South African Social Security Turning to Mobile Payments?

June 26, 2018         By: Steven Anderson

We all know that mobile payments mean convenience for the end user, and these days, that’s a valuable point unto itself. In fact, it’s so valuable that some government agencies are looking to use mobile payments as a way to disburse grants to recipients. That’s exactly what’s going on with the South African Social Security Administration (SASSA), who’s looking more closely at mobile payments-based grant payments.

It’s not the first time such a move has been considered; back in 2016, both Vodacom and MTN were involved in mobile money in the region, but pulled out and shut down said offerings. The duo had found success in other markets, but South Africa proved a problem as there was a comparatively high rate of banking use involved. Since much of Africa is unbanked, except South Africa, there was a distinct problem there.

Fast forward to the modern day, where SASSA is facing a problem; Net1’s Cash Paymaster Services are planning to give up control in September, and that’s got SASSA scrambling for a new way to pay out its social grants to the 17 million South Africans who use them. Mobile money is jumping to the top of the list, and word is that SASSA has already made some moves on that front.

While the measures have been gradual so far, they are working; last month, 2.5 million users received grants by cash at SASSA paypoints, and that number is down to 1.9 million this month. SASSA intends to continue to push for further reductions every month clear through to September.  

Such a move would likely reduce SASSA’s costs; while paying out cash directly is a cost that wouldn’t change much, the costs of needing to maintain paypoints is a cost that can be reduced. That would certainly give SASSA’s budget a hand up and might even result in some tax cuts for the taxpayers who make such grants possible. We’ve already seen mobile payments work on gear nowhere near state of the art, so that’s a further plus in infrastructure need.

It’s not ready for prime time yet, but SASSA may be on to something here; cards, stamps…these things cost money. A few digits on a phone display cost much less yet do the same good.