It's official: Post Office, banks to deliver grants in hybrid model

2017-12-10 11:15
Minister in the Presidency Jeff Radebe. (Photo: GCIS)

Minister in the Presidency Jeff Radebe. (Photo: GCIS)

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Cape Town - The South African Post Office will handle core functions of a new social grants system, while commercial banks will play an increased, direct role for more than 2 million beneficiaries.

The inter-ministerial committee on social security, headed by Minister Jeff Radebe, announced on Sunday that a "landmark" deal had been signed with SAPO to handle core functions of a new system.

The deal was signed on Thursday, December 7, and emphasises the hybrid nature of the new model, but with the Post Office providing the following:

- central holding account for electronic services
- on-boarding of new beneficiaries
- biometric authentication
- develop IT system

It will also provide cash pay points at its outlets.

Hybrid model

The Post Office does not have exclusive rights over the system, however.

Radebe announced that there will be an increased role for commercial banks and retailers, to give beneficiaries more choice.

For the more than 2 million people who receive their grants electronically, the money will be deposited directly into their commercial bank accounts from January 1, 2018.

Beneficiary account details have been verified and reconciled by Sassa.

A special, low cost bank account is also being developed for those who want to move over to the banking sector, rather than rely on the Post Office or cash payments.

The current Sassa card, provided by Grindrod Bank, has been extended by one year, and will not expire in December 2017.

Cash payments delivered in rural areas for 2.9 million people (29%) will continue to use the current cash payment method.

Incumbent service provider Cash Paymaster Services will not have direct control over this process come April 1, 2018.

Sassa will go out on tender to find a new service provider to handle the cash payments portion of the grant system.

A communication plan has also been developed which will utilise broadcast, social media, government channels and media networks to communicate the message to the public.

Beneficiary data

In summary, there will be four key channels through which grants will be paid under the hybrid model:

- Direct payments into commercial bank accounts,
- Payments into new or existing Post Office bank accounts,
- Payments through merchants in large, retail shops,
- Payments at second tier vendors, such as (legally-recognized) Spaza shops, general dealers, village banks and small retailers.

The 5 million beneficiaries who use Grindrod Bank accounts under the current system will be given the option of transferring to their commercial accounts or a Post Office account.

Questions still remain around the securing of beneficiary data.

The migration of the data from CPS to Sassa is still ongoing, and there is no indication yet if CPS has been ordered to destroy its database upon completion.

The issue of legal deductions, which sparked the court challenge against the CPS deal by NGO Black Sash, is currently before the High Court in Pretoria.

Sassa indicated in May it intended to appeal the court's ruling that deductions were still commercially legal.

Read more on:    social grant crisis  |  sassa  |  grants

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