SASSA-POSTBANK AGREEMENT: MINISTER TOLASHE ASSURES CONTINUITY OF SOCIAL GRANT PAYMENTS

By Cuma Pantshwa.

• ⁠The parliamentary portfolio committee on social development has been notified that the agreement between the South African Social Security Agency and Postbank is set to expire at the end of September 2025.
• Briefing the committee today, Minister of Social Development Sisisi Tolashe assured members this would not affect any of the beneficiaries who receive social grants through the PostBank.
• Minister Tolashe emphasised that the security and continuity of social grant payments remain a top priority, adding that payments will continue seamlessly.

Minister of Social Development, Sisisi Tolashe, together with the South African Social Security Agency (SASSA) CEO, today briefed parliament’s portfolio committee on social development on the imminent termination of the Master Services Agreement between SASSA and the Postbank.

The agreement, which governs Postbank’s role in processing social grant payments, is set to expire at the end of September 2025.

SASSA confirmed that it would not be renewed due to Postbank’s failure to meet contractual obligations, including compliance with a South African Reserve Bank variation order to replace gold cards with black cards.

The SARB has since suspended the replacement process indefinitely.

The minister provided information on the steps leading to the termination of the agreement with Postbank and delivered a presentation clarifying that the decision is a contractual and administrative matter and does not affect the payment of social grants to millions of South Africans.

“This change will not disrupt the payment of social grants to beneficiaries who bank with Postbank,” she said.

“The termination of the Master Service Agreement is a contractual matter to end an agreement that no longer serves its original purpose.

“Postbank remains a fully licensed financial institution, and beneficiaries will continue to receive their grants in their accounts, just as before. No change will occur in this regard.”

The minister cautioned against politicising the issue in ways that could create unnecessary fear.

“If we politicise this transition or use it to score points, we risk creating unnecessary panic among the very people we are mandated to serve. The beneficiaries of social grants deserve stability and confidence, not confusion or fear.”

Social grants: A lifeline for millions

SASSA disburses approximately 19 million social grants every month to around 12 million recipients, at a total of R22.4-billion.

Around three million beneficiaries currently bank with Postbank, including 1.96 million social grant recipients and 1.08 million Covid-19 Social Relief of Distress beneficiaries, representing R3-billion in monthly payments.

The remaining 16 million payments are made through 21 other banks operating in South Africa.

Why the agreement ended

The relationship between SASSA and Postbank is governed by a contract. Clause 5.1 of the Master Service Agreement allows either party to terminate the agreement by giving 18 months’ notice, without the need to provide reasons. SASSA has now exercised this option.

This is not the first transition in the payment system.

In 2018, following a Constitutional Court ruling on a matter brought before the court by the Black Sash, SASSA ended its contract with Cash Paymaster Services. The South African Post Office and its subsidiary Postbank then stepped in to assist with over-the-counter payments through a Treasury-approved deviation.

Minister Tolashe emphasised that the security and continuity of social grant payments remain a top priority.

“Social grants are a lifeline to millions of South Africans. The administrative termination of this contract does not affect beneficiaries. Payments will continue seamlessly, whether through Postbank or any of the other 21 banks in the system.”

Key message to South Africans

•⁠ ⁠Beneficiaries using Postbank accounts will continue to receive their grants into those accounts, accessible through both the gold and black Postbank cards.
•⁠ ⁠No changes to banking services are expected. Should Postbank adjust its service conditions, it will communicate directly with clients.
•⁠ ⁠Beneficiaries retain the freedom to switch banks at any time by notifying SASSA.

The minister further underlined that SASSA would remain vigilant and work with the South African Reserve Bank to protect grant recipients in the event of any regulatory changes affecting Postbank or other banks.

She concluded by urging all stakeholders to communicate clearly and responsibly.

“The facts are simple: beneficiaries will continue to receive their grants, Postbank remains a functioning bank, and no new service provider is being appointed. No client needs to move to another bank unless they themselves choose to do so.”