{"id":829209,"date":"2025-06-24T14:05:24","date_gmt":"2025-06-24T12:05:24","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=829209"},"modified":"2025-06-24T14:12:38","modified_gmt":"2025-06-24T12:12:38","slug":"major-south-african-bank-sends-urgent-message-to-ramaphosa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/829209\/major-south-african-bank-sends-urgent-message-to-ramaphosa\/","title":{"rendered":"Major South African bank sends urgent message to Ramaphosa"},"content":{"rendered":"\n

South African digital banking group TymeBank has sent an open letter to Minister of Home Affairs Leon Schreiber urging him to reverse the decision to hike verification fees by 6,500%.<\/p>\n\n\n\n

The letter contains an urgent appeal to President Cyril Ramaphosa, the Minister of Finance Enoch Godongwana, and Reserve Bank Governor Lesetja Kganyago to intervene.<\/p>\n\n\n\n

Schreiber announced this week that Home Affairs would be rolling out an updated online verification system (OVS) from 1 July 2025, which would come with a steep increase to the price of checks.<\/p>\n\n\n\n

The OVS is used by various service providers, including banks and insurers, to conduct real-time ID verification checks against the national population register.<\/p>\n\n\n\n

Under the current system, it costs a client 15 cents per check. From 1 July, this fee will increase significantly to R10, with an option for ‘offline’ bulk checks at R1 per field.<\/p>\n\n\n\n

Schreiber said the fee increase was necessary because the current charge had always been “inappropriately low” and unchanged for more than a decade.<\/p>\n\n\n\n

Meanwhile, the cost of maintaining and upgrading the system had constantly been increasing, with no way for the department to recover these costs, leading to technology stagnation.<\/p>\n\n\n\n

The minister also accused clients of exploiting the system by overwhelming it and causing downtime, and then pushing clients onto their own verification systems that charged inflated fees.<\/p>\n\n\n\n

While the DHA is now confident that the system can fulfil its purpose and that the fee structure is reflective and fair, industries that rely on cheap real-time checks are in for serious pain.<\/p>\n\n\n\n

Coenraad Jonker, co-founder and chief executive of Tyme Group, said the new structure would be detrimental and damaging to the entire banking industry.<\/p>\n\n\n\n

He said the increase to this fee will be crippling for the banking industry and will have huge consequences for those serving vulnerable communities.<\/p>\n\n\n\n

The proposed pricing structure will make it commercially unviable to serve low-income South Africans, such as social grant recipients and informal workers, and will close the door on digital progress, he said.<\/p>\n\n\n\n

\u201cThis is not just a policy shift\u2014it\u2019s a regressive tax on the most vulnerable South Africans,\u201d said Jonker. <\/p>\n\n\n\n

\u201cIt undermines the progress we\u2019ve made toward digital inclusion, weakens the financial sector\u2019s ability to comply with anti-money laundering laws, and risks reversing efforts to exit the FATF greylist.\u201d<\/p>\n\n\n\n

Finding another way<\/h2>\n\n\n\n
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Coenraad Jonker, Tyme CEO<\/figcaption><\/figure>\n\n\n\n

Jonker urged president Cyril Ramaphosa and the national government as a whole to step in and hit pause on the plan.<\/p>\n\n\n\n

He wants the government to halt the implementation of the fee increase and re-engage with industry stakeholders to find a more transparent and sustainable path forward. <\/p>\n\n\n\n

The new offline batch-processing option has also been rejected. While less expensive at R1 per field, the Tyme CEO said it is not a practical substitute for real-time data lookups. <\/p>\n\n\n\n

“In the digital world, everything is real-time \u2013 account opening, card replacements, PIN resets and payments. Real-time is increasingly important for customer service and for the safety and security of customers,” he said.<\/p>\n\n\n\n

He argued that if look-ups are not real-time, customers would incur additional costs because they would need to take at least two trips to open an account.<\/p>\n\n\n\n

“These are costs that cannot be absorbed or mitigated by banks,” he said. Old generation or ‘legacy’ banks still run many overnight batch processes, but this is the problem. <\/p>\n\n\n\n

“By charging R10 for real-time and R1 for batch processing, the DHA is essentially providing the incumbents with a 90% discount while punishing new digital competitors and their customers with unsustainable pricing,” Jonker said.<\/p>\n\n\n\n

“This is patently anti-competitive” and akin to sabotaging digital transformation and financial inclusion, he added.<\/p>\n\n\n\n

Jonker said that TymeBank is not opposing system upgrades or cost recovery, but wants a “phased, performance-linked” model to be used that protects financial access for underserved communities. <\/p>\n\n\n\n

This would include volume-based pricing and a cost recovery model linked to performance and inflation.<\/p>\n\n\n\n

Importantly, he said there should be reasonable notice periods that allow institutions to plan and budget accordingly.<\/p>\n\n\n\n

Home Affairs originally published the fee change in March 2025, intending for the change to take effect from April 2025, but this was withdrawn and re-gazetted with a 30-day public comment period.<\/p>\n\n\n\n

The new gazette with the official changes was only published this week, with around only two weeks’ notice to clients before implementation on 1 July.<\/p>\n\n\n\n

“Digital transformation and financial inclusion are not luxuries. They are the backbone of a modern, just society,” he said.<\/p>\n\n\n\n

“The government cannot afford to raise barriers where it should be opening doors. We must not allow our digital future to be held hostage by short-sighted policy.”<\/p>\n\n\n\n

The full open letter can be read below:<\/p>\n\n\n\n