Big banks snub latest Sassa offer
LETTER: NO POLICY FOR SUBSIDY TO ADMINISTER PAYMENT
The likelihood of SA’s big commercial banks being involved in social grant payment has been dashed. Moneyweb
Aletter written by SA Social Security Agency (Sassa) acting CEO Abraham Mahlangu to Banking Association SA (Basa) CEO Cas Coovadia – dated May 7 – reveals there’s still no policy for subsiding banks to administer social grant payment.
This a clear indication that Sassa faces another delay in including commercial banks in its social grant system.
Commercial banks were meant to collaborate with the SA Post Office to administer the payment of grants to 10.5 million beneficiaries by availing their ATM infrastructure, payment processing systems and bank accounts to Sassa.
Essentially, this would allow social grant beneficiaries to use a bank of their choice to access their money after the Cash Paymaster Services (CPS) contract to administer social grants expired on March 31.
However, Mahlangu’s letter shows that Sassa and commercial banks are still at loggerheads about the low-cost bank accounts social grant recipients would use to withdraw their money.
Sassa asked larger banks to create standardised low-cost bank accounts. However, most of the four largest banks were unhappy about this, saying the accounts would create problems with competition authorities.
They added that they each have unique products appropriate for grant beneficiaries, that’s why standardised bank accounts won’t work.
Mahlangu said it became clear during engagements with individual banks that these bank accounts wouldn’t be ready by April 1.
“Sassa [during engagements with banks] also explained a process through which recipients and/or beneficiaries could provide written authorisation to Sassa to have their grant paid through their chosen method,” said Mahlangu.
He added that there’s an absence of a policy to subsidise banks to distribute social grants and no procurement process in place to contract banks. Without policies in place, Sassa “is not in a position to subsidise any bank account”.
A Barclay’s Africa spokesperson said it’s working with government to ensure social grant beneficiaries use its services. “Absa has always been willing to be part of the solution in terms of ensuring that grants are distributed. As a financial services company with a footprint across the country, we have the infrastructure to deliver this critical service to those who need it.”
Nedbank’s Joanne Isaacs said it is also still committed to working with Sassa. “Nedbank already has existing products aimed at inclusive banking. We continue to position these products to Sassa beneficiaries and will work with Sassa on any future needs.”
FNB Consumer Core Banking CEO Ryan Prozesky said Sassa beneficiaries can elect to receive their grants through its pay-asyou-use Easy account. He added that by June 2018, grant beneficiaries will be able to access their money through a mobile bank account, with no monthly fees.
At least three banks – Standard Bank, Barclays Africa and Nedbank – have engaged Sassa since 2014 about their inclusion in the grants payment network.
However, Sassa’s mismanagement under former Social Development Minister Bathabile Dlamini and its onerous tender requirements have discouraged the banking sector.