The South Africa Social Security Agency (SASSA) and the South African Post Office (SAPO) have announced their readiness to commence the payment of social grants to more than 5.7 million social grant beneficiaries from 1 April 2018.
This is according to a report by GCIS.
"We are pleased to announce a significant state of readiness for SAPO to commence payments of social grants and assure South Africans that social grants will be paid from 1 April 2018," acting SASSA CEO Pearl Bhengu said on Thursday.
Bhengu said SASSA has implemented a pilot project that began in January through direct payments into commercial bank accounts - and this has gone well so far.
SASSA says it has made direct payments to more than 2.3 million beneficiaries for the month of March 2018 and this number will be increased further in April 2018.
Testing for direct payments to beneficiaries, who receive money through the SASSA payment card, was done for 100 000 beneficiaries for the March 2018 payment period, Bhengu said.
"In April, a total of 5.7 million beneficiaries transacting through the SASSA Payment Card will be paid directly by SASSA without the assistance of Cash Paymaster Services (CPS). In essence, by 1 April 2018, SASSA would have paid approximately 7.7 million of the 10.7 million beneficiaries directly," Bhengu said.
SASSA also intends depositing money into the cards of beneficiaries who receive their social grants in cash from pay points.
Bhengu said the only support that will be required for these approximately 2.8 million beneficiaries is the distribution of cash at the pay points.
"All the above transfers will be made directly from SASSA's own PMG account, which operates within the SA Reserve Bank environment."
Bank accounts opened for beneficiaries
In a joint media briefing with SAPO CEO, Mark Barnes, Bhengu assured that payments will be made without major interruption.
"SAPO is ready to open accounts for SASSA grants beneficiaries from 3 April 2018. The testing of the bulk account opening process, with a sample of 1 000 existing SASSA beneficiaries' data, was seamlessly concluded in February 2018," Barnes said.
The special disbursement account has the following features:
No deductions; free cash withdrawals; one free balance enquiry per month; one free mini-statement per month; free full statement covering up to a maximum of three months on demand and a free first replacement card.
Given the participation of Postbank in the payment system, Barnes said an increasing number of beneficiaries have also already opened Postbank accounts between January and February 2018, exercising one of the key choice options of the hybrid model.
"Some of these beneficiaries have already received their March social grants via Postbank," he said.
SASSA and SAPO also indicated that they are starting to phase in a process where, if a current SASSA pay-point is within 5km of a Post Office branch and the post office branch meets the minimum norms and standards, then the post office will take over the cash payments of that pay point.
In the past, SASSA relied on the services of CPS to pay 10.7 million beneficiaries through cash payments, direct deposits and electronic payments. However, the contract was declared invalid in 2014, but the Constitutional Court in 2017 extended it to ensure grants continue being paid.
The extension expires at the end of March when the Post Office is meant to take over payments.
SASSA has asked for a further extension of this contract for an extra six months because the Post Office would be unable to take over cash payment services of social grants at the moment to about 2.8 million people - a service currently provided by CPS.
"The 2.8 million social grant beneficiaries are paid in cash at SASSA pay points on their normal individual payment dates. It is for the actual distribution of cash where SASSA still requires support," said Bhengu, adding that it was for this reason they brought a limited application to the Constitutional Court.
Bhengu said SASSA is in the process of appointing a cash payments service provider, who will distribute social grants using the new SASSA-SAPO card at all pay points across the country.
Contingency plans
SASSA, through National Treasury and the South African Reserve Bank, is also in talks with commercial banks for the establishment of a low-cost account for social grants beneficiaries who receive their money directly into their personal bank accounts.
Furthermore, SASSA is currently engaging 27 accredited cooperative financial institutions that may be used in the future to pay social grants.
Bhengu said should the Constitutional Court decline their proposal for a further extension of the contract with CPS, the agency has a contingency plan in place involving the SA Reserve Bank (SARB).
SASSA has an account with the SARB and will use the account to make cash transfers to beneficiaries.
SASSA and SAPO believe that their partnership will enable the development of an integrated grant payment system.
This will be a significant milestone on the roadmap of in-sourcing the grant payment function in the near future. The integrated payment system will be convenient, easy to use and accessible to all social grant beneficiaries. It will also go a long way towards reducing fraud and corruption associated with the payment of social grants.
Social grant beneficiaries can currently choose between three methods of payment: cash payment, merchant or supermarkets and through personal bank accounts.
All SASSA cards still functional
The agency has reiterated that all SASSA cards will continue to work.
"Beneficiaries using the old SASSA card may continue to do so until 30 September 2018. We will soon introduce the new SASSA cards via the Post Office and beneficiaries will be informed about the process to be followed," said Bhengu.
The new card will be progressively introduced over the period from April to 30 September 2018, when it is expected that the current SASSA card will no longer be in circulation at all.
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