Sassa set to give CPS more powers
GRANT DISTRIBUTION: COMPANY WANTS ‘REASONABLE’ FEE IF THE CONTRACT IS EXTENDED FOR SIX MONTHS
Under the extended contract, distributor would be the paymaster for only 2.5 million elderly and disabled beneficiaries. Moneyweb
The South African Social Security Agency (Sassa) wants to give Net1 subsidiary Cash Paymaster Services (CPS) more powers in the distribution of social grants if its invalid contract is extended for an additional six months from April 1.
Sassa’s acting CEO Pearl Bhengu asked the Constitutional Court earlier this month to lift the invalidity of CPS contract to pay a portion of 10.7 million social grant beneficiaries until September 2018.
Under the extended contract, CPS would be the paymaster for only 2.5 million elderly and disabled beneficiaries.
In justifying CPS’s involvement, Bhengu said Sassa had been unable to find an alternative service provider to pay elderly and disabled beneficiaries who don’t have bank accounts, but access their social grants in a physical cash format via CPS’ vehicles, kitted with its biometric UEPS/EMV technology. The remaining eight million beneficiaries access their social grants via bank ATMs or retail points.
However, it appears Sassa wants to give CPS more powers, asking it to offer services that are beyond processing payments to elderly and disabled beneficiaries. A Sassa letter, dated February 13, asked CPS to continue to provide a system of support for existing Sassa/Grindrod Bank cards, which grant recipients use to withdraw their money at ATMs, retail and CPS pay points. The letter was contained in CPS’ submission to the Constitutional Court on Wednesday as it responded to Bhengu’s affidavit. The agency also asked CPS to issue Sassa-branded Grindrod cards to new beneficiaries, which would require CPS to maintain its beneficiary enrolment services.
Net1 CEO Herman Kotzé told Moneyweb CPS is not in favour of a six-month extension. The main reason, Kotzé said, is that Net1’s reputation has been sullied for scoring the contract in an invalid manner. “We don’t want to be continuously trapped in an arrangement that is seen to be an extension of an invalid contract. It has really been damaging to us.”
Net1 might consider the extension if there is no other way to pay social grants as “we don’t want to be responsible for the failure of the grants system”. The process to extend the contract must be regularised and legal, Kotzé added.
CPS also wants the court to revise the fee it’s paid by Sassa. Under its current contract, it’s paid R16.44 per beneficiary to pay over 10 million beneficiaries. In court papers, CPS director Nunthakumarin Pillay said the company would be required to pay only 2.5 million when its contract is extended for six months, resulting in its revenue being “reduced by approximately two-thirds”.
“Imposing the same price per beneficiary [R16.44] paid over the extension period would result in CPS operating at a significant loss,” said Pillay.
Essentially, CPS wants to be paid more for its services, but didn’t disclose its preferred amount. Instead, Pillay asked the National Treasury to determine a “reasonable price”.