Sassa targets bank account deal
• Agency in talks with banks and Treasury on low-cost payment solution for social-grant beneficiaries, says acting CEO Pearl Bhengu
Talks are under way between the Treasury, the South African Social Security Agency and banks regarding the development of a low-cost banking solution for social grant beneficiaries.
Talks are under way between the Treasury, the South African Social Security Agency (Sassa) and the banks on the development of a low-cost banking solution for social grant beneficiaries.
Sassa acting CEO Pearl Bhengu said in a report submitted this week to the Constitutional Court that the negotiations with the banks started in December and that the banks had already made proposals that would be discussed at a further meeting tentatively scheduled for Friday.
“Sassa has identified the need for a low-cost bank account that will offer beneficiaries a suite of services at no cost to the beneficiary,” she said.
Low-cost bank accounts paid via Sassa’s own corporate bank account would be an alternative to the grant payments made by Net1 Technologies subsidiary Cash Paymaster Services (CPS) and Grindrod Bank.
Bhengu also told the court that it would be necessary for Sassa to approach the court for a six-month extension of the suspension of the invalidity of Sassa’s contract with CPS until end-September. The suspension terminates at the end of March.
The panel of experts appointed by the Constitutional Court conceded that such a six-month extension of the invalid contract might be necessary.
About 20% (2-million) of the 10.7-million social grant beneficiaries receive their social grants from cash paypoints, while 7.7million do so through the National Payments System.
Bhengu said if agreement was reached with banks on a low-cost product, Sassa would subsidise their accounts as it would with the South African Post Office (Sapo), which would be involved in grants payment.
It costs Sassa R16.44 per transaction per month for both electronic and cash payments of social grants, which translates to a cost of about R2.1bn a year.
“Sassa seeks a solution that would not worsen the benefits beneficiaries currently enjoy, but rather one that improves their situation,” Bhengu said.
Sassa plans to take over the direct transfer of grant payments into beneficiary bank accounts from CPS-Grindrod Bank from March.
An analysis conducted by the Treasury indicated that all banks had entry-level bank accounts priced at R5-R5.50, the monthly account management fee.
Sassa reached an agreement with Sapo to provide a special disbursement account with a bouquet of free services to social grant beneficiaries using electronic payment services at a cost of R6.71 per recipient a month.
Bhengu said the panel of experts had recognised that the cash payment system might have to continue for some time.
In the short to medium term, cash payments would need to continue at existing points near to where beneficiaries live. “The process of continuing with cash payments will require a tender process since Sapo has indicated that they are unable to undertake the cash payment function within the time period left although they indicated that they can do this by December 2018,” Bhengu said.
A new service provider would require at least two months from the date of award to get ready to pay grants. It meant that payments could start only from May 2018.
A LOW-COST BANK ACCOUNT WILL OFFER BENEFICIARIES A SUITE OF SERVICES AT NO COST TO THE BENEFICIARY