JOHANNESBURG – The South African Social Security Agency (SASSA) and Postbank are embroiled in a tense and escalating dispute over the cancellation of a long-standing agreement that designated Postbank as SASSA’s primary disburser of social grants. The fallout has resulted in a legal threat, accusations of defamation, and clashes within the highest levels of government.
Postbank last week threatened SASSA with a lawyers’ letter over an outstanding R116 million debt that SASSA refuses to pay. The agency cites concerns raised by the auditor-general (AG) regarding the legal standing of the agreement as the primary reason for withholding payment. The AG has questioned the legality of a special dispensation granted to Postbank to disburse SASSA grants, arguing that the same opportunity has not been extended to other banks.
Unlike other banks that disburse social grants, Postbank does not charge grant recipients normal banking fees. Instead, it receives fees from SASSA for the services it offers. SASSA argues that it is no longer justifiable to pay Postbank approximately R20 million a month in service fees when it does not offer the same facility to other major banks. This cost-saving rationale is at the heart of SASSA's decision to terminate the agreement.
The master service agreement (MSA) between SASSA and Postbank was ceded to Postbank from the South African Post Office (SAPO) when the latter began experiencing financial difficulties in 2023. This transfer of responsibility has further complicated the already complex relationship between the two entities.
According to input presented before an interministerial committee on SASSA, the AG views the agreement between SASSA and Postbank as a deviation that should be flagged as irregular if the service is not put out to tender, offering other banks a fair opportunity to bid to provide the service as well. This lack of a competitive bidding process is a key concern for the AG.
The standoff between SASSA and Postbank has resulted in unpaid invoices of approximately R20 million a month between October 2025 and March 2026, leading to SASSA owing Postbank just under R120 million. This mounting debt has brought the relationship between the two entities to a breaking point.
Postbank last week threatened to take SASSA to court over the unpaid fees, despite having provided the services specified in the MSA to grant beneficiaries over that period. The legal threat underscores the severity of the financial strain Postbank is experiencing as a result of the unpaid debt.
“SASSA has failed to pay service fees due to Postbank since October 2025. As at the date of this letter, the outstanding balance stands at over R116m (inclusive of VAT) for … October 2025 to March 2026,” reads a letter dated 21 April from Postbank CEO Nikki Mbengashe. The letter highlights Postbank's growing frustration with SASSA's inaction.
“Postbank has extended SASSA every reasonable opportunity to resolve this matter, and has pursued … steps over a period of more than six months. Despite all this, SASSA has not made any meaningful commitment to settle the outstanding service fees.” Mbengashe's statement reveals the extent of Postbank's efforts to resolve the dispute amicably.
The dispute between the two state entities is so tense that social development minister Sisisi Tolashe is believed to have clashed with deputy minister of communications Mondli Gungubele at a cabinet committee meeting this week. The clash highlights the political implications of the SASSA-Postbank feud.
Tolashe allegedly told Gungubele she would not back down on the decision to cancel the MSA and refused to pay Postbank the disputed R116 million. The minister's firm stance underscores the government's commitment to addressing the AG's concerns.
According to sources, Tolashe, who has faced media scrutiny over the past few weeks, accused Gungubele of being one of the people who had sent “imidlwembe” (scoundrels) to target and defame her. These accusations add a layer of personal animosity to the already complex situation.
“She told Mondli she knows he is one of those behind these stories about her because she is not budging on the agreement with Postbank,” said an insider. The alleged accusations suggest a deep level of distrust and political maneuvering within the government.
Gungubele did not answer calls or respond to WhatsApp messages sent to him, leaving the allegations unanswered.
The Sunday Times has seen more than 10 letters concerning the MSA that were exchanged between SASSA and Postbank, dating back to 2024. These letters provide a detailed record of the escalating tensions between the two entities.
In the letters, SASSA insists it is well within its rights to terminate the agreement with Postbank and has adhered to the 18 months’ notice period stipulated in the contract. SASSA's legal justification for terminating the agreement is a key point of contention.
But Postbank rejects this stance, telling the Sunday Times that, as far as it is concerned, SASSA has yet to formally inform it of the cancellation. This conflicting information highlights the breakdown in communication between the two entities.
A letter from former SASSA acting CEO Raphaahle Ramokgopa to Mbengashe dated February 2024 states that SASSA had already informed Postbank of its intention to terminate the agreement about two months earlier. This letter provides evidence of SASSA's earlier communication regarding the termination.
“The letter sent to Postbank on 20 December 2023 was our notice to Postbank that SASSA is terminating the MSA, and that is still the position,” said Ramokgopa. This statement reinforces SASSA's claim that it has followed the correct procedures for terminating the agreement.
Ramokgopa also told Mbengashe that SASSA would no longer pay Postbank over-the-counter service fees for recipients who received their grants in cash at post offices, and that no beneficiaries would be using the cash paypoints (CPP) from April 2024. This decision to eliminate over-the-counter services has significantly impacted Postbank's revenue stream.
“The elimination of the CPP and over-the-counter services as of April 2024 will result in Postbank rendering traditional banking services like any other bank,” she said. This statement reflects SASSA's view that Postbank no longer provides unique services that justify the special agreement.
SASSA believes that, without the over-the-counter and CPP services, Postbank no longer offers special services that are not being offered by the commercial banks and that it therefore does not make sense to continue with the MSA. This belief is the foundation of SASSA's decision to terminate the agreement.
This comes after millions of grant beneficiaries migrated from Postbank and the Post Office to use the facilities of other banks. The shift in beneficiary preferences has further weakened Postbank's position as the primary disburser of social grants.
Mbengashe acknowledged in a response to the Sunday Times that SASSA beneficiaries can choose where their grants are paid. This acknowledgement underscores the changing landscape of grant disbursement in South Africa.
“Postbank is not the sole distributor of social grants in South Africa. Beneficiaries retain full choice over where and how they access their funds,” she said. Mbengashe's statement reflects the reality of a more competitive and diverse grant disbursement system.
“Postbank’s role is to ensure that those who depend on government support, particularly the most financially vulnerable, have access to a banking partner that protects their funds and enables full financial inclusion. Postbank’s model ensures zero deductions from grants, full and immediate access to funds, and protection from banking fees that would otherwise erode value,” said Mbengashe. Postbank's CEO defends the bank's role in promoting financial inclusion for vulnerable populations.
“This is not simply a cost consideration — it is a financial inclusion policy choice. The government’s intent in enabling Postbank’s role is precisely to ensure that those who rely on social support are not disadvantaged by the cost structures of the financial system.” Mbengashe argues that the government should prioritise financial inclusion over cost savings.
According to briefing notes of the department of monitoring & evaluation, seen by the Sunday Times — which have been presented to the interministerial committee on SASSA, President Cyril Ramaphosa and the top ANC leadership — most grant beneficiaries prefer using automatic teller machines (ATMs) to access their money. These briefing notes provide valuable insights into beneficiary preferences and the effectiveness of different disbursement channels.
“The national payment system [ATMs and point-of-sale retailers] remains the preferred method, with 98.5% of beneficiaries opting for this channel. [The] SAPO branch channel is the second [most] preferred,” the notes say. The data clearly indicates the dominance of ATMs and point-of-sale retailers in grant access.
“Of the 18,013,692 grants paid [excluding social relief of distress grants], only 123,675 (0.7%) use SAPO branches, and 141,978 (0.8%) use cashpoints. All [social relief of distress] recipients use the national payment system, [and] none use paypoints.” The statistics further highlight the declining use of SAPO branches and cash paypoints.
The notes recommend the termination of the MSA, saying that “the partnership for all intents and purposes is now obsolete, as grants are paid by SASSA on time by paying grants into individual bank accounts”. The recommendation reflects the view that the MSA is no longer necessary in the current landscape of grant disbursement.
The notes go on to say: “The Post Office is closing branches, and thus its competitive advantage of reach [is no longer relevant]. The Post Office is in business rescue, and this could lead to Postbank having minimal physical presence pending the outcome of the business rescue.” The declining physical presence of the Post Office further weakens the rationale for maintaining the MSA.
The future of the relationship between SASSA and Postbank remains uncertain, but the dispute has significant implications for millions of grant beneficiaries and the broader financial inclusion agenda in South Africa. The legal battle, political clashes, and conflicting perspectives all point to a complex and challenging situation that requires careful consideration and a commitment to finding a solution that serves the best interests of all stakeholders.
