TymeBank is considering legal action in an effort to stop the department of home affairs from implementing huge increases in the fees companies must pay to verify their clients’ identities.
Speaking to TechCentral on Thursday, TymeBank co-founder Coen Jonker – who now serves as CEO of the bank’s parent company, Tyme Group – said the move, by home affairs minister Leon Schreiber, to jack up the fees will harm financial inclusion in South Africa by making it more difficult to serve low-income customers.
Schreiber and his department have drawn fire from TymeBank, telecommunications operators and other industry players, who have warned that the price hikes – which will take effect on 1 July – are not only gratuitous but will have unintended consequences in the fight against crime and in serving the poorest South Africans with financial, telecoms and other services.
Legislation such as Fica (the Financial Intelligence Centre Act) and Rica (the Regulation of Interception of Communications and Provision of Communication-related Information Act) requires banks, telecoms providers and other consumer-facing entities to verify their clients’ IDs against the home affairs database in an effort to fight money laundering and other white-collar crime.
Under Schreiber’s plan, it will cost R10 per query for real-time ID verifications of the National Population Register, which Jonker told TechCentral on Thursday will take South Africa from among the most affordable markets in the world for this type of service to one of the most expensive. Until now, companies have paid as little as 15c per query.
Home affairs said it will offer overnight batch processing at R1/query – still a big increase – that will allow companies to better manage their costs. However, Jonker said fintechs like TymeBank, unlike the big banks, have built their business models based on affordable access to real-time ID verification.
‘Crippling blow’
He said public verification tools like the one offered by home affairs, should be provided at cost or subsidised to promote financial inclusion. He also said the cost of handling a database query is at most a “few cents”, and not anywhere near R10.
Jonker earlier this week published an open letter to Schreiber in which he described the price hikes as “a crippling blow to financial inclusion and digital progress in South Africa”.
“This is not just a policy shift – it’s a regressive tax on the most vulnerable South Africans. It undermines the progress we’ve made towards digital inclusion, weakens the financial sector’s ability to comply with anti-money laundering laws and risks reversing efforts to exit the Financial Action Task Force grey list,” he wrote to Schreiber.
Read: War of words erupts over home affairs database fee hike
Schreiber immediately hit back on social media, calling Jonker’s open letter “faux outrage” and accusing TymeBank of “profiting over people”.
South Africa’s six largest telecoms operators, through member body the Association of Comms & Technology, have also taken home affairs to task over the price hikes.
And on Thursday, MicroFinance South Africa (MFSA) issued a statement urging “immediate engagement by national policymakers” to discuss the issue.
“While we support our government’s efforts to safeguard identity systems and ensure Fica compliance, the proposed fee introduces yet another new cost for registered credit providers to absorb,” said MFSA CEO Leonie van Pletzen. “This comes at a time when formal lenders are already struggling to sustain their businesses, as they continue to operate within an outdated and unbalanced regulatory framework.
“MFSA and its members are fully committed to regulatory compliance, including robust identity verification under Fica, but the reality is our industry can no longer afford it.”
Van Pletzen called on home affairs to suspend the planned fee hikes “until a sustainable solution is reached and can be maintained over the long term without negatively impacting social well-being”.
“We are fully aligned with government’s objective to improve oversight and secure our financial system, but no credit provider, regardless of their intent, can meet these obligations if the cost of compliance is structurally unaffordable.”
Amid the chorus of criticism against home affairs, one company has come to Schreiber’s defence: Stellenbosch-based Capitec Bank, which said on Wednesday that it “supports the initiative to upgrade the National Population Register and enhance the stability and reliability of its online verification system”.
Relief
“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.
Jonker told TechCentral that Capitec’s decision to defend the price hikes could have been designed to weaken its fintech competitors, which are more reliant on real-time ID verification and less on batch transactions that can be processed overnight.
Read: Tech crucial to rooting out corruption at home affairs: minister
Jonker said TymeBank decided to publish the open letter to Schreiber only after its requests to be meet with him and the team at home affairs about its concerns proved unsuccessful. He said TymeBank may now pursue relief in the courts, though no firm decision had been taken in this regard at the time he spoke with TechCentral on Thursday afternoon. – © 2025 NewsCentral Media
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