Cape Town – The Congress of South African Trade Unions (COSATU) has warned that the South African Social Security Agency’s (SASSA) decision to terminate its agreement with Postbank and shift grant payments to private banks will have a negative impact on millions of vulnerable beneficiaries.
According to Eyewitness News, COSATU argued that the move could expose recipients to high banking fees at a time when the cost of living continues to rise.
As stated by COSATU parliamentary coordinator Matthew Parks, Postbank currently does not charge withdrawal fees, but private banks could impose costs of up to R10 for every R1,000 withdrawn.
He described the decision as “bewildering,” stressing that it would leave the poor subsidising the profits of commercial banks. Parks further noted that the change undermines efforts to stabilise Postbank, which government has been trying to rebuild as a state-owned financial institution.
Social Development Minister Nokuzola Tolashe has warned that the termination of the agreement between the South African Social Security Agency (Sassa) and the Postbank will negatively affect grant beneficiaries. https://t.co/yxTvUeSQTR pic.twitter.com/TWtUUg0JRu
— SABC News (@SABCNews) September 3, 2025
According to IOL, SASSA officials have rejected suggestions that beneficiaries will be forced to leave Postbank. SASSA CEO Themba Matlou said those satisfied with Postbank’s services would still be able to use the bank. He explained that the agency could not subsidise banking fees for some beneficiaries while excluding others, adding that such a practice would be discriminatory.
The dispute arises as private banks position themselves to compete for a share of the estimated R3 billion social grants payment system.
Financial institutions see significant revenue potential in the arrangement, with transaction fees forming a lucrative part of the business model, a report by News24 said.
Analysts have suggested that the introduction of commercial banks into the system may boost efficiency, but also warned that additional costs could fall directly on recipients.
COSATU has called on SASSA to reverse the decision and retain Postbank as a central payment partner. Parks stated that with rising inflation and unemployment, “the poor should not be asked to shoulder the burden of private sector profit.”
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Compiled by Lisabeal Nqamqhele
