Can the rental company ask for a copy of my passport?

Hi!

We are planning a trip to South Africa and have booked a rental car through Hertz. We plan to cross the border at Komatipoort to visit Ponta do Ouro, and we requested official border-crossing approval from the rental company.
Although we sent copies of our passports and driver's licenses with certain sensitive details redacted (as we are cautious about sharing our private information), they are insisting on receiving unredacted copies—and they even asked us to send them to a Gmail address.

1. Are they legally allowed to request this?
2. Do other rental companies have the same policy?

Additionally, the customer service representative I spoke with could not explain what happens to these personal copies once the rental period ends, except that it will be stored “indefinitely”…