Sassa’s fight against bank
The battle between the South African Social Security Agency (Sassa) and Grindrod Bank is set to intensify at court over the latter’s abrupt decision to hike bank charges by more than 40% for social grant beneficiaries to access their grants.
In a report to the Constitutional Court dated June 29, Sassa’s acting CEO Abraham Mahlangu said the agency’s process of instituting legal proceedings against Grindrod over excessive bank charges “has commenced”.
Grindrod increased its fixed monthly bank charges from R6.91 to R10 from April 1 for about 5.2 million social grant beneficiaries who still access their money using Sassa/Grindrod branded bank cards at CPS dedicated pay points, ATMs and retail pay points. Grindrod is a partner of Net1 in producing and underwriting the Sassa/Grindrod branded cards.
Mahlangu said Grindrod increased the bank charges despite the bank agreeing with Sassa to a fee structure of R6.91 on March 15.
The increase in bank charges by 45% meant that Grindrod would score a windfall of R54 million in April, compared with R37 million if it had not increased bank charges.
Grindrod and Net1 were criticised by Mahlangu and Social Development Minister Susan Shabangu for increasing bank charges, accusing both companies of profiting from beneficiaries who are impoverished and are generally SA’s most vulnerable citizens.
Sassa has been locked in a public spat with Grindrod as it demanded that the bank revert to its initial fee of R6.91 and reimburse all beneficiaries R3.09.
Mahlangu said Grindrod declined Sassa’s demand on the basis that it claims to only earn R0.50 per account per month to provide banking services to beneficiaries while the remaining R9.50 is paid to Net1 for the provision of technological support.
Grindrod said it didn’t have a choice but to increase bank charges. The bank said it didn’t have a contract with Sassa as a result of the agency’s delays in transferring beneficiaries from the Sassa/ Grindrod branded cards to new Sassa/Post Office branded cards.
Net1 CEO Herman Kotze said Sassa was aware that the beneficiaries would be liable for the monthly bank charges. “Grindrod and Net1 have set this fee at R10 including vat (R8.70 excluding vat), which it believes to be commensurate with the services being offered,” said Kotze.