Daily Dispatch

Top SA re­tail­ers, banks slug it out

Charges for so­cial grant ben­e­fi­cia­ries is a bone of con­tention

- By ZEENAT MOORAD Business · Retail · Industries · South Africa · Spar · Pick 'n Pay Stores Limited · Checkers · Visa International Service Association · MasterCard · Reserve Bank of India · FirstRand · Absa Group Limited · Shoprite SA

AS­TORM is brew­ing be­tween ma­jor re­tail­ers and banks over SA’s so­cial grant sys­tem‚ with re­tail­ers that pro­vide free so­cial grant pay­out points at the tills push­ing banks to cut their ATM charges for grant pay­outs.

South Africa’s re­tail­ers in 2012 signed an agree­ment with JSE-and Nas­daqlisted Net1 to be­come of­fi­cial dis­trib­u­tors of so­cial grants. Net1 sub­sidiary Cash Pay­mas­ter Ser­vices still holds the multi­bil­lion-rand con­tract to ad­min­is­ter grant pay­ments to more than 16 mil­lion South Africans‚ even though the Con­sti­tu­tional Court ruled that the con­tract was awarded im­prop­erly.

But‚ the free ser­vice has seen long queues at the tills at month-end and has cre­ated a hot­bed for crim­i­nal ac­tiv­ity at Sho­prite‚ Spar and Pick n Pay. They want banks‚ which are charg­ing so­cial grant re­cip­i­ents as much as R18 to re­trieve their grant money at ATMs to waive the fees.

Grant ben­e­fi­cia­ries pre­vi­ously col­lected their money from South African So­cial Se­cu­rity Agency (Sassa) pay­points or a net­work of re­tail­ers. The re­tail­ers also in­stalled ma­chines in stores so finger­print bio­met­rics could en­sure that only the cor­rect re­cip­i­ents could draw grants.

Re­tail­ers re­ceived 10c per with­drawal and teamed up with Net1 largely to at­tract ex­tra cus­tomers. While the move eased pres­sure at Sassa pay­points‚ the Sassa card can­not be used at bank ATMs.

Re­tail­ers say it is “only just” that the cards should work at bank ATMs‚ given that they are bur­dened with the cost of cash man­age­ment‚ ad­di­tional se­cu­rity and have to swal­low trans­ac­tional and in­ter­bank charges on grant pay­outs.

“We pro­vide it as a ser­vice; it pulls ad­di­tional feet in [to stores]‚ but it comes at a cost. [There is] no fi­nan­cial ben­e­fit to it and it is an area of con­cern that banks charge for with­drawals. Ev­ery­one in­volved in pay­ing out pen­sions makes money‚ but at a re­tailer‚ you can with­draw for no fee what­so­ever‚ but it ac­tu­ally costs us money‚” says Mike Pren­tice‚ group mer­chan­dise ex­ec­u­tive at Spar Group.

Net1 chief ex­ec­u­tive and chair­man Serge Be­la­mant says merchant stores such as Pick n Pay and Check­ers pro­vide a stan­dard cash-with­drawal func­tion for ben­e­fi­cia­ries.

“Large stores want the fi­nan­cial spend of ben­e­fi­cia­ries‚ but not the queues or the as­so­ci­ated risk … The rules gov­ern­ing trans­ac­tions at pointof-sale can­not dis­crim­i­nate be­tween clients.”

Re­tail­ers are caught by the bank­ing rules and the Visa and Master­Card brand regimes‚ he says.

“Net1 has no is­sue with the waiv­ing of ATM fees for ben­e­fi­cia­ries. Why banks would al­low this‚ how­ever‚ is an­other story. They would dis­pense cash at their cost and lose the trans­ac­tion fees at merchant stores.”

Net1’s ten­der was ruled in­valid by the Con­sti­tu­tional Court in April last year. The court or­dered Sassa to re­open the bid­ding af­ter it found the ten­der process was flawed. Sassa dis­missed three new bids for the con­tract last month for not making the cut‚ lead­ing to Net1 re­tain­ing the ten­der.

Sho­prite’s se­cu­rity costs ex­ceeded its trans­port costs‚ at R1-bil­lion for its last fi­nan­cial year. Armed rob­beries‚ par­tic­u­larly on pay­out days‚ have surged. From Fe­bru­ary last year to Au­gust this year‚ there has been more than 230 armed rob­beries at its stores.

Pick n Pay chair­man Gareth Ack­er­man says banks should join re­tail­ers in waiv­ing the ATM fee for Sassa with­drawals and rely on a gov­ern­ment fee‚ as re­tail­ers do.

Be­fore 2012‚ ben­e­fi­cia­ries were paid out­side the bank­ing sys­tem‚ op­er­at­ing out­side the rules and reg­u­la­tions im­posed by the SA Re­serve Bank (SARB) and the Pay­ments As­so­ci­a­tion of SA.

Banks ap­pear to be un­will­ing to forgo bank charges for grant re­cip­i­ents. Capitec says it does not in­tend to dis­crim­i­nate or favour any in­come group‚ while First Na­tional Bank (FNB) says it did not lobby to be in­cluded in the grant-pay­ment chain‚ but sup­ported the strate­gies and ob­jec­tives of the SARB, and par­tic­u­larly its Na­tional Pay­ments Sys­tem Depart­ment.

“FNB’s wide ATM foot­print al­lows grant hold­ers to with­draw; how­ever‚ cash re­sults in sub­stan­tial direct costs – se­cu­rity‚ trans­port‚ in­sur­ance – and are re­cov­ered to en­sure sus­tain­abil­ity‚” FNB said.

Absa said in­ter­change fees ap­plied across the bank­ing in­dus­try. — BDLive

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 ??  ?? ON WARPATH: A storm is brew­ing be­tween ma­jor re­tail­ers and banks over South Africa’s so­cial grant sys­tem
ON WARPATH: A storm is brew­ing be­tween ma­jor re­tail­ers and banks over South Africa’s so­cial grant sys­tem

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