You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Grindrod, Net 1 enter unbanked market

Nasdaq technology giant teams up with Grindrod’s bank.

Unbanked South Africans will have another company vying for their business once Net 1 UEPS and Grindrod Bank launch their proposed retail-banking division. Nasdaq-listed Net 1 announced today that it had signed a co-operation agreement with Grindrod Bank for the establishment of a division that will focus on deploying Net 1’s wage payment solution in South Africa.

The division is expected to compete against other players in the lower end of the retail banking market such as Capitec and the big-four banks. Net 1 estimates that there are 5m unbanked and under-banked wage earners in South Africa.

“These wage earners are typically paid in cash on a weekly, bi-weekly or monthly basis and have all the risks associated with cash payments, but none of the benefits associated with having a formal bank account,” said Net 1 in a media release.

“Net1 and Grindrod Bank plan to offer these wage earners a UEPS smart card that will allow the card holder to receive payment, transact and access other financial services in a secure, cost-effective way.”

In terms of the agreement, Grindrod Bank will establish the division and be responsible for human resources, administration, compliance, risk management and financial affairs of the division. Net 1 will be responsible for the supply and maintenance of all UEPS hardware and software required to implement and run its wage payment system. It will receive ongoing fee payments based on the amount of business transacted by the division.

Net 1 CEO Serge Belamont says that finding the ideal banking partner in South Africa has “been a long and arduous process”. Grindrod Bank MD David Polkinhorne says that the initiative provides the bank with improved technology and infrastructure as well as opening up new growth prospects.

More detail is to be announced at an earnings call scheduled for February 8, 2007.

Net 1’s primary business is to provide alternative payment systems to unbanked and under-banked populations in developing markets. The company has its head office in Rosebank, Johannesburg, and used to be listed on the JSE.

Net 1 migrated to the US market after merging with its former partner U.E.P.S. The result was fantastic value re-rating. The company’s value before de-listing in December 2004 was R1,7bn. It’s current market  value is $1,4bn.

Grindrod Bank is a subsidiary of the JSE-listed shipping company. Its three main businesses are: private-client services to high-net worth clients, corporate banking and advisory services.


Comments on this article are closed.





Follow us:

Search Articles:Advanced Search
Click a Company: