Ten million: that’s how many active South African Social Security Agency (Sassa) debit cards are in use by recipients of social grants across South Africa.

This is according to an announcement made yesterday in Pretoria, South Africa where MasterCard and Sassa marked this milestone for the project, following the introduction of a biometric grant disbursement system in March 2012.

The two organisations said the milestone also marks the conclusion of the ‘re-registration phase’ of the project, with social grant beneficiaries having received their MasterCard debit cards with biometric functionality, issued by Grindrod Bank in association with SASS and Net1 UEPS Technologies.

Since March 2012, just under 22 million South African social grant beneficiaries have re-registered onto the updated system introduced by Sassa.

As part of the re-registration process, each recipient has a bank account opened for them, which is offered free of monthly charges by Grindrod Bank.

Recipients can then deposit funds into their bank account via electronic funds transfer (EFT) or third party bank transfer.

The Sassa debit card can also be used anywhere MasterCard pay points in South Africa. And grant recipients can make purchases, check their account balances and withdraw cash at till points without incurring transaction charges at selected South African retailers.

Recipients can also withdraw cash at any ATM, which does however attract transaction charges, Sassa and Mastercard officials said. Multiple grant beneficiaries can also be loaded onto a single SASSA Debit MasterCard card.

In a statement, Mastercard and Sassa said a key feature of the SASSA card’s biometric functionality, though, is that it identifies social grant recipients using biometrics such as fingerprints, voice and other personal information.

This feature, in turn, is intended to minimise fraudulent grant applications and collections, and reduce grant administration costs by distributing all grant payments electronically. The system has been further introduced to reduce the dependence on cash payments as well.

“A key driver of the new system was to put stringent measures in place for SASSA to ensure that only qualifying grant recipients – those really in need – are authorised to receive one of seven grants that SASSA offers,” explained Virginia Petersen, the chief executive officer of SASSA (pictured left).

“Between April 2012 and June 2013, over 150,000 grants were cancelled, which has led to a saving of R150 million (about $15.1 million) per annum,” Petersen added.

Sassa said that moving to electronic payments has also saved it money in terms of grant administration costs.

Before March 2012, Sassa said it cost on average R33 ($3.33) per grant to pay beneficiaries. Under the updated system, disbursement costs have been capped at R16.44 ($1.66) per payment, Sassa explained.

The system has also boosted South Africa’s banked population, said Sassa and Mastercard.

Between March 2012 and July 2012, the SASSA Debit MasterCard card was cited as the ‘main contributing factor’ to the 4% growth in the country’s banked population from 63% in 2011, to 67% in 2012, according to the FinScope South Africa 2012 survey.

As at July 2012, 2.5 million SASSA MasterCard cards had been issued to grant recipients. Since then an additional 7.5 million cards have been issued to grant recipients.

And to mark the milestone of 10 million cards, Ann Cairns, president of international markets for MasterCard (pictured right), also presented SASSA with a commemorative award to acknowledge SASSA’s “world-leading” social grants payment programme.

“By supporting the South African government in the implementation of a cost-effective electronic payments programme, we are helping them save money, improve efficiencies and prevent fraud,” said Cairns.

“More importantly, we are opening up a world of financial inclusion to millions of South Africans who haven’t previously had access to traditional financial services.”

Similar systems to that of Sassa debit card are planned to be introduced by Mastercard in markets such as Nigeria and India as well, Cairns said at the briefing.

Net1 struggles to shake off controversy

Earlier this year, South Africa’s Supreme Court of Appeal ruled that Net1 UEPS Technologies - one of the key partners involved in the social security grants payments system - was not fraudulently awarded a contract by the South African government.

The court case came about following allegations by Absa company, AllPay, of tender manipulation and bribery.
South Africa’s special investigating unit, the Hawks, have also said that they are not investigating Net1 anymore.

However, reports have said Net1 is under the watch of the US Department of Justice, which has been investigating allegations by losing bidder AllPay. The US has interests in Net1 owing to the company being listed on the Nasdaq stock market.

To potentially add to Net1 woes, a MoneyWeb report has emerged this month that has alleged illegal loan repayments have been deducted directly off the City of Pretoria’s payroll after a division of Net1 called Fihrst, the city’s payroll administrator, entered into a contractual agreement with a micro-lender Propratt.

The agreement is reported to allow the micro-lender to deduct monies from the salaries of employees before it is paid into their bank accounts.