Tag: banks

By Lucinda Shen for Fortune

As of Monday’s market close, those who bought into Uber at its IPO are down roughly $1.4 billion.

But very early investors, and now, the bankers that helped take the company to market are in the green. Uber shelled out $106.2 million to a bevy of underwriters led by Morgan Stanley, per filings with the Securities and Exchange Commission. The group also includes Goldman Sachs, BofA Merrill Lynch, Barclays, Citigroup, and Allen & Company.

That comes as shares of Uber fell another 11% Monday—pulling its valuation down to $62 billion and representing a collective $1.4 billion loss for those who bought in at the company’s $45 IPO price. Assuming that Uber drivers took up all shares offered to them at the IPO price, they are collectively looking at paper losses of about $43.2 million.

On Friday, Uber CEO Dara Khosrowshahi sought to calm his employees regarding Uber’s stock price.

“Like all periods of transition, there are ups and downs,” he wrote in a note to workers.”Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”

In particular—Facebook’s IPO may echo strongly with that of Uber’s. That IPO too involved Morgan Stanley in the lead role. Following a lackluster first day of trading, the bank’s fees, as well as trades stemming from its role as the lead in the deal, were heavily scrutinized. A Massachusetts regulator later fined Morgan Stanley $5 million over the IPO, arguing the underwriter had selectively disclosed information to certain clients over others.

It remains to be seen whether similar investigations will follow Uber’s IPO. But for now, count the banks as one of the few parties that have profited from this deal.

By Roxanne Henderson for Business Day

From free burgers and ride-hailing services to hip-hop concerts and discounted petrol, SA banks are going all out to win customers as competition hots up.

The biggest lenders are facing an onslaught of entrants for the first time in 12 years. And they are responding before the newcomers find their feet by pushing loyalty programmes, revamping digital offerings for technology-savvy millennials, targeting existing customers with extra products and services and cutting fees.

The challengers — some of whose founders or senior staff cut their teeth in the banks they are now up against — could not be coming at a worse time. Most lenders are reducing costs, retrenching staff and closing branches to cope with an economy that has not expanded above 2% a year since 2013 and a move toward the increased use of digital services.

Tax increases, higher utility costs and stubbornly high unemployment are squeezing consumers, who are not only looking to cut their expenses but also want more convenience.

“Banks are becoming more client-centered, many new players are entering the space offering a basic banking account at competitive prices, so they have to create stronger relationships with existing clients,” said Nolwandle Mthombeni, an analyst at Mergence Investment Managers in Cape Town.

“Technology has become the biggest expense item for some of the incumbents as they try compete with new entrants that do not have any legacy systems.”

FirstRand’s First National Bank, Standard Bank, Absa and Nedbank are using credit as their biggest leverage over new contenders, according to Jan Meintjes, a portfolio manager at Denker Capital.

Central bank data shows that term loans jumped almost 15% in the 12 months to February after contracting the prior two years, while the value of credit card debt increased 9.2% from 4.7% a year earlier, after shrinking in 2017. Lenders are turning to different approaches to snag customers.

Nedbank got local rapper Ginger Trill to launch an offering that gives university students a cheap account, credit card facility, as well as fast-food restaurant and ride-hailing vouchers. It added a digital personal assistant and concierge offering to its app that links to a network of 350,000 product and service providers.

“We’re trying to amplify our brand’s resonance,” said managing executive for consumer banking Mutsa Chironga.

Nedbank, known for targeting affluent customers, also plans to revamp its loyalty programme and digitise its platforms.

FNB tries to get eyeballs to its app by connecting business customers with retail clients, or home buyers to sellers so they can do deals without a realtor. FNB is also digging deep into its client data to find cross-selling opportunities.

“Where we see a transactional relationship with us, but a credit relationship elsewhere, we try to crowd” out competitors, said CEO Jacques Celliers.

FNB rewards cardholders filling up at stations owned by Engen Petroleum, the country’s biggest fuel distributor, through its eBucks programme.

“Our growth in insurance and the exciting opportunities we see in investments will be key avenues for growth,” he said.

Bank Zero, co-founded by former FNB CEO Michael Jordaan, plans to start a digital offering later in 2019 that will be among at least five institutions, including Old Mutual and African Bank, taking on traditional banks.

Discovery, SA’s largest health-insurance administrator, wants to gradually add customers to the bank it recently opened, starting with the 350,000 credit cardholders it shared with FNB through a joint venture that ended in 2018. The company plans to tap into the 4.4-million lives it reaches through insurance, wealth management and its Vitality loyalty programme.

The bank will follow the same concept as Vitality, which rewards clients who eat healthily and exercise with discounts on flights, gym and meals or Apple Watches at a fraction of the price if they meet fitness targets.

“They’re going to make an impact,” said Meintjes. “Whether they’re going to make money is a separate question.”

Billionaire Patrice Motsepe’s TymeBank, which uses kiosks in Pick ’n Pay stores to open accounts with no monthly fees, signed up 210,000 clients within two months. To break even, the lender will need 2-million.

To get this done, it is sending mobile teams and a portable kiosk to transport hubs, university campuses and big employers — a throwback to a technique Absa used in the early 2000s to reach rural customers with briefcases packed with equipment to sign people on. The Big Four know the price of ignoring the competition.

Capitec Bank started as an unsecured lender in 2001 to grow to a full-service offering with a market-leading 11.4-million customers. The stock has gained 59% over the past 12 months, outperforming all the members of the FTSE-JSE Africa Banks index, which is down 0.4% over the period, as well as Investec.

“It’s only when Capitec started evolving and entering into transactional banking that they saw the threat,” said Mthombeni. “Banks are forced to respond differently to competition now.”

By Kevin Lancaster for MyBroadband

Discovery Bank, Bank Zero, and TymeBank – South Africa’s newest banks – are set to “disrupt” the local banking scene in 2019.

Disrupt – an almost meaningless word which is akin to “millennial” in terms of its flagrant use by anyone who wants to show they understand trends and marketing – is not enough, however.

The new banks must destroy everything in their path, particularly the banking fees South Africans pay today.

We recently showed that compared to Bitcoin and Ethereum, and their respective blockchains, local banks are slow and cumbersome.

Where it took Bitcoin and Ethereum under 10 minutes to send tokens from one account to another, a local bank transfer from Standard Bank to Absa took almost 12 hours.

The cryptocurrency transfers did accrue a small transfer fee while the bank-to-bank transaction was free, but there are no monthly fees for most cryptocurrency wallets – unlike a bank account.

The potential of cryptocurrency transactions is not truly realised with local payments, however, and where they truly shine is in international payments.

While maintaining fast transfer times regardless of where in the world you send tokens, the fees you pay do not change. If you send Ethereum to Durban or Dubai, it will take the same amount of time and you will be charged the same fee.

The same cannot be said for bank transactions. “International fees” are charged when you make a payment across a border.

A practical example of this is when you pay your Netflix subscription fee, you pay extra – as the money goes to the company’s operation in Amsterdam.

A Netflix Premium subscription costs R169, with a transfer fee of R4.65 added on top of this.

International fees
These bank fees extend to “currency conversion” charges, too, which means that if you make a payment in an international currency with your card, you will have to pay for the pleasure.

Nedbank, Absa, FNB, and Standard Bank all charge this fee, which ranges from 2% to 2.75% – depending on which bank you are with. Capitec told MyBroadband that it does not charge a currency conversion fee.

While 2% does not sound like much, this accumulates rather quickly when making multiple transactions.

I discovered this on a recent work trip to the US, where I used my South African credit card to pay for items in US dollars.

After checking my online banking a couple days into my trip, I immediately switched to drawing cash for the day and sucking up the once-off withdrawal fee as opposed to making all payments with my card.

And yes, there is an “international fee” when withdrawing cash from an ATM in a foreign country.

Before switching to cash, these are the international fees which I accrued on my card:

R5.47
R6.99
R16.03
R13.56
R4.60
R0.79
R8.01
R3.37
R5.48
R313.72

The total: R378.02.

Whether these fees are implemented by the local bank, international banks, or a combination of the two is irrelevant – as the consumer this is what you pay.

Admittedly, the example of international transactions is an extreme one but it nonetheless serves as a reminder of the culture of fees worshipped by local banks.

These fees extend far beyond international payments and see users being charged to send an email payment confirmation to a recipient.

Before you fill in the text box at the bottom of your online payment confirmation window, entering the beneficiary’s email address so the bank will send them a mail confirming your payment was made, first check how much it will cost.

For me it was R1.10. My bank charged me R1.10 to send an automated email confirming a payment – another discovery made during the fee investigation.

Discovery Bank, Bank Zero, and TymeBank have all talked a big game about disrupting the local banking scene when they launch.

Let us hope they can deliver on their promises and that they will do more than merely disrupt – they must destroy and replace.

Do credit card fees go beyond the law?

Source: Supermarket & Retailer

The National Credit Act (NCA) prohibits a credit provider from charging any fees or charges not listed in section 101 of the act. One of the permitted charges is a “service fee”. Regulations under the act cap this fee at R60 a month, unless an exemption applies.

So, is it legal for banks to charge credit card account holders a “card fee” or a “credit facility fee” over and above a monthly service fee? If not, why has the National Credit Regulator (NCR) done nothing to stop banks from doing so?

At the beginning of last year, Standard Bank started levying a “card fee” on anyone who has a standalone credit card, which is one that is not offered as part of an account with a bundle of transactions for a set fee.

The bank said the fee was to cover the costs of “the administration and maintenance of all the value-added services and features” associated with the credit card.

At the time, Nthupang Magolego, a senior legal adviser at the NCR, said the act provided a “closed list” of fees that a credit provider was allowed to charge under a credit agreement, and a card fee was not one of them.

She said the regulator would “investigate and take appropriate action” if an illegal fee was being charged.

More than a year later, the regulator will not say whether or not it investigated the issue. It has ignored requests for comment.

All of the big five banks are now charging either a card fee or a credit facility fee on some or all of their credit cards.

Ethel Nyembe, the head of card issuing at Standard Bank, also wouldn’t answer questions relating to an investigation by the regulator into the bank’s credit card fees.

Credit cards provide access to certain lifestyle offerings such as access to airport lounges and cinemas.

Customers who don’t want these benefits can use alternative credit offerings such as personal loans, overdrafts and certain credit cards from which such offerings are removed, says Nyembe.

Cilliers Kriel, CEO of the credit card division at FNB, says the bank’s credit card is more than a credit facility. It’s also a “financial services product”.

“The credit card account is a financial services product as defined in the Financial Advisory and Intermediary Services Act which can be used to make deposits, withdrawals, earn credit interest, make payments either by swiping at merchants or by debit order.

“The credit facility gives the customer the option to borrow, up to an agreed limit . The credit facility is attached to and maintained in association with the credit card account.”

Absa and Nedbank also separate the charges on the card account from those charged for a credit facility.

The NCA permits a credit provider to charge fees relating to the financial services agreement or account beyond those listed in the act for a credit agreement, says Kriel.

But Trudie Broekmann, an attorney who specialises in consumer law, says the act does not define a “financial services account”, so it’s not clear what the lawmakers intended by this.

Only if they intended to include a credit card account in the definition can the banks rely on the exemption and charge more than the R60-a-month service fee, she says.

In her opinion, the section of the act that treats the credit facility and the financial services account as separate components was drafted with an overdraft facility linked to a cheque or current account in mind. With an overdraft facility, it’s clear the credit facility (the overdraft) is secondary to the financial services account (the cheque/current account) and so regarding the two as separate components does not appear to be misplaced, she says.

“In the case of a credit card account, however, the credit facility and the financial services account are one and the same and it seems artificial to regard the account and the facility as separate components subject to separate service charges.”

No-one opens a credit card account without a credit facility and the primary function of a credit card account is to provide access to the credit facility, she says.

Treating them as separate components and charging you for each is like a supermarket charging you separately for an egg shell, egg white and egg yolk, she says.

Broekmann says it can be argued that the banks are in breach of the act when they charge you more than R60 a month on your credit card.

“This contention should be tested and I would be eager to represent a group of credit card holders . in taking the complaint to the National Consumer Tribunal to reach clarity on this aspect.”

Several European banks have been drawn into money-laundering allegations centered on dirty Russian money. Much of the information has been made available to media outfits by The Organized Crime and Corruption Reporting Project, or OCCRP. Investigations into the scandal are under way in the Baltic nations, the US, the UK and the Nordic countries. Below is a list of the main banks touched by the scandal.

Danske Bank A/S

Denmark’s biggest bank admitted in September that much of about $230bn that flowed through its tiny Estonian unit between 2007 and 2015 was probably suspicious in origin.

The lender is being investigated by the U.S. Department of Justice and the Securities and Exchange Commission, as well as by authorities in Denmark, Estonia, the U.K. and France.

Swedbank AB

Swedish broadcaster SVT alleged that almost $6bn in suspicious transactions flowed between Danske Bank and Swedbank in 2007-2015, linking the Swedish bank to Danske’s $230bn money-laundering scandal.

The bank is being investigated by the financial supervisory authorities of Sweden and Estonia. It’s also being probed by Sweden’s Economic Crime Authority for allegedly breaching insider information rules.

Nordea Bank Abp

The biggest Nordic bank allegedly handled about €700m in potentially dirty money, with funds arriving from failed Lithuanian bank Ukio Bankas and heading to shell companies in countries such as the British Virgin Islands and Panama, according to Finnish broadcaster YLE.

Investor Bill Browder filed complaints with Nordic authorities in October alleging $405m of suspicious funds flowed via the bank. Sweden decided not to investigate but Finland has yet to say if it will.

Deutsche Bank AG

More than $889m went from accounts at Deutsche Bank to those of the so-called “Troika Laundromat” between 2003 and 2017, according to German daily Süddeutsche Zeitung—part of the OCCRP journalist group.

The report comes on top of regulatory scrutiny of Deutsche Bank’s role as a correspondent bank in Danske Bank’s money-laundering scandal and a probe by German prosecutors of its involvement in a tax-evasion scheme unmasked by the Panama Papers in 2016.

Raiffeisen Bank International AG

The Austrian bank that’s among the biggest foreign lenders in Russia is the main target of a filing by the Hermitage Fund, detailing $634m allegedly transferred to it from Lithuania’s Ukio Bankas and from the Estonian unit of Danske Bank. Hermitage said the bank ignored signs that should have triggered money-laundering prevention measures.

Raiffeisen has launched an internal probe, yet also points out that Hermitage has filed similar allegations before and that they were dismissed by Austrian authorities.

ABN Amro Group NV

The Troika Laundromat moved about €190m through a unit of the Dutch bank that became part of Royal Bank of Scotland, Dutch newspaper Trouw and magazine De Groene Amsterdammer reported. All assets, data and clients of the unit became the legal responsibility of RBS in February 2008, ABN said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank.

Cooperatieve Rabobank U.A.

About €43m were paid to the Rabobank account of Dutch yacht builder Heesen for construction of two boats for Russian senator Valentin Zavadnikov, according to newspaper Trouw and magazine De Groene Amsterdammer. The money came from the Troika Laundromat scheme, the media outlets said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank.

ING Groep NV

The Dutch bank’s branch in Moscow worked until 2013 with a client who it suspected of involvement in money laundering, the media outlets said.

The Dutch financial crimes police declined to comment on whether it was investigating the bank. ING last year paid $900m to end a Dutch money-laundering probe.

Turkiye Garanti Bankasi A.S.

The Dutch unit of the Turkish bank processed €200m in transactions that came from two Lithuanian banks that were at the center of the Troika Laundromat, the Dutch media outlets reported.

It wasn’t immediately clear if it was being investigated.

Capitec announces fee cuts

By Angelique Arde for Business Day

Capitec is cutting its fees. The bank, which normally announces its fee increases in March, made the announcement a week before new digital bank TymeBank is due to host an investor day, upping the ante in what could be a banking fee price war.

From 1 March, the monthly admin fee on the bank’s one and only account, the Global One account, will decrease from R5.75 to R5. The price of electronic payments on mobile and internet banking will decrease from R1.60/transaction to R1. Debit order fees will decrease from R3.70 to R3.50. The cost of drawing cash at all Pick n Pay, Shoprite, Checkers and Boxer till-points will drop from R1.60 to R1. And the cost of immediate payments has also decreased from R10 to R8.

International and online card purchases, transfers between own accounts and e-mailing statements on mobile and internet banking will remain free.

The bank has increased a few fees: the fee for in-branch transfers and payments will increase from R5.30/transaction to R6. Cash withdrawals from Capitec-branded ATMs will cost R6 per R1,000, while all other bank ATM withdrawal fees will be lowered to R8 per R1,000. Capitec used to charge a flat fee irrespective of the amount withdrawn.

Capitec said in a statement on Tuesday that the bank had experienced its highest single-month uptake to date, with more than 266,000 new clients joining the bank in January 2019.

In addition to low fees, Capitec clients get access to four savings plans, offering from 5.1%-9.25% interest per year,” said Francois Viviers, the bank’s marketing and communications executive.

 

Did the banks collude with the Guptas?

Source: The Citizen 

The EFF has criticised South Africa’s major banks, calling them opportunistic and hypocritical “in their testimony given to the state capture inquiry”.

Standard Bank’s retired head of legal testified at the inquiry on Monday giving reasons that led the bank deciding to close the business accounts of the controversial Gupta family.

Former FirstRand Group – which First National Bank (FNB) is a division of – chief executive officer (CEO) Johan Burger is testifying at the commission today.

“These banks were very happy to do business with the Guptas until the unceremonious December 2015 removal of Nhlanhla Nene as finance minister when South African stocks were severely devalued,” the EFF said in a statement.

The red berets added that by the time of Nene’s axing, the Guptas and former president Jacob Zuma – who are commonly referred to as the Zuptas – were already carrying out corrupt activities “facilitated by the very same banks”.

The EFF said: “It is impossible that the banks only started to notice the suspicious transactions of the Guptas and their companies in 2016 as they now want us to believe.

“The truth is that these banks colluded in the looting of the country for as long as it was feeding into their profit maximisation motives and greed. These are the only driving forces behind the commercial banks. For them, it’s profit before people and the country.”

The party said it hopes the chair of the commission Deputy Chief Justice Raymond Zondo would not be fooled by the testimony of the banks.

“We call on the South African Reserve Bank (Sarb) and the Financial Intelligence Centre to launch a separate probe into the complicity of South African banks in the Gupta state capture and why they turned a blind eye towards an obviously suspicious transactions before 2016 and to hold them accountable for their part in state capture,” the EFF said.

The party added that if the Sarb fails to institute such a probe the party would take it upon itself to initiate a parliamentary probe into the matter.

Meanwhile, Burger testified on Tuesday that FNB had closed the accounts of the Guptas due to associated reputational and business risks.

The dangers of instant EFT services

By Jamie McKane for MyBroadband

Sending money to others over EFT is a common action, but these transactions can take some time if you do not pay an additional fee for express payment.

To circumvent express fees and improve the transfer time of EFTs, many South Africans opt to use third-party instant EFT services.

Using third-party instant EFT platforms requires the user to supply the provider with their online banking details, including their username and password.

The instant EFT service then logs into the user’s online banking account and makes the transaction on their behalf, with the user receiving an OTP confirmation.

While this can result in faster EFTs, it also places the user at risk of having their online banking credentials compromised – and can be a violation of a bank’s terms and conditions.

MyBroadband asked major South African banks about their stance on instant EFT services and the possible security risks involved in using these platforms.

Absa
Absa told MyBroadband it does not approve third-party EFT services.

“Absa does not approve of third-party service providers who utilise screen scraping to facilitate these EFT payments,” the bank said.

“Only approved vendors will be allowed to enter the Absa domain to facilitate third-party EFT services via secure API.”

Absa added that customers who use these services would be liable in the event of their credentials being compromised, as they provided them to the third-party service.

“Absa’s terms and conditions stipulate that customers should never provide their security information to anyone,” Absa said.

“Should customers knowingly provide third-party vendors with their online banking logon details, the customer will be held liable in the event of cybercrime.”

Absa added that it is in the process of enabling more secure connection models via the utilisation of secure API’s for use by third-party payment service providers.

FNB
FNB EFT Product House CEO Ravi Shunmugam told MyBroadband they do not support third-party instant EFT providers.

“FNB does not support the practice of third-party services providers requesting customers to enter their banking login credentials into third-party websites or applications,” Shunmugam said.

“The bank is working with the payments industry bodies, PASA and SABRIC to highlight this practice and potential risks to customers at an industry level.”

“These services are not PCI DSS-certified and we are working with the industry to have similar standards established and enforced,” he added.

Shunmugam said that customers should not share their online banking credentials with any third parties.

“We would like to remind our customers not to enter their login credentials into any third-party website or application and to safeguard their login credentials at all times.”

Shunmugam said customers who have entered their login credentials in any website or application other than their bank’s platforms are advised to change their passwords.

Nedbank
Nedbank Emerging Payments head of business development Clinton Leask said that clients voluntarily disclosing their banking credentials to third-party EFT services were putting themselves at risk.

“We continually advise our clients to ensure the safekeeping and confidentiality of their banking information and not disclose such information to unknown or unauthorised third parties,” Leask told MyBroadband.

“In instances where clients voluntarily disclose their confidential information to a third-party they put themselves at risk by giving third parties the ability to access information about their accounts, banking history, and other confidential information,” he added.

“Consumers currently have the ability to effect instant payments, other than instant EFT, with real time credit payments, which is accessible via Internet banking and with card via 3DSecure.”

Standard Bank
MyBroadband contacted Standard Bank for comment, but the bank did not provide feedback.

By Emily Glazer, Deepa Seetharaman and AnnaMaria Andriotis for Wall Street Journal 

The social-media giant has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking-account balances, as part of an effort to offer new services to users.

Facebook increasingly wants to be a platform where people buy and sell goods and services, besides connecting with friends. The company over the past year asked JPMorgan Chase JPM 0.37% & Co., Wells Fargo & Co., Citigroup Inc. C 0.01% and U.S. Bancorp USB 0.70% to discuss potential offerings it could host for bank customers on Facebook Messenger, people familiar with the matter said.

Facebook has talked about a feature that would show its users their checking-account balances, the people said. It has also pitched fraud alerts, some of the people said.

Data privacy is a sticking point in the banks’ conversations with Facebook, said people familiar with the matter. The talks are taking place as Facebook faces several investigations over its ties to political analytics firm Cambridge Analytica, which accessed data on as many 87 million Facebook users without their consent.

One large U.S. bank pulled away from the talks due to privacy concerns, some of the people said.

Facebook has told banks that the additional customer information could be used to offer services that might entice users to spend more time on Messenger, a person familiar with the discussions said. The company is trying to deepen user engagement: Investors shaved more than $120 billion from its market value in one day last month after it said its growth is starting to slow.

Facebook said it wouldn’t use the bank data for ad-targeting purposes or share it with third parties.

“We don’t use purchase data from banks or credit-card companies for ads,” spokeswoman Elisabeth Diana said. “We also don’t have special relationships, partnerships or contracts with banks or credit-card companies to use their customers’ purchase data for ads.”

Facebook shares climbed sharply Monday on the news, rising 4.45%, marking the biggest one-day gain since last month’s historic drop.

Banks face pressure to build relationships with big online platforms, which reach billions of users and drive a growing share of commerce. They also are trying to reach more users digitally. Many struggle to gain traction in mobile payments.

Yet banks are hesitant to hand too much control to third-party platforms such as Facebook. They prefer to keep customers on their own websites and apps.

As part of the proposed deals, Facebook asked banks for information about where their users are shopping with their debit and credit cards outside of purchases they make using Facebook Messenger, the people said. Messenger has some 1.3 billion monthly active users, Chief Operating Officer Sheryl Sandberg said on the company’s second-quarter earnings call last month.

Alphabet Inc.’s Google and Amazon.com Inc. also have asked banks to share data if they join with them, in order to provide basic banking services on applications such as Google Assistant and Alexa, according to people familiar with the conversations.

Facebook has taken a harder public line on privacy since the Cambridge Analytica uproar. A product privacy team has announced new features such as “clear history,” which would allow users to prevent the service from collecting their off-Facebook browsing details. It also is making efforts to alert users to its privacy settings.

That hasn’t assuaged concerns over Facebook’s privacy practices. Bank executives are worried about the breadth of information being sought, even if it means their bank might not being available on certain platforms their customers use. Bank customers would need to opt-in to the proposed Facebook services, the company said in a statement Monday.

JPMorgan isn’t “sharing our customers’ off-platform transaction data with these platforms, and have had to say no to some things as a result,” spokeswoman Trish Wexler said.

Banks view mobile commerce as one of their biggest opportunities but are still running behind technology firms such as PayPal Holdings Inc. PYPL 0.62% and Square Inc. Customers have moved slowly, too; many Americans still prefer using credit or debit cards, along with cash and checks.

In an effort to compete with PayPal’s Venmo, a group of large banks last year connected their smartphone apps to money-transfer network Zelle. Results are mixed so far: While usage has risen, many banks still aren’t on the platform.

In recent years, Facebook has tried to transform Messenger into a hub for customer service and commerce, in keeping with a broader trend among mobile messaging services.

A partnership with American Express Co. AXP 1.04% allows Facebook users to contact the card company’s representatives. Last year, Facebook struck a deal with PayPal that allows users of that payment service to send money through Messenger. And Mastercard Inc. MA 0.54% cardholders can place online orders with certain merchants through Messenger using the card company’s Masterpass digital wallet. (A Mastercard spokesman said Facebook doesn’t see the card users’ information.)

South Africans love loyalty programmes

By Stephen Cranston for Financial Mail

According to research firm AC Nielsen, SA has the highest penetration of loyalty programmes anywhere, with almost two-thirds of the population belonging to more than one programme.

There are two broad categories of reward programmes in financial services. One is rewards for doing business, which would apply to all the bank programmes.

FNB’s eBucks has been the most successful of these (the eBuck itself was an online currency long before anyone had thought of bitcoin). The other bank programmes — Nedbank’s Greenbacks, Absa’s Rewards and Standard Bank’s UCount — have similar methodologies to eBucks.

Then there are the wellness programmes, which were pioneered in SA. Discovery Vitality is dominant in this sector, with Momentum Multiply in a respectable second place. They both encourage fitness, particularly through discounted gym membership.

Johan Moolman, head of eBucks, says the programme has paid out more than R10bn in its 18-year history.

Customers can spend these rewards on regular purchases such as groceries, fuel and airtime, or they can save them for Christmas gifts or travel,

To stay competitive the number of points needed to move to a higher level has reduced. The ability to accrue eBucks at level 5 is quite substantial, with a 3% accrual on credit card payments, 0.25% on cheque cards, and 15% discounts at Shoprite/Checkers, Gautrain and Uber, the airtime provider FNB Connect and even on FNB Life Cover.

Absa Rewards differs from eBucks in that it pays cash rather than a phantom currency. Head of Absa Rewards Sonja Fourie says Absa’s experience shows that it drives engagement. “Many loyalty programmes are engineered with an overriding goal to drive deals with partners. We need a shift so that programmes are engineered to drive value for the customer and provide the customer with a choice of where to use the rewards.”

Fayelizabeth Foster, the executive head of loyalty and rewards at Standard Bank, disagrees. She was one of the founders of Absa Rewards, but when she was hired to start Standard’s UCount programme five years ago she took a different approach.

“Just giving cash which then gets swallowed up by the monthly bills isn’t the best way to build up loyalty. It is better when a rewards programme gives you something specific that is important to you.”

This could mean a bucket-list holiday, or for example the opportunity to participate in crowd-funding for students.

Nedbank Greenbacks has been successful at encouraging its clients to use their points to buy unit trusts.

It enhances the value of Greenbacks by more than 20% for those who choose to buy unit trusts instead of goods.

The bank programmes do not have the paternalistic approach of Vitality which, for example, only gives discounts at Woolworths and Pick n Pay when it comes to paying for healthy foods.

Foster says UCount is more concerned about helping its clients through the month and pays back up to 20% of the shopping baskets at Pick n Pay and Woolworths. It includes nonfood items such as shampoo and washing powder.

It even has KFC as a partner as it believes that a monthly family treat is valuable for many of its clients.

Unlike its main competitors, UCount points expire after five years. Foster believes this boosts engagement as it forces customers to make an active choice about what to do with their rewards, as they don’t accumulate indefinitely.

Setting up these programmes is complex, time-consuming and expensive and it does not work for everyone.

In March 2017 Liberty cancelled its Own Your Life rewards programme. It was no longer considered to be aligned to Liberty’s strategic direction, with its focus on nice-to-haves such as car hire, accommodation and flight bookings.

Old Mutual has been conspicuous by its absence from rewards programmes, but Jean Minnaar, GM for customer solutions, says the new Old Mutual Rewards programme is being rolled out to staff. It is designed to encourage good financial habits: taking control of finances and working towards financial goals. It will be available even to people who do not own an Old Mutual product though, of course, the group plans to build up enough goodwill to win them over.

In contrast, its rival, Sanlam Reality, encourages people to take out as many products as possible from the life office and its strategic partners, such as Santam and Bonitas medical aid. Ultimately, these programmes would not be worthwhile if they did not add new business.

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My Office News Ⓒ 2017 - Designed by A Collective


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