TymeBank has entered discussions with South Africa’s Department of Home Affairs and Minister Leon Schreiber following a public dispute over a sharp increase in the cost of accessing the government’s identity verification database. The talks come about six weeks after TymeBank warned it was considering legal action to halt the fee changes, which it says threaten financial inclusion for low-income citizens. The dispute underscores the tension between public infrastructure funding and private-sector needs for affordable verification services.
Background to the Dispute
In June, TymeBank co-founder and Tyme Group CEO Coen Jonker criticized the department’s decision to implement significant fee hikes for real-time identity verification. Until July 1, companies paid just 15 cents per query to access the National Population Register in real time, making South Africa one of the cheapest markets in the world for such services. Under the new structure, real-time verifications now cost R10 per query, while overnight batch processing is priced at R1 per query.
Industry Concerns
The move has drawn criticism from banks, fintechs, and telecommunications operators, who argue that the higher costs will hinder compliance with key regulations such as the Financial Intelligence Centre Act (Fica) and the Regulation of Interception of Communications and Provision of Communication-related Information Act (Rica). These laws require regulated entities to verify customer identities to combat fraud, money laundering, and other criminal activities. Critics warn that the price hikes could lead to reduced access to essential services for millions of South Africans.
TymeBank’s Position
TymeBank has maintained that identity verification is a cornerstone of financial inclusion and must remain secure, affordable, and widely accessible. The bank says that affordable real-time verification is essential for fintechs that serve large, diverse, and often low-income customer bases. “A pricing model that supports this principle is essential to ensuring no one is left behind,” the bank said in a statement, adding that it advocates for a reliable real-time system capable of handling high transaction volumes.
Jonker’s Public Criticism
Jonker has described the fee increases as a “regressive tax” on South Africa’s most vulnerable citizens, warning that they risk undermining progress in digital and financial inclusion. He has also argued that the move could weaken the financial sector’s ability to comply with anti-money laundering rules and jeopardize efforts to remove South Africa from the Financial Action Task Force’s grey list. In an open letter to Minister Schreiber in June, Jonker said the policy change was not merely administrative but had far-reaching economic and social consequences.
Ministerial Response
Schreiber responded sharply to Jonker’s public letter, dismissing it as “faux outrage” and accusing TymeBank of profiting from government systems. The exchange heightened public attention on the dispute, framing it as both a regulatory and reputational battle. The minister has not indicated any willingness to roll back the fee hikes, which the department has defended as necessary for maintaining and improving its systems.
Ongoing Discussions
Despite the earlier public spat, TymeBank confirmed that it is now engaging with the minister and the department “in good faith” to find a “sustainable and inclusive solution” to the pricing model. The bank has emphasized its preference for dialogue and partnership but has not ruled out legal action if talks fail to produce a fair resolution. It says any agreement must balance the department’s infrastructure goals with the need for inclusive, affordable access to identity verification.
Possible Legal Action
TymeBank has signaled that the legal route remains on the table if no satisfactory compromise is reached. “While we remain committed to dialogue and partnership, we also reserve our right to take appropriate action should a resolution not be achieved,” the bank stated. The outcome of these discussions could have broader implications for fintech operations, compliance costs, and access to financial services in South Africa.
The dispute between TymeBank and the Department of Home Affairs highlights the delicate balance between public revenue models and the private sector’s role in expanding financial inclusion. As talks continue, the stakes remain high for both sides, with potential consequences for millions of South Africans who rely on affordable access to financial and telecommunications services. Whether through compromise or confrontation, the resolution will help define the future cost of digital identity verification in the country.
Source: Techcentral