Home affairs ID verification cost to increase by up to 6 500% 

The Department of Home Affairs has announced it will be increasing the cost that companies must pay to verify people’s identities by up to 6,500% in an effort to correct what it called “unsustainable under-pricing of verification services.”

The department also announced on Monday that it will launch an upgraded verification system for the national population register (NPR).

Verification system

Since 2013, Home Affairs has provided a service, known as the online verification system (OVS), allowing third-party companies, including banks, insurance companies and mobile network operators, to verify identities and other biographical information of their clients against the NPR.

The OVS essentially enables these companies to prevent fraud by verifying that a person attempting to sign up for accounts and services is who they claim to be.

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Under pricing

In a statement on Monday, the department said the R0.15 cents rate charged by the state is far below the cost the private sector charges for OVS, which “deprived Home Affairs of the resources required to maintain the NPR”.

“Extreme under-pricing has led to profiteering and abuses by some users that overwhelm the NPR and cause failure rates in excess of 50%, contributing to ‘system offline’ failures at Home Affairs offices and threatening national security”.

Massive increase

The department published a notice in the Government Gazette on Monday, resulting in an increase in the price of real-time verification services against the NPR from R0.15 to R10.

This is an increase of 6 500%.

“This vicious cycle is unsustainable. The artificially low pricing structure has led to such severe under-investment in the NPR that it now poses a direct threat to financial inclusion, to the ability of the government to combat identity and financial crime, and to national security. Home Affairs is bringing an end to this vicious cycle.

“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,” the department said.

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Roll-out

The department said it will start rolling out from the 1^st of July.

“The upgraded OVS functions as a sleek, modern system that delivers what it was designed to do. It now performs in real-time, and the failure rate has been reduced to below 1%”.

Minister of Home Affairs Leon Schreiber said the “matter of national security, plain and simple.”

“Every responsible State on earth must take the necessary steps to ensure a functional population register. This upgrade also advances financial inclusion and makes a significant contribution to South Africa’s attempts to get off the Financial Action Task Force’s grey list.”

Increase welcomed

Meanwhile, the Congress of South African Trade Unions (COSATU) has welcomed the adjustments announced by Home Affairs.

“This decades-long de facto subsidy for financial institutions has created a perverse crisis where, due to the absurdly low fee charged by the Department, many have simply overloaded the system with requests”.

System offline

Cosatu said the consequence has been the system’s continuously being overwhelmed by the sheer volume of repeat requests for information and frequently crashing. 

“This has compounded an already overstretched Home Affairs, battling to cope with long queues and the system being repeatedly offline.

“The working class has been the victims of this vicious spiral with workers losing out on wages as they queue for days at a time to apply for documents and Home Affairs officials, already battling a crippling 60% vacancy rate, having to manage long queues of frustrated members of the public and systems failures over which they have zero control,” Cosatu said.

Cosatu said it will engage its affiliates, who organise workers across the banking, financial institutions, and retail sectors, to ensure that the cost-reflective charges put in place by the Department are not used as an excuse by these private sector institutions to increase banking and related fees charged to customers. 

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