CPS contract extended to ensure continuity of South Africa’s social grant payments CPS contract extended to ensure continuity of South Africa’s social grant payments

CPS contract extended to ensure continuity of South Africa’s social grant payments
26 Jan 2018

Net1 subsidiary Cash Paymaster Services (CPS) is likely to remain involved in distributing social grants in South Africa for several months after its contract expires in March.

According to the services agreement between the South African Social Security Agency (Sassa) and the South African Post Office, seen by Business Day, there will be a "phased migration" period lasting until 30 September, during which CPS will gradually hand over its responsibilities to the Post Office.

The five-year agreement is designed to ensure that social grants continue to be paid to beneficiaries after Sassa’s arrangement with CPS expires on 31 March. The deal will cost ZAR2.25 billion (US$183 million) in the first year in line with the figure CPS proposed in 2017.

CPS told the Constitutional Court in March last year that its proposed fee to distribute social grants over two years was ZAR4.7 billion (US$380 million), or ZAR2.35 billion (US$190 million) a year.

According to Business Live, Sassa’s deal with the Post Office involves a hybrid model that allows the country’s 17 million social grant beneficiaries to choose their preferred payment method. Options include Postbank, commercial bank accounts, merchants in large retail shops and a "second tier" of merchants comprising village banks, general dealers, small retailers and spaza shops.

The aim is to reduce the number of beneficiaries using cash pay-points, which are expensive and pose security challenges. The Post Office will be able to purchase or procure replacement cash-dispensing equipment currently provided by CPS, in consultation with Sassa. Net1 owns the technology used to pay the grants, while the equipment belongs to CPS.

Net1 said that after its contract expires, the technology and equipment used for distributing grants will be redeployed to other business ventures. But it will also consider a request by the Post Office to use its technology and equipment “in accordance with our business strategy”.

Net1 said Sassa already has all the required beneficiary information to ensure a smooth handover.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

Net1 subsidiary Cash Paymaster Services (CPS) is likely to remain involved in distributing social grants in South Africa for several months after its contract expires in March.

According to the services agreement between the South African Social Security Agency (Sassa) and the South African Post Office, seen by Business Day, there will be a "phased migration" period lasting until 30 September, during which CPS will gradually hand over its responsibilities to the Post Office.

The five-year agreement is designed to ensure that social grants continue to be paid to beneficiaries after Sassa’s arrangement with CPS expires on 31 March. The deal will cost ZAR2.25 billion (US$183 million) in the first year in line with the figure CPS proposed in 2017.

CPS told the Constitutional Court in March last year that its proposed fee to distribute social grants over two years was ZAR4.7 billion (US$380 million), or ZAR2.35 billion (US$190 million) a year.

According to Business Live, Sassa’s deal with the Post Office involves a hybrid model that allows the country’s 17 million social grant beneficiaries to choose their preferred payment method. Options include Postbank, commercial bank accounts, merchants in large retail shops and a "second tier" of merchants comprising village banks, general dealers, small retailers and spaza shops.

The aim is to reduce the number of beneficiaries using cash pay-points, which are expensive and pose security challenges. The Post Office will be able to purchase or procure replacement cash-dispensing equipment currently provided by CPS, in consultation with Sassa. Net1 owns the technology used to pay the grants, while the equipment belongs to CPS.

Net1 said that after its contract expires, the technology and equipment used for distributing grants will be redeployed to other business ventures. But it will also consider a request by the Post Office to use its technology and equipment “in accordance with our business strategy”.

Net1 said Sassa already has all the required beneficiary information to ensure a smooth handover.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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