South Africa’s financial and telecommunications sectors are undergoing a fundamental shift in how they verify customer identities. Faced with a staggering increase in the cost of accessing the Department of Home Affairs (DHA) national population database, banks and fintechs are moving away from routine database pings toward sophisticated, “reusable” digital identity systems.
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The catalyst for this change was a controversial price hike implemented in July 2025. Under Home Affairs Minister Leon Schreiber, the fee for real-time ID lookups surged from as little as 15c to as much as R10 per transaction. While a batch-processing option exists at R1 per query, the industry argues that these costs are unsustainable for high-volume environments where Know Your Customer (KYC) checks are mandatory for fraud prevention.
This fiscal pressure has exposed the flaws in traditional verification. Historically, access to the DHA database was loosely controlled, allowing even unregulated entities to query it via APIs. Today, the combination of high costs and uneven data quality has forced institutions to rethink their architecture to avoid risky workarounds, such as using outdated, cached copies of the database.
Industry leaders, including Sumsub’s Tom Schoon and FutureBank CEO Sergio Barbosa, are advocating for a layered identity strategy. Instead of treating the DHA database as a default step for every transaction, the new model uses it as a “legal anchor” to establish a core identity just once.
By “reusing” a verified identity for a defined period—typically several months—banks drastically reduce their exposure to escalating government fees. Future lookups are only triggered by specific risk flags or time-based expiry, rather than routine events.
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The benefits of this transition extend beyond cost savings. Consolidating KYC, anti-money laundering (AML), and fraud detection into a single orchestration layer reduces friction for consumers and supports scalability. As South African banks expand across the continent, this interoperable model becomes vital in markets where identity infrastructure varies wildly.
If successful, South Africa’s shift could serve as a digital blueprint for the rest of Africa. By lowering the friction in cross-border payments and trade through a unified trust mechanism, the region can build the robust financial infrastructure necessary for the next phase of digital growth.
