Post office to cost more than existing grant payment provider, says panel

THE proposal by the South African Post Office (Sapo) to pay social grant recipients would cost more than the amount charged by existing provider Cash Paymaster Services (CPS).

This was because the South African Social Security Agency (Sassa) had not opened the tender for competitive bids.

This is the view of the panel of experts and the auditor-general‚ who were appointed by the Constitutional Court to investigate the grants payment debacle.

The panel made this observation in its report to the court this week, as an agreement between Sassa and Sapo for the payment of grants is expected to be signed soon.

Minister in the Presidency and chairman of the interministerial committee for comprehensive social security Jeff Radebe told parliament on Tuesday that Sassa and Sapo had signed an implementation protocol.

Radebe said the protocol would allow the post office to provide services to Sassa‚ subject to cost-effectiveness.

The panel said future service providers for the payment of social grants should be able to execute these services at a lower cost than that charged by CPS.

CPS‚ which will provide the service until April, is presently charging R14.42 plus VAT for each transaction.

The panel said‚ contrary to its expectations‚ the post office proposed a markedly higher price of R21.50 plus VAT‚ a 49% increase from current levels.

It said most of Sapo’s projected costs related to the acquisition of new Postbank ATMs‚ cash-point infrastructure and pointof-sale devices.

In addition‚ the post office is proposing a 6% a year increase from this base price for years two to five.

The panel said by the fifth year‚ the proposed price would be R28.77 plus VAT‚ a 100% increase from current levels.

Sapo claimed it offered better services than those offered by CPS‚ including free cash withdrawals.

“Nonetheless‚ the panel believes these proposed price increases are opportunistic and only made possible by the lack of competing bids‚” the panel said in its submission to court.

The panel said future service providers could charge less because the CPS price was based on a much higher percentage of beneficiaries receiving grants at cash paypoints rather than electronically through the banking system.

In its submissions‚ the panel said 80% of 10.6 million grant recipients could be paid by the banks. – TimesLIVE