Capitec has come out in support of the regulatory change ushering in a staggering 66-fold jump in fees for digital identity verifications, turning a regulatory burden into a competitive advantage as the government’s move undermines the zero-fee model that underpins TymeBank’s strategy.
The home affairs department’s move to upgrade the national population register has drawn sharp criticism from Patrice Motsepe-backed TymeBank, which slammed it as threatening its commitment to pull in millions of low-income individuals into the financial system. It already has 11-million clients.
Capitec, has positioned itself to absorb the additional costs, shielding its 24-million clients from higher fees, on the grounds that a secure and stable national identity system as crucial for safeguarding South Africans against fraud and fostering a trusted digital economy.
“While we understand these crucial upgrades require a fee increase from the department, we have decided to absorb the additional costs. This means our clients will see no change to their banking fees as a result of this initiative for the current financial year,” Capitec said.
“The digital identity verification service is a critical building block to prevent fraud, which ultimately comes at a significantly higher cost to all South Africans.
“By ensuring this system remains robust we are helping to build a safer and more accessible financial future for everyone,” Capitec said.
Competitive bulwark
The effect of the department’s decision will see fees for a single real-time verification check increase from 15c to R10, effective from next month.
For Stellenbosch-based Capitec — with its vast client base and deeper pockets — the decision could be seen as turning a regulatory challenge into a competitive bulwark, further solidifying its fortress-like position in SA’s retail banking sector.
For TymeBank, which has grown rapidly since its launch in 2019 to become Capitec’s closest rival by client numbers, the decision threatens to disrupt a delicate cost structure at the heart of its operations.
TymeBank co-founder Coenraad Jonker issued a strongly worded open letter to home affairs minister Leon Schreiber on Tuesday.
Jonker said the increases were a “crippling blow” to financial inclusion and digital progress in SA.
His letter highlighted the critical role of the department’s identity verification services in onboarding customers, ensuring anti-money-laundering compliance and expanding financial services to excluded populations.
“We serve 11-million South Africans,many of whom are social grant recipients and informal earners. Under your current fee structure, TymeBank is able to provide the poorest South Africans with an account in real time with no monthly fees.
“Your new fee will make this impossible, robbing SA of its only accessible and free bank account,” the letter reads.
Profiteering
Schreiber has defended his decision to push for the first increase of the service since 2023.
“Extreme underpricing has led to profiteering and abuses by some users that overwhelm the national population register and cause failure rates in excess of 50%, contributing to ‘system offline’ failures at home affairs offices and threatening national security,” the minister said.
“After initiating substantial upgrades to the service, home affairs today gazetted a new price structure that sets a cost-reflective price for real-time verifications during peak hours at R10, while introducing an off-peak, low-cost alternative for batch transactions costing just R1.”
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