South African cryptocurrency landscape is evolving rapidly, as major startups and exchanges Luno and VALR expand the scope of crypto-based payments across a wider range of merchants. This development signals a growing acceptance of digital currencies in everyday transactions, while simultaneously drawing greater attention from the South African Revenue Service (SARS), which has intensified its efforts to enforce tax compliance within the burgeoning sector.

Luno, one of South Africa’s leading cryptocurrency exchanges, recently announced a significant expansion of its payment options. Thanks to a new partnership with mobile payment platform Zapper, Luno customers can now use cryptocurrencies to make transactions at over 31,000 merchants nationwide. This includes a broad array of vendors, from airlines like FlySafair to fuel stations and educational institutions.

With this integration, Luno users can make payments via the Luno Pay app at any merchant that offers Zapper QR codes, either in-store or online. Transactions are capped at R100,000 ($5,700), allowing for substantial payments using digital assets.

“We are delighted to be the first crypto asset service provider in South Africa to collaborate with Zapper,” said Tarris Arnold, Luno’s Business Development Manager. “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 echoed this enthusiasm, stating that the partnership aligns with Zapper’s mission to help merchants grow their businesses by opening up access to more than five million South Africans who are part of the Luno payment network.

Similarly, Johannesburg-based crypto exchange VALR has made strides in broadening its payment capabilities. VALR customers can now make payments using 11 different cryptocurrencies on the online shopping platform Geewiz. At checkout, users simply select “Pay with crypto” and choose VALR as the payment processor, facilitating crypto payments in one seamless step.

This expansion into everyday payments marks a turning point for cryptocurrency in South Africa, where digital assets have traditionally been viewed primarily as investment vehicles rather than currencies for regular transactions. However, as more merchants come on board, the potential for wider use of cryptocurrencies as a legitimate means of exchange is growing.

SARS Intensifies Tax Oversight

The rising use of digital assets in South Africa has not gone unnoticed by SARS, which has significantly escalated its efforts to ensure tax compliance within the sector. Legal experts from Webber Wentzel, a prominent law firm, have reported that crypto traders are now receiving notifications from SARS indicating 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’ efforts to enforce tax compliance within the burgeoning crypto sector,” noted Webber Wentzel.

This increased scrutiny follows South Africa’s recent move to regulate financial service providers involved in the crypto asset market. Licensed crypto-asset exchanges are now required to provide certain information to regulators, including details on transactions that may have tax implications.

SARS has warned that failure to comply with information requests could lead to criminal charges under the Tax Administration Act. The authority’s aggressive approach underlines its commitment to ensuring that all taxable profits, including those from crypto trading, are reported and taxed accordingly.

In its pursuit of revenue collection, SARS has also turned to artificial intelligence (AI) as part of its strategy to identify and monitor non-compliant traders. While the full extent of AI’s implementation remains unclear, it reflects the authority’s broader goal of modernising its enforcement mechanisms to address the complexities of the digital economy.

“This innovative approach reflects SARS’ commitment to modernising its enforcement mechanisms to address the complexities of digital asset trading,” said the legal experts at Webber Wentzel.

As South African crypto-currency startups and exchanges like Luno and VALR expand payment options for users, the country finds itself at the crossroads of innovation and regulation. The integration of digital currencies into mainstream commerce could provide a boost for crypto adoption, yet the increasing attention from SARS highlights the need for both traders and platforms to ensure compliance with evolving tax laws.

While crypto adoption in South Africa appears to be gaining momentum, the regulatory landscape is tightening. As more merchants accept digital assets, users and businesses alike will need to navigate a complex environment where financial innovation is tempered by growing government oversight.

For now, South Africa remains a promising market for cryptocurrencies, with increasing support from merchants and platforms. However, as both adoption and regulation evolve, the true test will be how effectively the industry can strike a balance between growth and compliance.