The sum will be paid over 12 months to Johannesburg-based licensing company Stanton Woodrush, who had registered the nickname almost 20 years ago, SAFA said on Friday.
"We feel very happy about the acquisition of the Bafana Bafana name which allows us to exploit this great brand for the good of the game," SAFA president Kirtsen Nematandani told reporters.
It brings to a close a highly divisive issue which had pitted the association against the licensing company in court and also concludes months of post-World Cup negotiations.
Bafana Bafana was a moniker first attached to the team in 1992 by a newspaper reporter. Loosely translated from Zulu it means "our boys" and quickly became popular although was shunned at first by the football association.
After South Africa won the 1996 African Nations Cup, the nickname became firmly attached to the team and the association sought to embrace it but had already been beaten to the registration of the name as trademark by businessman Stan Smidt, who owned Stanton Woodrush.
SAFA lost a court case over the intellectual property rights nine years ago but later went into a partnership with Stanton Woodrush for apparel and licensing sales using the nickname, worth an estimated 50 million rand.
After last year's World Cup, SAFA made a renewed bid to gain sole rights to the nickname and held lengthy negotiations, at one time threatening to ditch Bafana Bafana and organise a public poll for a new nickname.
