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Net1 files for declaratory order with South African High Court
Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
(“Net1” or the “Company”)
Net1 files for declaratory order with South African High Court to provide certainty
on interpretation of recent regulations adopted under the Social Assistance Act
Johannesburg, June 3, 2016 – Net1 (NasdaqGS: UEPS; JSE: NT1) today announced that it
has filed for a declaratory order with the High Court of the Republic of South Africa
Gauteng Division, Pretoria, to provide certainty to the Company, as well as other industry
stakeholders, on the interpretation of the Social Assistance Act of 2004 (the “Act”) and
recent Regulations promulgated in terms thereof (the “Regulations”). The Regulations limit
direct deductions from social grants paid to beneficiaries. The Company interprets the
meaning of the word “deductions” to be specific to the practice of collecting life insurance
premiums from grants, before the grants are paid to social welfare beneficiaries’ bank
accounts, and is of the opinion that the legislature did not intend to curtail the right of
beneficiaries to transact freely once the money is deposited into their bank accounts.
Currently, grant beneficiaries effect more than 15 million debit transactions per month,
involving more than 1,300 financial services and product providers. According to SASSA’s
statistics, 18,800 transactions were disputed during the 2015/16 fiscal year, which is far
below the 0.5% industry benchmark for disputed transactions and represent less than 0.01%
of all debit transactions processed during the period.
However, SASSA seeks to lend a broader interpretation to the meaning of the term
“deductions” to incorporate any debit orders, EFT debits, purchase transactions, or fund
transfers that are effected after the transfer of social grants to beneficiaries’ bank accounts.
If SASSA’s interpretation were to prevail, debit transactions could no longer be used as a
method for beneficiaries to make regular payments for financial services such as insurance
premiums, loan re-payments, cell phone contracts, money transfers or any other recurring
payments. The Company believes that forcing beneficiaries to pay for these products or
services in cash would be a major setback to the national objective of financial
inclusiveness, introduce financial and security risks for beneficiaries and result in
significant price increases for these products and services.
The Company further believes that SASSA’s interpretation of the Act and the Regulations
is erroneous for a number of reasons including, but not limited to, its belief that such an
interpretation violates beneficiaries’ constitutional rights by limiting their fundamental right
to enter into contracts and that such interpretation impermissibly encroaches on the
jurisdiction and powers of the South African Reserve Bank and the Payments Association
of South Africa, which regulate the national payment system. SASSA's interpretation
effectively prohibits the social welfare recipient community from enjoying the benefits of a
convenient, low-cost, reliable and ubiquitous payment system that enables the recipients to
procure financial services at highly competitive rates.
The Company expects the application to be heard before the end of June.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its Universal
Electronic Payment System (“UEPS”) or utilize its proprietary mobile technologies.
The Company operates market-leading payment processors in South Africa and the
Republic of Korea. Through Transact24, Net1 offers debit, credit and prepaid processing
and issuing services for Visa, MasterCard and ChinaUnionPay in China and other
territories across Asia-Pacific, Europe and Africa, and the United States. Through
Masterpayment, Net1 provides payment processing and enables working capital financing
in Europe.
UEPS permits the Company to facilitate biometrically secure, real-time electronic
transaction processing to unbanked and under-banked populations of developing economies
around the world in an online or offline environment. Net1’s UEPS/EMV solution is
interoperable with global EMV standards that seamlessly enable access to all the UEPS
functionality in a traditional EMV environment. In addition to payments, UEPS can be used
for banking, healthcare management, payroll, remittances, voting and identification.
Net1’s mobile technologies include its proprietary mobile payments solution - MVC, which
offers secure mobile-based payments, as well as mobile banking and prepaid value-added
services in developed and emerging countries. The Company intends to deploy its varied
mobile solutions through its ZAZOO business unit, which is an aggregation of innovative
technology companies and is based in the United Kingdom.
Net1 has a primary listing on the NASDAQ and a secondary listing on the Johannesburg
Stock Exchange.
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and unknown
risks and uncertainties, including statements relating to the timing or substance of any High
Court ruling. A discussion of various factors that may cause our actual results, levels of
activity, performance or achievements to differ materially from those expressed in such
forward-looking statements are included in our filings with the Securities and Exchange
Commission. We undertake no obligation to revise any of these statements to reflect future
events.
Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1-917-767-6722
Email: dchopra@net1.com
Johannesburg
June 3, 2016
Sponsor:
Deutsche Securities (SA) Proprietary Limited
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