Home Affair this week announced it will be increasing the cost that companies must pay to verify people’s identities by up to 6,500%.
A spat has erupted between Home Affairs Minister Leon Schreiber and TymeBank CEO Coenraad Jonker, with the minister saying the bank is putting “profiteering over people!”
On Tuesday, Jonker criticised Home Affairs identity online verification system (OVS) check fee hike warning Schreiber in an open letter that he should reverse his decision to increase the fee for accessing identity verification services.
Verification services
Home Affairs this week announced it will be increasing the cost that companies must pay to verify people’s identities by up to 6,500% in an effort to correct what it called “unsustainable under-pricing of verification services.”
The department also announced on Monday that it will launch an upgraded verification system for the national population register (NPR).
The OVS allows third-party companies, including banks, insurance companies and mobile network operators, to verify the identities and other biographical information of their clients against the NPR.
These checks are a requirement under specific legislation, including the Financial Intelligence Centre Act (Fica) and the Regulation of Interception of Communications Act (Rica).
ALSO READ: TymeBank founder warns minister about fee increase for ID verification
Price increase
Home Affairs gazetted a new price structure for real-time identity checks, increasing the fee from 15 cents to R10 from July. For verifications during off-peak hours, companies can perform a batch of verifications for R1.
The department said extreme under-pricing of the OVS led to profiteering and abuses by some users that overwhelmed the NPR and caused failure rates in excess of 50%, contributing to ‘system offline’ failures at Home Affairs offices and threatening national security.
This is an increase of 6 500%.
Tyme not happy
In a strongly worded letter on Tuesday, Jonker warned that the fee hike will “unravel years of progress in digital transformation, financial inclusion and economic justice.”
“Today, South Africa is one of the most inclusively priced countries in the world, comparing well with Panama, Colombia and Peru, at 2 US cents per identity lookup. Your new fee makes South Africa almost twice as expensive as the most expensive peer group countries, like Pakistan and Ecuador.”
‘Robbing SA’
Jonker said the price increase would make it impossible for Tyme to allow clients to open an account in real-time with no monthly fees.
“Your new fee will make this impossible, robbing South Africa of its only accessible and free bank account.”
Jonker said Schreiber’s decision shifts the cost of what should be a state-funded utility onto the shoulders of the poor. “It imposes a regressive tax that penalises those with the least.
“Identity verification is a public good. Around the world, it is subsidised or fully funded due to its essential role in national development. Yet here, in a time when our country most needs inclusivity, innovation and trust, we choose exclusion.
“As my example illustrates, the price hike is wildly out of line with the average cost per user compared to South Africa’s peer group countries,” Jonker said.
ALSO READ: Home affairs ID verification cost to increase by up to 6 500%
Digital world
He said the R1 batch lookup fee was not a practical alternative, as real-time lookups are crucial in the digital world.
Jonker said that Tyme contributed to the public participation process for the fee increase but was “clearly ignored”.
Among the suggestions he put forward in the open letter are a phased fee structure and volume-based discounts.
Schreiber hits back
Schreiber struck back and slammed Jonker on social media. . In a post on X, he said that banks, insurers and Cosatu recognised the need to fix the process.
“The CEO of a Unicorn worth R26,700,000,000.00 demands that taxpayers struggling to afford food must subsidise it, as it refuses to pay more than 15 cents for a service that costs vastly more to provide and that contributes to “system offline” at Home Affairs offices?” Schreiber wrote.
“Shocking” is the fact that you paid a measly 15 cents for years, relying on taxpayers to subsidise the rest of the actual cost while you profited.
“Shocking” is that we have your CEO admitting, in writing, that he never even read our letter inviting public comment, then approached a political party from the shadows after the comment period closed to try and apply pressure, and now dishonestly claims he was not consulted.
“Shocking” is trying to prevent Home Affairs from correcting under-pricing to invest in the NPR before it cripples national security. Take your faux outrage somewhere else and stop putting profiteering over people!” Schreiber said.
Mobile operators
The Association of Communications and Technology (ACT), an organisation representing mobile operators such as Vodacom, MTN, and Telkom, also criticised the fee, saying that the organisation had previously written to the department to raise concerns about the process used to increase the fees.
ACT said that network operators that are members of ACT may have to either absorb the cost or pass the cost of the verification on to consumers.
ALSO READ: Home Affairs clears 250 000 ID backlog in one month
