The South African Social Security Agency (SASSA) and the South African Post Office have signed an agreement Photo: Facebook
DURBAN - The South African Social Security Agency (Sassa) and the South African Post Office have signed an agreement regarding the distribution of social grants.

A hybrid model that will have the Post Office work with commercial banks to give out social grants will be implemented in place of the Cash Paymaster Services (CPS) contract which will expire next year.

In January, the hybrid model was turned down by a team which included various government officials, the Reserve Bank, Sassa and the national Treasury.

Sassa eventually reverted back to the hybrid model intitaly shot down.

The Minister in the Presidency, Jeff Radebe, announced the deal between Sapo and Sassa on Sunday. There, however, have been doubts about the ability of Sapo to become a paymaster within the allocated time frame.

February 2018 is the deadline to phase out CPS which deemed invalid by the Constitutional Court in March 2017.

Sassa's next deadline is March 18, 2018; by which the agency will have had to transfer the personal data of Sassa beneficiaries to the Post Office. The transferring includes enrolling the beneficiaries biometric data, producing new cards that they will use to collect their social grants and integrating the Post Office's branches in South Africa with Sassa pay points.

The Post Office already operates Post Bank which has 5,8 million clients with savings accounts. According to the signed service agreement, the Post Office will not have not have absolute rights to distribution of the social grants.

Under the agreement, the Post Office will offer banking services through their branches to for social grant payments, for the next six years, until 2023.

The major operations of the Post Office would include the production and the distribution of the new payment cards, handling the biometric authentication of new and existing beneficiaries and creating new social grants payment software in association with State Information Technology Agency and the Council for Scientific and Industrial Research.

CEO of the Post Office, Max Barnes, had earlier said that its offering would be affordable for fiscus. Sassa pays CPS R14,42 per social grant recipient including vat and the Post Office has proposed charge of R12,41 including vat for its branch services.

In the new service agreement, commercial banks will have a support services role. Sassa's intends on encouraging all commercial banks to create low-cost bank accounts that beneficiaries would utilise at ATM's or retail outlets to withdraw their social grants.

As it is 1,4 million Sassa beneficiaries currently get their social grants from commercial banks.

Unless the National Treasury allows Sassa a deviation from going through the procedure of an open tender to acquire the services of commercial banks, the phasing out of the CPS may be drawn out.

There has also been some questions regarding the acceptance of expired Sassa cards. Grindrod Bank has announced that will continue to accept Sassa card that have a 31 December 2017 expiry date.

Grindrod Bank has asked all merchants to take theses Sassa cards at the points of presence because they have been tested by Mastercard Acquirers. Sassa cards distributed by Grindrod Bank will continue to be in operation post the expiration date without any negative effects.