1. Social Pension Payments: South Africa
Sarah Rotman
April 10, 2013

2. Agenda
1. Payment Methods up to March 2012
2. Messy Procurement
3. New Payment Method as of March 2012
4. Recipient Experience
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3. South Africa’s Social Security Administration (SASSA)
• SASSA implements and pays various unconditional cash
transfers that reach 9 million recipients (30% of the
population)
• Old Age Grant
• Child Support Grant
• Disability Grant
• Foster Child Grant
• Care Dependency Grant
• Grant in Aid
• War Veterans Grant
• Old Age Grant
• Targets elderly over 60
• Eligibility determined by means test
• 140 USD (R1200) paid monthly
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4. Payment Methods up to March 2012
Payment Instrument Cash Limited-Purpose Instrument General-Purpose Instrument
Form of Payment --
• Cash-based services (CBS
payments): recipients access
a card-based electronic store
of value at pay points to
receive their cash payment
• Direct deposit to existing
bank accounts (ACB
payments)
Providers --
• Specific payment providers
that offer store-of-value via
smart cards, but no additional
fund deposits and use only at
dedicated pay points
• Net1, Empilweni
• Banks that offer magnetic-
stripe cards linked to
accounts
• Mainstream bank accounts
• Sekulula account offered by
AllPay, a subsidiary of ABSA
Bank
Percentage of recipients -- 41% 59%
Cost -- $4.46 $2.03 or $0.10
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Source: “Social Cash Transfers and Financial Inclusion: Evidence from Four Countries.” Focus Note 77. CGAP, February 2012

5. Provider:
Instrument:
Withdrawal: Any ATM (no
differential pricing) use
at POS
Account:
Selection:
ABSA/AllPay
Sekulula Account
Debit card
Default option in 3/7
provinces
All major banks
Any ATM (no
differential pricing) use
at POS
Standard bank
account (Mzansi
“basic account”)
Debit card
Customer must opt to
be paid into an
account at any bank
Net1 Aplitec
Closed loop of
proprietary biometric
pay points
Limited Purpose
Account
Biometric smart card
Default option in 3/7
provinces
Source: BFA (2006,2008); CGAP (2012)
Another Overview of Payment Methods
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6. Overview of Costs of Payments
Overview of Costs South Africa
Average grant per recipient $144.7
Weighted average fee per payment $3.50
As % of average grant 2.4
Cost by type of instrument:
Cash payment N/A
Limited-purpose instrument $4.46
Mainstream financial account $2.03 or $0.10*
* $0.10 is the fee paid by SASSA to make a bulk electronic transfer into client bank
accounts via the Automated Clearing Bureau; the recipient then pays any costs associated
with using the account directly.
Source: CGAP (2012)
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7. South Africa compared to other leading countries
Source: CGAP (2012)
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8. Agenda
1. Payment Methods up to March 2012
2. Messy Procurement
3. New Payment Method as of March 2012
4. Recipient Experience
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9. South Africa’s Messy Procurement Story
2007 - New tender to consolidate
payment arrangements in all 9
provinces
October 2008 – SASSA cancelled the
tender citing irregularities in the
process
2009 – SASSA entered into agreement
with South African Post Offices without
a tender process being followed; one of
the bidders (Net1) sued SASSA;
SASSA lost the case and set aside the
Post Office contract; case referred to
Supreme Court of Appeals and
reversed the lower court’s findings
May 2011 – New tender process
launched, but existing contract
extended past September 2011
deadline
June 2011 – Net1 asked Constitutional
Court to hear the case, which was
declined
January 2012 – New tender awarded to
Cash Payment Services (Net1); tender
worth about R10bn for a five-year
period
February 2012 - ABSA AllPay
challenged the tender process
August 2012 - Judge declared the
process invalid, but for practical
reasons did not set aside the
agreement between the SASSA and
CPS (Net1)
March 2013: Net1 has decided to sue
AllPay for allegedly injuring its
reputation
Source: CGAP G2P Research Project: South Africa Country Report, October 2011
http://www.itweb.co.za/index.php?option=com_content&view=article&id=62814
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10. 10
Source: http://www.iol.co.za/news/crime-courts/awarding-of-social-grants-tender-illegal-invalid-1.1371727#.UEJDImthiSM
South Africa’s Messy Procurement Story
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11. Agenda
1. Payment Methods up to March 2012
2. Messy Procurement
3. New Payment Method as of March 2012
4. Recipient Experience
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12. Payment Arrangement as of March 2012
12Source: “The Payment Experience of Social Grant Beneficiaries.” FinMark Trust, April 2012
• All beneficiaries receiving social grants will be re-
registered on a new biometric based payment system.
• All beneficiaries will be issued with a SASSA branded
smart card. The SASSA card is a MasterCard which
can be used anywhere including merchants, points of
sale and ATMs. If the card is used outside of the
merchants supported by the payments system,
beneficiaries will pay a fee.

13. Agenda
1. Payment Methods up to March 2012
2. Messy Procurement
3. New Payment Method as of March 2012
4. Recipient Experience
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14. Recipient Experience under Former Payment Arrangement
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• High levels of satisfaction, whether using electronic
payments or cash payment but for different reasons
• Those who receive grants in cash like this method
because they save money on transport and bank fees,
but dislike having to be at the cash point at a particular
time and express concerns about security of cash
collection
• Those who receive grants through bank account like
this method because it provides greater flexibility, but
complain about fees
• Unlike other countries in our initial study, use of bank
payment option appears to be driven by demand
based on convenience and cost.
Source: FinMark Trust 2012; CGAP 2012

15. Recipient Quotes
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• “It’s advantageous to get your money as cash
because you won’t pay for transport to town which
goes up every now and again.”
• “The problem with cash recipients is that you have to
wake up early to catch the line and wait for about
three hours before the money truck comes.”
• “There’s nothing as pleasing as knowing that you will
get your money wherever you are. When receiving
from the bank you do not have to come back home to
get your money.”
• “There’s no way you can leave money in the account
because it is swallowed by bank fees every time.”
Source: FinMark Trust 2012; CGAP 2012

16. Advancing financial inclusion to improve the lives of the poor
www.cgap.org 16