Decommissioning of Social Grant Paypoints: An Overview

September 2019

Download the Combined Site Reports - Decommissioning of SASSA PayPoint Black Sash

Download the Decommissioning of SASSA Paypoints Black Sash Report (Final)

Background: How the Decommissioning of Paypoints Came About

On 30 September 2018, the cash disbursement of social grants by the South African Social Security Agency (SASSA) shifted out of the control of Cash Payment Services (CPS) and was transferred to the South African Post Office (SAPO). This development came about as a result of a process that began in 2014 when the Constitutional Court declared the contract between SASSA and CPS invalid.

In March 2017, when SASSA had failed to act on this ruling, the outcome of the Black Sash vs the Minister was that the contract between SASSA and CPS invalid was again declared invalid, and SASSA was granted a period of a year for an alternative service provider to be found. The outcome of this was that SASSA and SAPO signed an agreement in December 2017, which was finally implemented in October 2018.

This transition saw the instigation of a state-led hybrid national payment system which consists of four components:

  1. The SASSA/SAPO Special Disbursement Account (SDA) or Gold Card, a VISA bank account intended for use at retail outlets and for drawing cash, but from which no debit orders or stop orders can be processed.
  2. Monthly grants being paid into individual grant recipients’ personal and institutional bank accounts.
  3. Cash payments of grants through one of three options: the tellers at SAPO branches, a designated SASSA paypoint managed by SAPO or cashback payment through selected retailers (e.g. Boxer, Pick ‘n Pay, Shoprite, Spar).
  4. Cash withdrawals at the ATMs of major commercial banks operating within the National Payment System (NPS). (Note: this option potentially involves transaction fees, while the others have been developed in such a way that grant recipients do not pay fees for a maximum of three withdrawals each month.)

In the lead-up to the implementation of this new system, a number of the paypoints that SASSA and CPS had previously operated were decommissioned. This significantly reduced the availability of grant distribution points for people living in peri-urban and rural areas.

Since May 2018, more than 5,000 community based paypoints in venues such as community halls, church halls, public schools and tribal offices have been consolidated or decommissioned, based on them being considered redundant or because they were situated 5 kilometres or less from a SASSA paypoint, a post office, an ATM or a retail store.

In terms of the SASSA/SAPO contract, the end result of this process is that by March 2019 grants were distributed at only 1 595 SAPO branches across the country. By contracts, there were roughly 10 000 paypoints in January 2018. While the impact of this reduction is somewhat mitigated by the fact that the hybrid model provides grant recipients with a number of alternative avenues of payment, the reality is that many of the most marginalised members of South African society have been hard hit by the onerous task of accessing their grants on the first day of every calendar month.

The Impact of the Decommissioning of Paypoints

According to the Decommissioning Report commissioned by Black Sash, the decommissioning of paypoints has resulted in grant recipients in peri-urban and rural areas facing several major challenges. These include:

Accessibility and Cost

People who choose to draw their grants in the form of cash and who live some distance from SAPO branches, retailers or ATMs often have to travel long distances, at significant personal expense, to get to paypoints. In addition to draining already sparse financial resources, this takes up significant amounts of time and means they have to be away from their homes and family or other support networks – sometimes overnight.

Transaction Fees

Some grant recipients prefer to access grants through ATMs. However, these outlets do not always allow them to withdraw the full amount in one transaction. The result is that they end up paying transaction fees as well as having to access ATMs that are sometimes far from home more than once a month.

Deductions and Debit Orders

The new SASSA SDA card has not protected grant recipients from illegal deductions and unauthorised debit orders from their accounts. There have been numerous reports of grant recipients not being paid out their full grant for this reason. Living long distances from major centres means they cannot report these issues or access the available recourse networks.

Grant recipients who choose to use ATMs also face the possibility of bank charges being deducted for their cash withdrawals. This did not happen at paypoints in the past.

There is also an ongoing issue of illegal deductions and debit orders that are a carry-over from the system that CPS managed. Reporting these and seeking recourse has proved a challenge for grant recipients.

Local and Informal Economies

The fact that grant beneficiaries need to travel long distances to central locations means that cash which used to be disseminated in local economies is now being spent at retailers and in major centres. Informal traders who used to sell goods at paypoints are no longer able to carry out their business.

SASSA’s Lack of Communication re Paypoint Closures

There appears to have been erratic and of last-minute communication from SASSA about which paypoints would be closed. This has caused uncertainty and stress for grant recipients, and often cost them extra travel money for which they had not been able to plan or budget.

Dignity and Safety of Elderly Grant Recipients

The long waits in queues, stress of crowded SAPO branches and retailers, as well as the struggle to enter the correct PINS at retailers or ATMs has been particularly difficult for elderly grant recipients. This leaves them vulnerable to fraud and theft. Grant recipients have reported realising when they got home that people who assisted them had actually stolen money from them because, for various reasons, the elderly grant recipients did not check the amount of cash they had been given.

Limited Access at ATMs

Grant recipients have reported that bank ATMs near SAPO branches will only release cash to five SASSA SDA cards in a row before declining transactions, meaning that another beneficiary with a “normal” or commercial bank card has to draw money at the ATM before it will accept another five SASSA SDA card and release cash.

There have also been reports of ATMs running out of cash or going out of order on grant days – due to the large volumes of people converging in one place on those.

Grant recipients using ATMs at SAPO branches can sometimes only use one of the available ATMs, as the other one is reserved for general business.

Unreliable Networks

ATMs and Speedpoint machines struggle to operate in some areas, due to poor cellphone network coverage. This creates delays.

Long Queues

Factors such as a lack of access to enough ATMS, a shortage of sufficient tellers at SAPO branches and poor network coverage leading to equipment malfunction all result in grant recipients being held up in long queues.

The fear of spending long hours in queues and not getting their grant payments as a result has led to a number of people travelling the day before or through the night to places where pay channels are available on grant days. This is costly, stressful and in some cases has serious health related consequences (elderly people fainting in queues is not a rare event on grant days).

Adequate Seating

The SASSA/SAPO SLA prescribes that there should be chairs available for grant recipients – and that tents need to be provided outside the SAPO branches if necessary. Not all SAPO branches comply with this requirement. And, given that there is no SLA or MOU between SASSA and retailers or banks, any seating that is provided is usually at the prerogative of a local manager or staff person at the outlet who has decided to make a plan.

Access to Toilets

In spite of the fact that access to toilets is included in the SASSA/SAPO SLA, not many SAPO branches provide this facility. In some communities, the nearest public toilets are several kilometres away from the SAPO branch that is a grant paypoint.

When it comes to retailers and banks, the provision of toilets is even more problematic. In some cases grant recipients are able to pay R2 to access a shopping centre’s public toilets, but this is not always the case.

People with Disabilities

Wheelchairs are available at some SAPO branches (as required in the SASS/SAPO SLA, but disabled and elderly people have been particularly hard-hit by the process of decommissioning because of how difficult, stressful and expensive it is to get to the current available paypoints.


There are several ways in which the safety of grant recipients – and staff at SAPO branches – have been negatively affected by the decommissioning of paypoints. Armed robberies at SAPO branches on grant days are on the increase.

In addition, long grant payout queues at SAPO branches, retailers and ATMs are vulnerable to petty thieves. Generally, when paypoints operated within community settings, the community members themselves would ensure the safety of grant recipients. Now that these paypoints have been decommissioned, this local safety network is not being adequately substituted with the provision of security measures.

The unsafe roads and transport systems that grant recipients use to get to grant outlets is also a concern. There have been several reports of people dying in accidents while travelling on bicycles, on foot or on public transport to access their grants. If the old paypoints had still been in operation, these fatalities would not have occurred.

Cash Management and Availability

There are several cash flow related constraints as a result of the decommissioning of paypoints.

Cash is not always available at outlets. This might be because a delivery has not been made, but it can also be because a retailer has run short of cash in their tills and needs to wait for further cash purchases to be made before the cash can then be paid out. As mentioned before, ATMs also regularly run out of cash. The effect of this is that grant recipients who have used their last cash reserves on transport to get to the outlet do not have money for food or water and have to sit or stand waiting for long periods of time.

ATMs also tend to disburse low denomination amounts, meaning that grants are paid out with lots of banknotes that can jam machines and create delays.