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Postbank Board Dismissed Amidst Software Dispute

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Postbank Board Dismissed Amidst Software Dispute

Postbank Board Dismissed Amidst Software Dispute. In a significant development, Postbank’s Board of Directors has been terminated, and the company has been placed under administration, as announced by the Minister of Communications and Digital Technologies. This move comes as a response to a forensic investigation that uncovered Postbank’s unlawful contracts with various suppliers, including those related to payment switch technology crucial for disbursing social grants through Postbank/SASSA cards.

Resolution of the “Glitch” and Shifting Preferences

During a press briefing, the Postbank CEO provided an update on the recent “glitch” that affected over 600,000 beneficiaries. She revealed that a majority of these beneficiaries have now received their grant money. Interestingly, many of the recipients are opting for a change, preferring to have their grants deposited directly into their personal bank accounts instead of relying on Postbank’s services.

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Ministerial Address and Resignations

Minister Mondli Gungubele, along with Social Development Minister Lindiwe Zulu, addressed the public during a media briefing, expressing apologies to the grant beneficiaries. Zulu emphasized the importance of open communication to avoid future hardships.

Moreover, it was disclosed that an administrator has been appointed temporarily, pending the appointment of a new board. Notably, three board members, including the chairperson, resigned earlier, citing hostility from the Minister.

Underlying Software Dispute

The root cause of the recent “glitch” was traced back to a dispute over a crucial “payment switch” software employed by Postbank for grant payments. An ongoing court case between Postbank and its former supplier, Electronic Connection, had led to the adoption of a new supplier’s payment switch in August. Unfortunately, this transition caused the recent system failure, disrupting payments to grant recipients.

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Apology from Postbank CEO

Postbank CEO Ntomboxolo Nikki Mbengashe acknowledged the inconvenience caused by the system failure and apologized for it. She explained that while thorough testing had been conducted before the system’s launch, the transition did not proceed as planned. Manual reversals were required to address the failed transactions. Mbengashe empathized with grant beneficiaries, noting that she too had been raised in a family dependent on grants.

Beneficiaries Seek Alternatives

Following the payment disruption, many beneficiaries resorted to taking loans for essential expenses. Some beneficiaries were observed queuing outside SASSA’s office, expressing a desire to abandon their SASSA gold cards due to concerns about further issues with Postbank. The Black Sash organization reported that many pensioners with SASSA cards were still waiting for their grant money.

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Technical Challenges and Ongoing Issues

Postbank’s problems with the “payment switch” software have persisted since 2018 and remain unresolved. Recent court documents revealed that Electronic Connection, the previous supplier, had threatened to suspend the service in July due to outstanding invoices. Postbank sought a court order to settle the invoices and maintain service.

While a new payment switch provider was appointed, inadequate testing during the transition led to the recent system failure. The cause of the payment issue remains unclear, with no definitive answers provided by Postbank and SASSA.

Long-Standing Software Dispute Details

The dispute over the payment switch software traces back to 2018 when FSS Technologies designed the Integrated Grant Payment System (IGPS). At that time, the South African Post Office (SAPO) managed grant payments, but its switch was incompatible with IGPS.

FSS Technologies provided its switch system for free temporarily, with the understanding that SAPO would procure its switch. However, SAPO continued using FSS Technologies’ switch. In 2020, FSS Technologies demanded payment for the switch’s use.

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In February 2021, Postbank took over grant payments from SAPO and agreed to pay for the switch’s use. Still, the agreement faced scrutiny from the National Treasury due to procurement irregularities.

In May 2021, Electronic Connection took over licensing the IGPS to Postbank. A settlement agreement was reached in December 2022, but the payment of the second installment was deferred pending a forensic investigation.

The recent “glitch” occurred during the transition to a new payment switch, attributed to inadequate testing. As a result, thousands of grant recipients faced difficulties accessing their grants, leading to severe hardships.

The situation remains dynamic, with ongoing investigations and changes in leadership, reflecting the challenges faced by Postbank in providing crucial grant payment services.

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