JOHANNESBURG - One of the biggest challenges facing the payment of social grants has been the adoption of an effective, safe and reliable system.
When it comes to the government and its spending, it has to be a system that is affordable, saves money for the government and still achieves its goal of distributing social grants to every registered citizen.
Currently, the South African Social Security Agency (Sassa), through its new contract with the Post Office, pays R20 for each beneficiary - an increase from the R16 charged by the previous service provider, Cash Paymaster Services.
With just more than 17 million beneficiaries in the system, and depending on how you look at it, these could be seen as exorbitant fees.
With all our socio-economic challenges, every cent matters and requires us to find or build innovative systems that not only save money for the government, but makes money for the government.
Mobile money can achieve this.
According to South African Banking Risk Information Centre, the total debit card fraud over the seven years since 2010 totalled R1.97billion and most of these transactions are fraudulent cash withdrawals at ATMs. The technology mobile brings could avert this catastrophe and deliver technology that protects people and their money.
GDMA Intelligence Mobile Economy reports that South Africa, as of 2016, has about 37million unique mobile subscribers with more than 80million connections. The high number of connections could be because of people who own more than one SIM card.
And as of 2017, the Google Connected Consumer Survey said 60percent of South Africans use a smartphone.
Feature phones still (like the rest of the continent) rule South Africa, making up 56percent of the African market share as reported by the International Data Corporation, IDC.
The challenge the current card payment system poses is that of risk, fraud and accessibility.
It is also very expensive for the government and in a way a system that does not speak to the future of payments.
Mobile money is an inevitable system and it would be prudent of Sassa to not just prepare for it, but to adopt it as another option.
Almost every South African owns a cellphone handset and the growth of instant money services such as eWallet attest to the fact that mobile money is the future of payments.
For this to succeed, it also needs big retailers and businesses to adopt it as a form of payment without a person cashing out hard cash first.
If Sassa could adopt a mobile money system the benefits would include cutting down on fraud, eliminating loan sharks, eliminating illegal and unauthorised debit orders, collecting data on purchases and empowering local businesses to name a few.
Regarding unauthorised debit orders or withdrawals, for example, it will be impossible to link a debit order from a mobile money account or to withdraw funds without the account owner's consent. And even if the owner accidentally approves a transaction it can be reversed without any money lost.
One of the biggest issues around the grant payments is the fact that people are claiming grants for child support but the money is spent on products that do not support the child.
Support
A mobile money solution could assure that the money allocated to child support is only spent on the child and its needs. All attempts to buy unapproved products or services will be declined. Unlike a card transaction, with mobile, money never leaves the system until its withdrawn or transferred to an account outside of the mobile money ecosystem.
Because of this, the flow of money can be monitored, controlled and reversed if needed with minimal effort and with little to no cost. In the event of a phone being lost or stolen or a SIM card cloned, the money is still safe.
All transactions can be protected with multiple authentication methods. And even if someone bypasses all these security methods the money is still safe money as it does not leave the system until its withdrawn.
As mentioned by President Cyril Ramaphosa, it’s time we lent a hand. It’s time we started helping people.
Sassa was introduced by the late minister Dr Zola Skweyiya to protect those who are vulnerable from abject poverty, but the system has been used and abused by criminals and officials for personal gain. It is time we introduced a system that makes it possible to track every cent, protect people from criminals and at the same time empower local businesses through data and consumer behaviour.
The government should stop looking at foreign products as solutions and work with local companies to provide solutions that really empower our people.
As South Africans, we can all benefit from the comfort of mobile money
Johan Meyer is the chief executive of Wallettec, a mobile payment solutions and mobile payment integration company.
The views expressed here are not necessarily those of Independent Media.
-BUSINESS REPORT