CPS to provide biometric authentication services for South African social grant beneficiaries

March 9, 2017 - 

Cash Paymaster Services (CPS), a subsidiary of Net1 UEPS, have agreed to the terms of a two-year contract with South African Social Security Agency (Sassa) to provide biometric authentication of beneficiaries for enrolment and payment, according to a report by Business Day.

The agreement was finalized in spite of Sassa’s commitment to the Constitutional Court that the duration of the new contract would not span beyond one year, according to a report by GroundUp.

Net1 CEO Serge Belamant said the contract was for two years at a fixed price based on the inflation rate.

Last week, Tim Masela, head of the Reserve Bank’s national payment system department, presented to the parliament’s social development committee on how the social-grants payments system works.

Social grant beneficiaries receive payments using a biometric-enabled smart card that can operate in the national payment system.

Sassa and Net1 capture the biometrics data of beneficiaries during the registration process. Beneficiaries can then open an account with Grindrod Bank where they will be issued a MasterCard-endorsed debit card that features pin and/or Net1 biometric capability.

Sassa then authorizes the identity of the beneficiary on its own database using fingerprint biometrics and voice biometrics.

In order for the R11 billion (US$837 million) in monthly grants to be paid, Treasury releases funds into a Sassa account with Nedbank, Masela said.

Next, the funds are transferred from a Net1 account to Grindrod Bank beneficiary accounts, with a small portion of the total grant payments transferred to other bank accounts.

Approximately 60 percent of all grant beneficiaries are provided with access to banking infrastructure, while the remainder rely on cash paypoints using biometric verification for payments. Roughly three to four million Africans use CPS cash paypoints.

Beneficiaries will be able to withdraw cash from their Grindrod bank accounts and ATMs of other banks, along with point of sale devices and through retailers’ CPS “closed loop”.

CPS initially won the contract based on it being the only operator capable of using biometric verification for enrolment and payment.

However, several critics such as DA social development spokesman Bridget Masango, have said that requirement was only added after the tender process to ensure that CPS would win the contract.

Masango said the capability is not necessary because banks offer other verification methods for their clients.

CPS will continue to pay grants for two more years while Sassa establishes its alternative systems.

Meanwhile, Sassa, Treasury and the Reserve Bank have all agreed on a medium-term plan, but not on the long-term plan for payments.

There is also a medium-term plan for payments to be facilitated through the banking infrastructure where an external service provider will be brought in to serve those beneficiaries who use the cash paypoints. Sassa will have limited involvement in the payment system.

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About Justin Lee

Justin Lee has been a contributor with Biometric Update since 2014. Previously, he was a staff writer for web hosting magazine and website, theWHIR. For more than a decade, Justin has written for various publications on issues relating to technology, arts and culture, and entertainment. Follow him on Twitter @BiometricJustin.