic challenges could make it more difficult for businesses, especially those relying on digital infrastructure, to operate smoothly.
The country’s political landscape is also in flux, with tensions rising ahead of the 2025 budget.
Bothma also told us that the country is in a difficult space from a tax perspective.
“The budget was delayed, and a lot of people in the private sector are wary about what South Africa’s future will look like. A lot of people are worried,” he explained.
He also highlighted that South Africa’s international relations, particularly with the United States, are deteriorating sharply, which could further impact investor confidence.
There is also growing public debate about the role of foreign businesses in South Africa’s economy, particularly with regard to issues like job creation, tax contributions, and the security of local data.
If Revolut is perceived as a company that benefits from South Africa’s financial system without contributing meaningfully to the local economy, the company could face regulatory resistance, which may lead to reputational damage.
Hiring locally or importing talent?
One of the central questions Revolut will need to address is whether to establish a physical presence in South Africa or manage its operations remotely.
With around 10,000 employees globally, Revolut maintains a relatively lean workforce, and its expansion strategy has often focused on automation and minimising in-country staffing.
South Africa’s fintech ecosystem also has a strong talent base, particularly in banking, technology, and payments.
It’s just as Bothma stated, “South Africa has a strong workforce for foreign companies, and Revolut is a well-known brand, similar to PayPal and Wise.
If they decide to establish a physical presence, they may open a small office and possibly hire local developers. However, their exact plans remain uncertain for now”.
The challenge, however, lies in South Africa’s labour laws are among the strictest in Africa, making it difficult to hire and fire employees.
This could add complexity to Revolut’s hiring strategy, as it must ensure that its workforce is not only skilled but also compliant with local regulations.
If Revolut decides to hire internationally, it will also need to navigate South Africa’s stringent work visa regulations, which tend to favour local employment.
Given the country’s high unemployment rate, regulators may scrutinise any move to import talent, particularly if Revolut’s presence does not lead to significant job creation.
Can Revolut overcome these barriers?
Revolut’s expansion into South Africa marks a significant shift in the country’s financial sector, introducing more digital banking options and intensifying competition.
However, the company faces a complex regulatory and tax landscape that could complicate its entry.
“If Revolut can successfully navigate compliance hurdles, adapt to South Africa’s economic and political realities, and establish a sustainable local presence, it could become a key player in the country’s digital banking space.
It must however overcome several challenges, including regulatory obstacles, the dominance of mobile money, limited internet penetration, and the need to build trust and brand awareness” said the Chief Strategy Officer for Standard Group PLC, Kenya.
Revolut has also acknowledged that its plans are still in the early stages.
“South Africa is a market we are evaluating. We see it as attractive, with the potential to offer a unique value proposition to customers in the future. However, we are quite early in the process,” the company stated.
Despite these hurdles, Revolut’s multi-currency capabilities and lower transaction fees could attract a strong customer base.
However, any misstep, whether in regulatory compliance, tax structuring, or political sensitivity, could slow its progress in one of Africa’s most complex financial markets.
