Johannesburg - Electronic payments provider Net1 UEPS Technologies [JSE:NT1], holding company of Cash Paymaster Services (CPS) which currently manages the payout of social grants in South Africa, posted revenue of $64m (about R870m) from its SA transaction processing in the third quarter of 2017.
This is an increase of 26% compared to the same period last year and an increase of 6% on a constant currency basis. According to Net1, the favourable impact of the weakening of the dollar against the rand during the third quarter positively impacted its results.
The payout of social grants faced a crisis earlier this year when the South Africa Social Security Agency (Sassa) admitted it was not ready to assume the payment function itself by April 1, as previously planned.
In 2014, the Constitutional Court declared the R10bn grant payments tender run by CPS invalid amid irregularities in the awarding of the deal. The court ordered Sassa to reissue the tender process, which Net1 ultimately decided not to participate in. But Sassa ended up not awarding a new contract as it said the bids it received were non-compliant.
Sassa subsequently said it would take over the payment function of grants but then, earlier this year, conceded that it wasn’t ready. The crisis was averted when the Constitutional Court suspended its previous order for 12 months in order to provide time for Sassa to put an alternative in place.
Net1 CEO Serge Belamant said on Friday the company faced challenges after “public attacks” in SA.
"The last few months have been challenging, aggravated by the tarnishing of our reputation and questioning of our business practices due to frivolous and unsubstantiated public attacks,” said Belamant.
“Although we devoted a substantial amount of time to manage these issues, we believe that we have made sufficient progress towards the finalisation of our South African and international expansion strategy."
He pointed out that the company continues with the distribution of government grants in South Africa, in line with an order by the Constitutional Court.
"We remain willing to support a smooth transition to Sassa or whomever they determine to be the most suitable service provider when our current contract expires. In the interim, we continue to provide seamless and timely access to grants for beneficiaries," said Belamant.
In his opinion Net1's technology saves the SA government an estimated R2bn per year through the identification and removal of fraudulent beneficiaries.
"In South Africa Net1 will partner, invest in or acquire the right institutions to expand its addressable market and fuel innovation, which in turn will lead to the creation of new products and business models," said Belamant.
Overall, Net1, which is also listed on the Nasdaq, reported revenue of $147.9m from global operations in the third quarter of 2017. This is an increase of 10% compared to the third quarter of last year and down 8% in constant currency terms. Fundamental net income was $23.5m - an increase of 19% compared to the third quarter of last year and down 1% in constant currency terms.Read Fin24's top stories trending on Twitter: Fin24’s top stories