TymeBank says the recently announced increase in the ID verification fee could worsen financial exclusion among social relief of distress SRD grant beneficiaries.
Home Affairs Minister Dr Leon Schreiber announced the verification fee hike in a statement on 24 June. It will come into effect on 1 July with the rollout of the upgraded National Population Register NPR online verification service OVS.
Banks, financial services providers and government agencies use OVS to check identities and other biographical information of their clients against the Home Affairs database.
While government agencies use OVS for free, private entities have been paying R0.15 per real-time verification since 2013. However, Home Affairs has now hiked this fee by 6,500 percent to R10 per verification.
Think about SRD grant beneficiaries: TymeBank to Home AffairsIn an opinion article published on TechCentral on Tuesday, TymeBanks chief commercial officer Cheslyn Jacobs said the bank serves many SRD grant recipients who need affordable banking.
Real-time verification also enables recipients to open a TymeBank account at a self-service kiosk, along with a bank card, within minutes.
However, this comes at a cost, which is currently R50 for onboarding one SRD customer. The verification fee increase would push this up to R75, Jacobs explained.
SRD recipients often generate less than R50/year in revenue, leading to a negative unit margin. TymeBank already subsidises these accounts by not charging monthly or minimum fees. A R10 verification fee puts this model at risk, he added.
If the bank onboarded a million SRD customers, Home Affairs verification costs alone would reach R20 million. This would make it unsustainable to serve the very people financial inclusion aims to help.
Although Home Affairs offers a cheaper overnight batch verification option for R1, it means a customer would not open an account in minutes. Instead, they would have to return the next day to complete the process once verification is finalised.