A total of 750 out of 1,000 students who received allowances at six universities paid an average of R25 or less in bank charges.
This was the finding of a study conducted by eZaga, one of the four companies contracted by the National Student Financial Aid Scheme (NSFAS) to pay student allowances.
The other service providers are Coinvest Africa, Norraco Corporation and Tenet Technology.
eZaga’s COO, Ismail Ally, told TimesLIVE Premium that the company randomly looked at 1,000 bank accounts of students who were paid by them.
NSFAS’s controversial direct payment system, which was outsourced to the four companies, has come under fire from students who have complained about excessive transaction charges.
The four entities charge NSFAS beneficiaries a standard monthly fee of R12 for administration costs, which excludes other transaction costs such as ATM withdrawals, card swipes and fees for replacing lost cards.
An ATM withdrawal will cost R10 plus R2.50 for every R100 withdrawn.
eZaga, which has on-boarded 141,358 students, including 115,482 from six universities and 25,876 students from 11 Technical Vocational Education & Training (TVET) colleges, charges a fee of R50 to replace lost cards.
Students from the Durban University of Technology, Tshwane University of Technology, Vaal University of Technology, University of the Free State, University of Limpopo and University of Zululand are being paid their allowances by eZaga.
On August 16, students from the University of Stellenbosch and the University of the Western Cape marched to parliament calling for the scrapping of the direct payment system.
A petition started by William Sezoe, vice-chair of the student representative council at Stellenbosch University, against the controversial payment system, has so far garnered more than 10,700 signatures.
Certain transaction fees are obviously more expensive than the rest but that this was the reality across all banks.
— eZaga COO, Ismail Ally
In July, Sezoe also lodged a complaint with the public protector against NSFAS’s direct payment system, which included exorbitant bank charges charged by the four entities.
Recently, the NSFAS board placed CEO Andile Nongogo on a leave of absence after allegations levelled him while he was head of the Services Sector Education and Training Authority (Sseta).
Advocate Tembeka Ngcukaitobi and attorney Sandile July were appointed to conduct a probe into the allegations against Nongogo, “with a particular focus on the direct payment project”.
Meanwhile, Ally conceded that certain transaction fees “are obviously more expensive than the rest”, but that this was “the reality across all banks”.
“Banks want to position their account holders to use transactions that are much cheaper. It’s the same for us.”
He said there was a big shift by students who were swiping cards at retail outlets instead of withdrawing cash at ATMs.
A cash withdrawal at a retail outlet costs R5 plus R1,50 for every R100 withdrawn.
“We got to teach students financial literacy and to use transactions that carry a lower cost. We don’t have an ATM network of our own and we are piggybacking off other banks in this case.”
Asked about the revenue he is receiving from transactions conducted by the more than 141,000 students that have been on-boarded by his company, he said: “I can’t speak to that because it obviously sits within our finance and product development departments.”
Ally said they were open to any investigation “because we have got nothing to hide”.
“I personally have been party to the entire process. Never have we discussed or had any open relationship on a personal level with anyone from NSFAS.”
Ally, who resigned as director of eZaga Holdings on August 22, said he was going to be involved in getting a new entity “up and running”.
But he said his resignation had nothing to do with the controversy over the new direct payment system.
“It’s an internal strategic move for me opening a new venture.”
Meanwhile, commenting on eZaga’s claims that 75% of students, according to research it conducted, paid an average of R25 or less in bank charges, Sezoe said: “I don’t think we can trust their own study.”
“We need an independent audit on whether that’s true, because from the experience of students that’s not the case.
“I think they are just trying to spin a certain narrative that students are not paying high fees.”
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