Big Jump in ID Verification Costs: What It Means for South African Microfinance

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• 08/27/2025
• Big Jump in ID Verification Costs
• ACPAS

Big Jump in ID Verification Costs: What It Means for South African Microfinance

As of 1 July 2025, the cost of verifying a South African ID through the Department of Home Affairs (DHA) has gone from a modest 15 cents to a steep R10 per real-time transaction. While that might not seem like a lot at first glance, this change is already sending shockwaves through industries that rely heavily on ID verification, especially microfinance.

Why the Sudden Price Hike?

For over a decade, financial institutions paid just R0.15 for real-time identity checks via DHA’s Online Verification System (OVS). This under-pricing, however, wasn’t sustainable.

According to the DHA, the new pricing was introduced to:

• Reflect the true cost of running and maintaining the National Population Register (NPR)
• Prevent system abuse and overuse
• Improve national security and support the move toward a Digital ID system
• Help South Africa align with global compliance standards

The under-pricing had its consequences, overloaded systems, failed verifications, long response times, and a weakened NPR.

What’s Changed Since 1 July?:

1. The OVS platform has been upgraded: It’s now modern and faster, with failure rates reportedly below 1%.
2. New Pricing Structure:
   • R10 for real-time verifications during peak hours
   • R1 for batch verifications processed during off-peak hours
3. Government departments continue to use the service for free.

Why This Matters for Microfinance

Microfinance institutions (MFIs) serve communities where traditional banking often doesn’t reach. For these lenders, verifying a client’s identity is not optional, it’s essential. They rely on DHA checks to:

• Confirm identity and citizenship
• Prevent fraud and impersonation
• Stay compliant with FICA and AML regulations

With many MFIs processing thousands of ID checks monthly, this price hike has a direct and significant financial impact.

Let's do the math:

Cost Per Verification	Monthly Verifications	Monthly Cost	Annual Cost
Old Fee (R0.15)	1,000	R150	R1,800
New Fee (R10.00)	1,000	R10,000	R120,000

That’s a R118,200 annual increase, for just one verification service.

What Does This Mean for Small Lenders?

While big banks may be able to absorb the cost, smaller MFIs face a tough choice:

• Increase their fees, passing the cost to clients
• Reduce the frequency of ID checks (which raises compliance risks)
• Tighten lending criteria, which can limit access to credit for the underserved

This could threaten progress made in financial inclusion, a cornerstone of microfinance.

Finding Balance: Compliance vs. Cost

The demand for solid identity verification is only growing. With fraud on the rise, from synthetic IDs to stolen identities. Cutting back on verification isn’t an option.
Instead, MFIs need smarter, more cost-effective ways to stay compliant.

What Can MFIs Do Now?

Here are a few ways micro-lenders can adapt:

1. Streamline with Smart Software

Use loan management platforms (like ACPAS) that integrate ID verification, credit checks, and AML tools, all in one place.

2. Batch Where Possible

Save costs by running ID verifications in bulk during off-peak hours.

3. Optimise When You Verify

Don’t verify every applicant immediately, trigger ID checks only when they’re essential.

4. Engage Through Industry Bodies

Support efforts from organisations like MFSA and SACRRA to negotiate tiered or scalable pricing with DHA.

Who Ultimately Pays the Price?

In the end, increased costs usually fall on the borrower, often low-income individuals. We could see:

• Higher loan fees
• Delays in processing
• Reduced access to credit

For an industry built to serve the financially excluded, this shift is more than a pricing issue, it’s a challenge to its mission.

A Call for Innovation and Collaboration

While DHA’s intentions to improving the system and national security are valid, the rollout left little time for businesses to prepare. The microfinance sector now stands at a crossroads.

This moment calls for:

• Smarter systems
• Industry collaboration
• A renewed focus on affordable, accessible credit

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Looking for a Smarter Way to Manage Verifications?

At ACPAS, we offer powerful, flexible Loan Management Software that:

• Integrates directly with DHA and other verification tools
• Helps you stay compliant
• Keeps costs down with built-in batching and logic triggers

Contact us today! Let’s help you work smarter, not more expensively.

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