Tag: bank fees

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.”

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