News24.com | Shabangu outlines ‘migration strategy‘ away from CPS

Social Development Minister Susan Shabangu has outlined to the Constitutional Court her plans to migrate the South African Social Security Agency (Sassa) away from its dependency on Cash Paymaster Services (CPS) to deliver cash grants to beneficiaries.

Sassa is still locked in its marriage of convenience with CPS, currently the only service provider with the tools to deliver more than 2 million cash grants to beneficiaries.

This is approximately just more than a quarter of the grants scheme. The other 75% is handled electronically through the banking system, through various merchants and retailers, or new service provider the South African Post Office (SAPO).

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On Thursday, Shabangu filed her latest monthly report to the court, indicating her department‘s progress in finding an alternative to CPS‘s cash portion of the scheme before the September 30 deadline.

She had cancelled a tender last month to find a replacement for CPS, opting for a “migration strategy” to decrease the dependency on a service provider to deliver cash.

“The primary objective is to ensure that all the current cash recipients of social grants receive new SAPO/Sassa cards by August 31,” her report outlines.

From 2.2 million to 800 000

In doing so, Sassa hopes to transfer 2.2 million beneficiaries, currently dependent on CPS‘s delivery of cash grants, onto the Post Office system.

Sassa and SAPO are finalising a card-swapping strategy to manage the transfer from the old Grindrod Bank card to the new SAPO/Sassa card.

In doing so, Sassa will:

– Transfer more than 6 million beneficiaries to electronic payments;
– One million beneficiaries will be paid by SAPO merchants or agents; and
– 890 000 beneficiaries will be paid cash at over-the-counter services at SAPO branches.

“As the number of cash beneficiaries is reduced, the number of current Sassa cash pay points will also be reduced.”

The plans will leave roughly 800 000 beneficiaries still dependent on straight cash by the end of the process.

From 8000 pay points to 850 SAPO branches

The strategy will lead to current cash beneficiaries, who use more than 8 000 Sassa pay points, being transferred to SAPO‘s 856 branches, of which 396 are within a five-kilometre radius from existing Sassa cash pay points.

“In addition, the strategy is inclusive of confirmed availability of 1 070 banking infrastructure and 1 638 merchants in the National Payment System that are in close proximity to existing Sassa pay points.

“As such, those beneficiaries who are unable to access any of the 856 SAPO branches will be channelled to these merchants and/or banking infrastructure.”

Her department is planning a nationwide media strategy from June 1 to communicate the changes to those affected and to assist with those requiring disability assistance.

She also updated the court on the setting up of a “technical committee”, revealed earlier this month, that will advise on the migration of cash beneficiaries.

The seven-person committee will assist in finding an alternative for the remaining 800 000 beneficiaries still dependent on cash before the end of the deadline.

No plans have yet been mentioned of readvertising a tender for a service provider to assist with those remaining beneficiaries.

CPS makes June payments, but future fee still up in the air

Meanwhile, on Thursday, the Constitutional Court ordered CPS and National Treasury to come to an arrangement regarding an appropriate fee paid per cash transaction for the remainder of CPS‘s contract, reported.

Treasury initially offered R44.35 per beneficiary to CPS on April 30. CPS has since lowered its demand from upwards of R60 per beneficiary to R45 per beneficiary.

Net1 CEO Herman Kotze told various journalists on Thursday that CPS would continue to distribute cash grants for the month of June. Net1 is the parent company of CPS.

The company however, is out of reserves and the new prospective deal will govern the remainder of the CPS contract until September 30.

CPS wants a deal that will cover its fixed operational costs, since the number of beneficiaries they serve will continue to decrease as a result of the migration strategy.

In the interim, the court ordered that CPS should invoice Sassa for work done since April 1 at R14.42 per beneficiary, exclusive of VAT.

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