One of South Africa’s leading banks has penned an open letter to the government, calling for the immediate reversal of an alarming 6 500% increase in identity verification fees, set to take effect on 1 July 2025, Cape {town} Etc reports.
This drastic hike, according to the bank, poses a ‘crippling’ threat to financial inclusion and the ongoing digital transformation within the nation.
The urgent appeal comes after Department of Home Affairs announced it 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.
The department said that the under-investment and overloading of the OVS is one key factor behind the challenge of ‘system offline’ at frontline offices. Additionally, an unreliable NPR poses a direct threat to national security as it undermines the ability of the State to verify identities.
‘The underpricing of this service with fees as staggeringly low as R0.15 per verification has deprived the State of the resources required to maintain and enhance the NPR.’
‘In turn, certain private sector users of the OVS have relied on this artificially low price to inflate their corporate profits at the expense of the quality of services received by the public, while also overwhelming the NPR with queries to such an extent that the failure rate now routinely exceeds 50%.’
‘Some users then went on to exploit the unreliability of the system created by their excessive use to create third-party verification services that charge prices vastly in excess of those paid to Home Affairs,’ the department explained.
However, the co-founder and CEO of Tyme Group, Coenraad Jonker, has expressed grave concern over the government’s decision, highlighting that the fee increase will severely impact low-income individuals, particularly social grant recipients and informal workers.
‘This is not just a policy shift it’s a regressive tax on the most vulnerable South Africans,’ stated Jonker, emphasising the risk posed to financial services accessibility across the country.
The open letter articulates the vital role of the Department of Home Affairs’ identity verification services. These services are crucial for both onboarding new customers and ensuring compliance with anti-money laundering regulations.
‘The proposed pricing structure will make it commercially unviable to serve low-income South Africans, undermining the progress we’ve made toward digital inclusion,’ Jonker warned.
He further stressed that this measure threatens South Africa’s efforts to exit the Financial Action Task Force (FATF) greylist.
Notably, TymeBank is not opposed to the necessary upgrades or cost recovery measures; rather, it advocates for a phased, performance-linked pricing model.
‘Digital transformation should open doors, not close them,’ Jonker asserted, urging for a collaborative approach between the public and private sectors to foster inclusive growth in the digital economy.
Among the calls to action outlined in the open letter are:
- A halt to the proposed fee increase in its current form.
- Structured consultation with industry stakeholders, including fintech companies.
- A transparent, inflation-indexed, and performance-based pricing model.
- Real collaboration between the public and private sectors to promote inclusive digital progress.
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Picture: Gallo Images / ER Lombard
