South African welfare agency issues biometric MasterCards

August 1, 2012 - 

The South African Social Security Agency (SASSA) has teamed up with MasterCard in a bid to offer its clients biometric payment cards.

Dries Zietsman, a manager at MasterCard South Africa said: “The early success of the project rollout affirms MasterCard’s vision to create a world beyond cash, as electronic payments using debit MasterCards opens up a world of financial inclusion for many South Africans who have previously not had access to banking products.”

Since March 2012, over two and half million biometric payment cards have been issued under a contract awarded in January 2012 to Cash Paymaster Services (CPS), a subsidiary of Net1 UEPS Technologies and Grindrod Bank.

Net1’s universal electronic payment system (UEPS) includes biometrically secure, real-time, electronic transaction processing, which benefits populations in developing economies that don’t have access to regular banking facilities. The MasterCards use unique identifiers, fingerprints and other personal information, which are verified when a social grant recipient uses their payment card.

“With over 2.5 million cards already issued since rollout in March 2012, it is clear that the cards are already being widely accepted by beneficiaries who are realizing the benefits of a cashless environment,” said Zietsman.

The second phase of its contract will start in June, and will entail the issuance of MasterCards to all 9.2 million SASSA beneficiaries.

Dr. Serge Belamant, chairman and CEO of Net1 said: “Biometric information positively identifies the beneficiaries of state welfare grants and provides greater convenience, safety and security for recipients. Furthermore, it reduces the impact of fraud on government as our UEPS Biometrics solution significantly reduces unlawful collection of grants, making sure that the funds made available by the South African government to assist those in need, are received by the people who need them the most.”

The debit MasterCards can be used to pay for goods and check account balances. They can also be used to withdraw cash at ATMs and point-of-sale points for an affordable charge at participating retail outlets such as: Pick n Pay, Shoprite Checkers, and Spar.

The SASSA expects the biometric payment system to significantly reduce its operating costs, with the government saving up to US$363 million in operating costs over the next five years.

SASSA controls and manages the disbursements of 15 million social benefits to 9.2 million beneficiaries on a monthly basis. Per the 2012 South African Budget Review, spending on social grants will grow from US$12.7 billion in 2012/13 to US$14.7 billion in 2014/15.

Will the use of MasterCards to distribute welfare payments in South Africa reduce administrative costs and fraud?

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About T'ash Spenser

T’ash Spencer writes full time for She has 15 years experience in the field of regional planning and earned her Master’s of Science in Regional Development Planning and Management from the University of Dortmund, Germany. Follow her @tashspencer1.