Sassa must choose a payment system urgently - Reserve Bank

2017-03-01 12:08
(Supplied)

(Supplied)

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Cape Town - Sassa needs to make a decision on its preferred system of paying out social grants to more than 17 million people, and it needs to do so urgently, the South African Reserve Bank says.

The SARB presented before Parliament's portfolio committee on social development on Wednesday on its role in assisting the transfer of the grants scheme from the current service providers.

SARB national payment head Tim Masela told the committee that Sassa now needed to focus on its core responsibility: collecting information from and communicating with the beneficiaries.

"The SARB believes that the finalisation of the architecture of the new, social grants scheme should be undertaken without further delay," Masela told MPs.

"In summary, in terms of Sassa's role, it should ideally cover its core competencies, and to prevent duplications, should make use of existing payment methods," he said, referring to banks and pay points.

"Current regulatory principles should be maintained, and an open architecture system will maintain options to beneficiaries.

"However, these choices have to be made urgently."

Won't be ready by April 1

The agency has 30 days in which to finalise a new payment system for social grant beneficiaries, and migrate all operations from current service provider Cash Paymaster Services.

The move is being hampered by the application, and subsequent withdrawal, to the Constitutional Court for Sassa to continue to work with CPS for one more year.

SARB also said it could assist in providing special bank accounts, but it is up to Sassa and the banks to approve its preferred method going forward.

Masela said the reserve bank was ready to roll out its biometric security measures for a new system, but couldn't do anything before Sassa chose a path.

It would also not be able to do it before April 1, he said.

Masela said the reserve bank was ready to approve a transitional system, but only if it was within the confines of the law.

Sassa could also potentially register as a bank if it wanted to legally handle the system in-house. Any other option would require a tender system to make payouts in rural areas.

He also said that SARB was not involved in setting up the current system with CPS in 2012.

Deductions

Another issue highlighted by the bank was the issue of deductions.

Masela said that deductions were not necessary illegal. There was scope within the law for deductions to take place, provided it was done by certified financial service providers, and all legislation was followed.

He said CPS handleed deductions before grants went into bank accounts, while smaller bank Grindrod handled debit orders after net sums were deposited in bank accounts.

He said it was the second type that had caused concern among beneficiaries, and it was that issue that was currently before the courts. He said the reserve bank was not privy to further details of those court cases.

Committee members expressed their concern about the deductions process.

Acting chairperson Hope Malgas said deductions on grants, before money is deposited, was against the law, and they "know it is not allowed".

Other MPs said Grindrod's involvement needs to be scrutinised more, and that the Reserve Bank shouldn't only focus on the four big banks.

Read more on:    reserve bank  |  sassa

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