FNB app gets eWallet

First National Bank banking app users can send money to any SA cellphone number

First National Bank (FNB) announced today (29 May 2012) that its customers can now send money to eWallets from the FNB Banking App.

This means that app users can send money instantly to any cellphone number in South Africa, FNB said.

FNB explained that when money is sent to an eWallet from the FNB App, funds are transferred instantly and the recipient receives an SMS indicating that funds have been sent to their cellphone.

The recipient is then able to access cash immediately at FNB ATMs, buy prepaid airtime or electricity, send money to another cellphone, purchase or get cash at selected retailers and make once off payments.

According to the FNB website, sending money to eWallet from a bank account costs R8 or R12 depending on the amount sent, and the recipient gets a free withdrawal from an FNB ATM.

Sending money to another cellphone number from eWallet costs R2, as does buying prepaid airtime or electricity.

In addition to the eWallet functionality, FNB said that its app customers can now also use the service to identify and access their Premier Banker by making a call or sending a message free of charge from the App.

http://mybroadband.co.za

Call for transparency on South Africa's banking fees

24 MAY 2012 06:25 - FARANAAZ PARKER

The Mail & Guardian's Faranaaz Parker compares the high cost of banking in South Africa to other banks around the world.

Anyone who has opened a bank account in a developed country will have an anecdote about the efficiency of service in those countries. 

My story involves being laughed at by a banker at Barclays in Cambridge when I asked how much it would cost to withdraw money at an ATM. “Why would we charge you to take your own money out of the bank?” he asked.

Why, indeed.

So I felt vindicated when I heard that national consumer commissioner Mamodupi Mohlala-Mulaudzi questioned the transparency of bank fees for withdrawals at ATMs.

Mohlala-Mulaudzi complained that low-income earners are most affected by charges at ATMs and said people who receive grants should not be expected to pay them. The commission has recommended banks display withdrawal fees on ATM screens before the customer concludes the transaction. 

The picture doesn’t look good for South African banks. The ombud for banking services, advocate Clive Pillay, has said that not only do South African banks charge more for services than their international counterparts, they also offer lower interest rates on positive balances.

Charging more
Pillay pointed out that, when it came to current accounts, South African banks charged fees for more services than their international counterparts.  

“Transactional fees are applied for each service except where the customer elects to have a bundle of services of which a composite monthly service fee is charged,” he said. 

In a perfect world customers would have fewer charges on their accounts overall and nobody would get charged for something as simple as a cash withdrawal at an ATM. It’s these small, frequent charges that slowly grow to be a major irritation.

Among the local banks, excluding transactional packages that require a monthly service fee and allow a certain number of “free” transactions, the numbers work out roughly as follows:

Absa charges R3.85 per withdrawal with an additional charge of R1.10 per R100. Nedbank similarly charges R3.50 for withdrawals plus R1.20 per R100 withdrawn, and Standard Bank charges R3.90 per withdrawal plus an additional 1.17% of the value drawn.

Capitec charges a flat rate of R4 and FNB charges R5.70 per R500.

These fees increase significantly if you use an ATM that does not belong to your bank, with some banks charging a penalty fee that is more than double the usual rate, in addition to the charge per R100 withdrawn.

Helping you bank better
A tally by My Broadband’s Quinton Bronkhorst shows that to withdraw R1 000 at an ATM, South Africans pay anywhere from R4 from Capitec at a Capitec ATM to R22.30 from Standard Bank on a non-Standard Bank ATM.

Banks will tell you that they’re dropping their prices and simplifying their accounts to help you bank better. They will tell you to cut your costs by withdrawing cash at a till point at a retailer or at one of their own ATMs. Or they will tell you to make fewer withdrawals of larger amounts of cash. Because what every South African needs is to stuff a wad of cash down their shirt and hope nobody mugs them on the way home.

The bottom line is that there is a not insignificant charge associated with accessing your own money from your own bank, and an indeterminate penalty fee when you get your money from another bank’s ATM.

Overseas banks, in comparison, make no claims on the money you choose to transfer from your account to your pocket.

There’s no fee for a basic Barclays account in the UK and if you use your debit card to withdraw cash from a Barclays ATM, it’s free. If you’re using a non-Barclay’s ATM, you receive an on-screen warning about the charge before you complete the transaction.

The US’s largest bank, Bank of America, charges customers a monthly transaction fee but it gives customers alternatives for avoiding the fee. Depending on the type of account you have, the bank might waive your monthly fee if you maintain a certain minimum daily balance or if you choose to receive paperless statements and to make all your deposits and withdrawals at an ATM.

Withdrawals at an ATM are free, unless they’re conducted at a non-Bank of America ATM. This incurs a flat $2 fee.

Notifying customers
Australia’s largest bank Westpac has no ATM fees, regardless of whether you use a Westpac ATM or not. Its day-to-day account comes with a nominal $5 monthly charged, which is waived if there is a single deposit of at least $2 000 before the end of each month. So if you had say your salary deposited into your bank account each month, you wouldn’t be charged for transactions.

One argument why notifying customers of the costs of withdrawing money from an ATM wouldn’t work is practical – each bank would need to know what the others charge individual customers for withdrawals. This is complicated because banks offer so many different transaction packages.

So far only Capitec has supported the idea of displaying the actual withdrawal fee. But then it can afford to – Capitec customers pay a flat fee for cash withdrawals, which essentially eliminates this complication. 

According to spokesperson Charl Nel, Capitec gets 130 000 new customers each month, so perhaps there is something in this flat fee structure that other banks could learn from.

But Capitec is a small bank among the country’s big players and it is among the Big Four that change would need to happen for consumers to see the benefits. 

Environmental context

Cas Coovadia, managing director of the Banking Association of South Africa has defended local banking practices. Coovadia said fees and charges must be considered within the context of the environment, which is influenced by factors like bandwidth costs and security challenges as well as regulatory constraints.

“Full transparency is the ideal. However, given the particular business models in banking, and the nature of relationships between banks acting as agents for each other, the issue becomes much more complex,” he said.

Coovadia said recent disputes between banks before the Advertising Standards Authority show the level of competition for customers between banks. “This is good for customers because competition drives down costs. I don’t believe we are heading for a price-war but we are certainly heading for an increasingly competitive environment,” he said.

Coovadia said that given the online real time service, the wide distribution of service points, the costs of infrastructure such as equipment, data links, security at the installation, and Saswitch service - which allows customers to draw money from any ATM - ATM withdrawal fees were reasonable.

“There is no such thing as “free banking”. Banks are commercial entities that need to earn a reasonable return to provide the services they provide and to maintain and increase shareholder investment. Any cost-free service in one area has to be made up through increased costs in other areas,” he said.

This is a fair point but it doesn’t mean that no-fee withdrawals are beyond the realm of possibility in South Africa.

http://mg.co.za/

African Bank acts to protect against unsecured lending

With much debate in the market about the high growth in unsecured lending and the possibility of a credit bubble forming, the country's biggest microlender, African Bank Investments Limited, says it initiated preventative action some time ago by making its underwriting criteria and affordability tests more stringent, to ensure that it reduces its potential exposure to customers displaying undue appetite for credit.

Image: Financial Mail

African Bank Investments Limited CEO Leon Kirkinis

Articles

• 

  African Bank continues to make strides with strategy

• ABIL interim earnings up 25% to R1.4bn

But, by the same token, the group says while there are groups that are overextending themselves financially, it has not seen this growing trend among its customers.

African Bank Investments Limited (ABIL) CEO Leon Kirkinis says it is also essential not to lose sight of what the borrowings are being used for, with research showing that ABIL's customers consistently utilise more than 50% of their borrowings for housing, home improvements and education.

Kirkinis says experience has shown that wherever there is a rapid expansion of credit markets, heightened caution is required. These cycles normally take 18 to 24 months to play out, he says, adding that there are signs of increased stress in certain sectors of the market.

"What is clear is that the lending market is changing and that competition continues to intensify. Lending has moved away from mortgages and instalment credit to unsecured lending for a variety of reasons, not least of which is to improve margins and ultimately, risk-adjusted profitability. Customers are encouraged to migrate to unsecured credit for their additional financial needs.

"This is particularly evident in the growing number of higher income earners in this segment of the market who, even in a rapidly growing market, have almost doubled as a percentage of the unsecured market between 2008 and 2011," Kirkinis notes.

In the light of the surge in unsecured lending the National Credit Regulator (NCR) is in the process of conducting a number of enquiries and investigations relating to unsecured lending. These enquiries and investigations are market related, product related, general information gathering and related to possible reckless lending. The South Africa Reserve Bank (SARB) also commissioned a study into unsecured lending to understand the current market conditions in the banking sector, while the NCR's exercise includes the registered credit providers outside the banking sector.

"Evidence suggests that the real growth in personal disposable income, reducing household debt levels and stable to reducing debt service costs as term lengthened, have protected disposable income. However there are groups of customers who are overextending themselves financially although we have not seen a growing trend of this amongst our customers.

"ABIL has also initiated preventative action some time ago by making its underwriting criteria and affordability tests more stringent, to ensure that we reduce our potential exposure to customers who are displaying undue appetite for credit.

"It is also essential however, not to lose sight of what the borrowings are used for. Research shows our customers have consistently utilised more than 50% of their borrowings for housing, home improvements and education. This steady trend of customers who use our credit to improve their daily lives and grow their families' futures, is what reinforces to us that our vision is worth pursuing," concludes Kirkinis.

http://www.businesslive.co.za

RAY FAURE
BUSINESSLIVE

Banks cash in as SA borrowing soars

12 MAY 2012 09:01 - LYNLEY DONNELLY

Alarm bells are not going off just yet, but experts say the rise in unsecured credit in South Africa is a worrying trend. Lynley Donnelly reports

Joe “Unsecured” Soap has bankers salivating, credit regulators and analysts jumpy and the South African Reserve Bank reassuring just about everybody who will listen that the local banking sector is in no way at risk of a meltdown. But just who is Mr Soap?

He is the unsecured borrower – anybody who takes credit from a bank or lender, but has no security or collateral against the loan.
According to experts, South Africans from all walks of life are doing more of this type of borrowing for various reasons.

The steady growth in unsecured credit has begun to raise eyebrows in the financial sector. According to the National Credit Regulator’s most recent consumer credit market report, unsecured credit transactions rose by 57.13% between 2010 and 2011, reaching R26.45-billion. From the third quarter to the fourth quarter of last year, it increased by 24.69%.

The unsecured credit market is a growth area for South African banks. Because these loans are deemed riskier, banks are allowed to charge more interest, although they are capped at 32% under the National Credit Act.

Ratings services agency Standard and Poor’s recently pointed out that looming international regulation in the form of the Basel III banking accords and lower credit take-up from South Africa’s cash-rich corporates mean that South African banks are seeking growth in the unsecured credit market.

Unsecured credit
How worried should we be? According to Darrel Beghin, manager for credit information and research at the National Credit Regulator, that all depends on how the credit is being used. Unsecured credit forms about 8% of all lending by South Africa’s banks.
“It is early days yet, but we are watching it,” she said.

The rate of unsecured credit growth is what appears to be causing alarm. It outstrips the growth of mortgage lending, which rose a mere 9% year on year. Meanwhile, as a share of all bank lending, or the gross debtors book, mortgages only rose by 4% between 2010 and 2011.

The real question is whether people are using unsecured credit for productive purposes, such as reinvesting in their homes, or for consumption, such as buying clothes or food. 

Unsecured credit transactions are distinct from other kinds of credit, which include mortgages or home loans, secured credit such as vehicle loans, credit facilities such as store cards and short-term credit or loans of less than R8000, repayable within six months.
Current trends indicate a range of reasons why consumers are taking up unsecured credit.

Paying for consumption
For a start, banks had been more cautious with long-term loans, Beghin said. With banks less willing to extend 100% mortgages, for example, consumers were opting to borrow the difference through unsecured loans.

Loan consolidation is another factor as borrowers bundle their outstanding obligations into a single personal loan with more favourable repayment terms.

A third trend involves consumers taking on unsecured credit to pay for building and renovations. It was particularly prevalent in townships, Beghin said, where a lack of title deeds meant people could not access mortgages.

Unsecured borrowing to pay for consumption or “everything from food to clothes” is another, more worrying, trend. People are also borrowing unsecured credit to pay for education, furniture, vehicles and “other” expenditure such as for weddings or funerals.

Research released last week by Shamil Ismail, senior research analyst at BNP Paribas Cadiz Securities, indicated that households in lower-income brackets held more unsecured credit accounts. Ismail’s research compared the number of unsecured accounts with the living standards measure (LSM) of households. The measure, developed by the South African Advertising Research Foundation, segments people according to their living standards. LSM 1 is the lowest measure and LSM 10 the highest.

Measure brackets
The report findings suggest that households in LSM 4 hold an estimated one million unsecured accounts, whereas LSMs 5 and 6 hold 1.4-million and 1.7-million respectively.

Households in LSM 4 have an average monthly income of R2797 and those in LSM 5 and 6 have incomes of R3839 and R5991, respectively.

Based on the population sizes of various measure groups, the research found that higher measure brackets, namely 7 to 10, have more credit accounts on average, estimated at 5.1 per household. These include mortgages, secured credit such a vehicle loans, credit facilities such as store cards and short-term loans, typically less than R8000 with repayment terms of less than six months.

According to Ismail, unsecured credit growth came predominantly from medium-term products – or loans with repayment terms of between three to five years. The average value of unsecured loans in this category increased from R20000 in March 2008 to R37000 by the end of last year. This might increase the risk of a “mismatch between consumption period and the loan repayment period”, said Ismail.

“As an example, some consumers may be taking out a R10000 loan and spend it on consumables such as food, living and expenses but have to repay it over five years. This can lead to a build-up of debt,” he said.

Growth of credit-active consumers
Anecdotal evidence suggests that people are using unsecured credit to pay for things such as school fees, second-hand cars, home alterations and deposits on new homes, according to Ismail.

Equally worrying is the growth of credit-active consumers as measured against the South African labour force. The research found that there were 5.8-million more credit-active consumers than people formally employed in South Africa.

Ismail warned that the average number of accounts for consumers in good standing – or those meeting their repayment requirements – had risen from 3.8 accounts per household in 2007 to 4.9 in December 2011.

“We believe this could put pressure on the good-standing consumers and they run the risk of becoming over-extended in debt,” he said.

The National Credit Regulator’s credit market report also revealed interesting trends about the uptake of unsecured credit by individuals. It suggested that more unsecured credit agreements were being extended to people with lower incomes. In the fourth quarter of last year, just less than 64% of the total number of agreements granted went to people earning R10000 or less.

Rand values
In terms of the rand values of all the agreements granted, people earning below R10 000 only held a 41.86% share of the credit granted.

People with an income of more than R15 000 held a 36.79% share of the unsecured credit granted. In terms of the number of accounts issued, however, they only held a 20.52% share.

For the time being, though, the regulator’s research indicates that more than 73.8% of unsecured credit, in rand terms, is reported as current.

Despite the attention it is receiving, the banking sector is not developing an unsecured lending bubble, according to the South African Reserve Bank.

“Although certain categories of unsecured lending are showing high growth rates, the total unsecured credit exposure of banks remains at less than 10% of banks’ total gross credit exposure,” it said in its financial stability review released in March.

“At these levels, unsecured lending does not constitute a bubble and the bank will continue to monitor developments closely.”

The view from Capitec
Capitec Bank has made a name for itself in what is becoming the increasingly competitive unsecured credit market space.

One positive aspect of the growth in unsecured credit lending is that South Africans who traditionally did not have access to formal credit avenues can now access banking services. 

Like the South African Reserve Bank, Capitec is confident that unsecured lending is not a threat while prudent lending practices prevail.

“Our credit client range is a good representation of the demographics of South Africa,” said Charl Nel, head of strategic communications at Capitec.

The average unsecured loan size has risen from R2309 in 2009 to R4172 in 2012, whereas arrears have dropped from 10.1% in 2009 to 5.1% in 2012.

Capitec asks its customers to give an indication of why they need a loan, according to Nel.

The most common reasons are home improvements, education, emergencies such as funerals, medical matters, car problems or broken household appliances, and general consumption.

Nel said Capitec did not believe concern was warranted over the discrepancy between formally employed people and credit-active consumers.

“The number of accounts is greater than the number of employed people,” he said.

“This is due to the fact that some people have more than one unsecured credit account [credit cards, store cards and so forth].

“All credit providers have to be sure of an income stream before they extend credit to make sure that they will receive payment on the credit provided.
“We apply the same principles in our business,” he said. – Lynley Donnelly

http://mg.co.za

Big banks agree to cut rates for indebted

South Africa’s biggest lenders had agreed with the government on a trial programme that would cut interest on R14 billion of loans to some of their most indebted customers, the head of the banks’ lobby group said on Thursday.

Loans to people in debt-counselling programmes would be rescheduled over five years, Cas Coovadia, the managing director of the Banking Association of SA, said at the World Economic Forum on Africa in Addis Ababa.

South Africa’s credit and competition regulators were both “on board” with the pilot project, he added.

“We may be able to restructure the debts of 70 percent” of those consumer-bank customers who were in arrears and in credit counselling, Coovadia said.

Bad debt levels at South Africa’s four largest banks, including Barclays subsidiary Absa and Old Mutual’s Nedbank unit, have remained elevated even as the Reserve Bank has held interest rates steady since the end of 2010, limiting the burden on borrowers.

With policymakers expected to raise rates this year to restrain inflation, loan books may sour further.

“The first step to restructure will be to reduce interest rates charged to (equal) the repurchase rate over five years,” Coovadia said. “If people still can’t do that, then the interest rate drops to zero.”

All South African banks and some retailers would be ready to test the programme by the end of June, Coovadia said.

The total number of consumers with impaired credit records increased by 100 000 to 8.93 million in the fourth quarter of last year, the National Credit Regulator said.

The lenders have been targeting low-income households to boost sales. In 2009, Standard Bank said it would loosen loan criteria for mortgages and credit cards.

Central bank statistics show savings as a percentage of household income was zero in the third quarter of last year.

“I am aware of the National Credit Act changes being considered and to be piloted,” said Louis von Zeuner, the deputy chief executive of Absa.

Absa reported a credit loss ratio of 1.01 percent last year, which was almost double the figure reported in 2007, before the financial crisis began.

Nedbank, which posted a 26 percent increase in quarterly profit in February, failed to reduce impaired debt as much as some analysts had anticipated.

The “industry would be looking to pilot a voluntary debt mediation” that “should result in faster resolution with less legal costs”, Nedbank’s chief executive, Mike Brown, said.

Four out of six economists surveyed by Bloomberg estimate that interest rates will rise by 50 basis points in the fourth quarter.

On Monday central bank governor Gill Marcus said economic growth appeared to be sustainable and moderate, and there was little or no room to lower rates given that inflation was at the top end of the target range. – Bloomberg

http://www.iol.co.za/

May 11 2012 at 05:00am 
By Renee Bonorchis

Banking on mobile cash

Though Kenya is the leader in mobile money, with M-Pesa, South Africa has two new innovative payment systems of its own.

The first, called Gust, has quietly been operating since last month and is being used in a closed system to pay for the lunches of MXit cellphone service staff.

The second is FNB's new GeoPay, an add-on to its smartphone app that lets you pay other app users, of which there are now 160000, direct. It was launched this week.

Both use localised direct payments to transfer money to people in close proximity.

Gust works only in Stellenbosch at a range of restaurants where MXit, like Google, pays for staff lunches. It is in early beta-stage testing and works only on Apple gadgets.

GeoPay works within 500m of other app users on Apple, Android, BlackBerry and Nokia smartphones, and tablets.

The app recognises users nearby and lets you transfer money direct to their phone.

The obvious examples include making payments with the app at a shop or restaurant.

But you can also pay money to friends. Friends who "forget" their wallet when going out of lunch will never have an excuse again, joked FNB's Farren Roper at the launch.

Mobile money transactions have proved enormously popular. In Kenya, an estimated 40% of the GDP moves around on cellphones. This is in no small part due to the popularity of the ingenious M-Pesa, which has become the gold standard of mobile money.

But the Kenyans are not the only people embracing mobile money.

"Africa is the continent where mobile money is by far the most advanced," The Economist reported last month.

It cited a survey of 20 countries by the Gates Foundation, the World Bank and Gallup that found that more than "10% of adults said they had used mobile money at some point in the last 12 months".

Three-quarters of the countries surveyed are in Africa. Traditional banking infrastructure in Africa is notoriously poor and an estimated 80% of adults are unbanked, as the Retail Banking Africa conference was told last year. But these new mobile services are going a long way towards solving this.

"In generations to come, some users may never come into contact with traditional forms of banking because of the ever-increasing prevalence of smartphones, tablets and app banking," said FNB CEO Michael Jordaan.

Toby Shapshak | 10 May, 2012 00:46

http://www.timeslive.co.za

FNB launches geo-based mobile payments

The bank is adding a new feature to its mobile application that will allow its customers to make and receive payments when they are in close proximity. By Craig Wilson.

First National Bank is launching a new payment service that allows users of its mobile app to make payments to one another without needing to exchange banking details, provided they are near to one another.

The service uses the GPS chips built into modern mobile devices, with authentication provided by the app.

The service appeared in Apple’s App Store and Google’s Play store on Monday morning. It is also available for BlackBerry devices.

FNB CEO Michael Jordaan will launch the location-based payment feature at an event in Johannesburg on Wednesday. It appears the bank didn’t intend to release the app to users ahead of Wednesday’s launch. TechCentral broke the news about FNB’s plans on Monday morning.

The media invitation to the launch event hints at the new payments feature with phrases such as “get a little closer” and “a new way to pay”.

FNB customers will be able to use the service to make payments to — or receive payments from — app users that are nearby. During the set-up process customers can link one of their accounts — assuming they have more than one — to make and receive payments.

Click to enlarge screenshot

Only the person making payment is required is required to log in; the receiver simply selects “receive payment” and the funds are credited to their default account.

It appears that there is no cost for transfers and it’s not immediately known what the maximum value of transaction will be set to.

The service is only available to users with devices that have GPS functionality, including Apple’s 3G-enabled iPad — Wi-Fi only iPad models don’t support GPS.

Non-FNB customers who wish to receive a geo-based payment can download the FNB banking app. By selecting “geo payments” and entering their cellphone number, an e-wallet (an electronic store of funds) will be automatically created for them into which they can receive a payment. Payments made to the e-wallet can be withdrawn as cash.

Absa, meanwhile, has been trialling near-field communications (NFC) payments with 500 of its employees since December last year. But being GPS based, FNB’s offering doesn’t require users to have NFC-enabled smartphones.  — (c) 2012 NewsCentral Media

Added by Craig Wilson on 7 May 2012.
Saved under News, Top
Tags: Absa, First National Bank, FNB, Michael Jordaan

South Africa: Standard, FNB Sent Back to AD Drawing Board

TIT-for-tat complaints to the Advertising Standards Authority (ASA) have come back to bite Standard Bank and First National Bank (FNB), after they were both accused last week of misleading customers.

The two banks now have to go back to the drawing board and develop marketing campaigns that do not make unsubstantiated promises.

Incidents of banks taking each other to the ASA are not new and show the effect of the rough-and-tumble marketing tactics they are using to grow and protect market share as they battle to grow income.

The ASA upheld one of FNB's complaints against Standard, which claimed all banks were increasing fees yet it planned to help its customers cut theirs by as much as 50%. The ASA said the claim could not be substantiated and breached ASA rules. "As a consequence, the claim in its current format has to be withdrawn completely."

Misleading advertisements

It dismissed FNB's claim that Standard had misled the public by claiming it offered free internet, telephone and cellphone banking because a customer's statement detailing such charges dated from before Standard's move to waive the fees.

The ASA upheld Standard's complaint that a headline in an FNB advertisement, implying it was the only bank leading in saving customers money, was misleading and could not be substantiated, and ordered the headline be withdrawn.

Standard was also not happy with an FNB advertisement that implied it was the "only" bank offering online share-investing products, as well as a facility to purchase airtime, SMS and internet bundles.

"These claims have been held to be ambiguous and, by virtue of that, they are misleading," the ASA said.

The headline "Be with FNB, the bank that leads in selfservice" was misleading as it was "based on misleading claims".

http://allafrica.com

Biz-Community (Cape Town)

Chequebooks on the way out

Article By: Sure Kamhunga

Wed, 02 May 2012 10:16 AM

The days of the chequebook could be numbered as consumers adopt alternative payment methods, bankers said this week, although a "cheque-less society" was still a long way off.

Cheque use by First National Bank (FNB) customers was declining by an average of 15% year on year as customers switched to alternative payment methods, CEO Michael Jordaan said.

SA’s banks have, and continue to invest in, point-of-sale, mobile and internet banking payment systems as part of strategies to reduce transaction costs and improve banking security.

Debit orders for the payment of items such as mortgages, rentals, vehicle loans and even maintenance orders have also reduced the use of cheques and cash, bankers say.

Mr Jordaan said customers were restricting the use of chequebooks mostly to pay utility, municipal or tax bills.

He said the maximum amount that could be written on a cheque was expected to be cut from R5-million to just R500 000 from July, which would reduce the security risk associated with cheques.

Absa deputy CEO Louis von Zeuner said he also expected to see a decline in cheque use.

"We expect chequebook usage to continue the decline. This trend is set to continue and is helped along by regulation that puts maximum amounts to cheques that get issued," Mr von Zeuner said. "However, it will be a long while before we live in a ‘cheque-less’ society," he said.

Mr von Zeuner said Absa was intensifying efforts to encourage customers to discontinue cheque-books and use alternatives such as mobile and internet banking.

"At a corporate (and) large business level, the bulk of activity is indeed done through electronic banking," Mr von Zeuner said.

Banking services ombudsman Clive Pillay welcomed the reduction in the use of the chequebooks because it minimised incidences of cheque-related fraud.

He said cheque-related complaints had "all but disappeared". The eventual "demise" of cheques would be a relief for his office.

http://business.iafrica.com

African Bank ‘to double’ customer numbers

Will continue responsible lending and deny loans where it felt customers could not afford repayments, bank admitted excess credit could destroy lives


MICROLENDER African Bank sees itself nearly doubling its customer base by 2014 as competition for market share in the unsecured loan market intensifies.

The growth of this market has, however, raised concern of a credit bubble — which bankers have dismissed as unfounded. There is concern, however, about the behaviour of some credit providers whose affordability tests are said to be less stringent than those used by banks.

The CEO of African Bank, Leon Kirkinis, yesterday told a combined meeting of staff and customers in Midrand that it would not let up on its plans to expand its already dominant market share in unsecured lending.

It would, however, continue responsible lending practices and would have the "courage" to deny credit if it felt customers could not afford the repayments. "Responsible lending is the foundation of our business because, I think you agree with me, too much credit can destroy people’s lives," he said.

The acting CEO of the National Credit Regulator, Nomsa Motshegare, at the weekend highlighted "undesirable market practices" of unnamed credit providers who denied high-risk customers secured credit but immediately sold them unsecured loans.

"Even though there is no overt contravention of the law in this practice, the ethics … are questionable," Ms Motshegare said. Executives at the top four banks insist they have not relaxed strict affordability tests and neither are they chasing market share at the risk of creating a nonperforming loan book.

The banks also denied claims by Higher Education and Training Minister Blade Nzimande that SA was sitting on a "time bomb" comparable to the international credit crisis, owing to the growth of unsecured loans.

The regulator’s figures show that unsecured credit increased from R21,2bn last September to R26,5bn last December, representing a quarter-on-quarter increase of nearly 25%. Credit facilities comprising mostly credit cards, store cards and bank overdrafts also went up more than 11,5% quarter on quarter from R14,9bn to R16,6bn.

Mr Kirkinis would not provide details of planned customer growth as the JSE-listed financial services group is in a closed period pending the release of its first-half results next month.

However, latest figures show that the group — which has more than 3,2-million customers — added 196000 new credit customers in the first quarter to December last year.

Mr Kirkinis said the meeting was part of a nationwide road show the bank had undertaken in the past three months to meet customers and staff and discuss the group’s strategy.

African Bank is the first local financial institution to hold a combined staff and customer meeting, which Mr Kirkinis said was meant to obtain feedback and discuss the group’s strategy.

kamhungas@bdfm.co.za
SURE KAMHUNGA Published: 2012/04/24 07:29:15 AM
http://www.businessday.co.za

MasterCard launches mobile service in South Africa

MasterCard, in collaboration with local mobile-centric payments and financial services company Oltio, has introduced MasterCard Mobile to the South African market to provide even greater access, convenience and security for online shoppers.

This payment platform will enable MasterCard and Maestro cardholders to use their PIN-based debit, cheque or credit cards, issued by Absa, Nedbank and Standard Bank, and their mobile phone on the MTN or Vodacom network, to pay for online purchases.

A key feature is that it enables Maestro cardholders to make secure online purchases for the first time.

Mobile online convenience

To make an online payment using the system, a cardholder can select to use the payment option on participating e-commerce sites in the same way they would select to pay by credit card, debit card or EFT. For first-time users, they will be securely prompted to register their payment card of choice where they will enter their PIN-based debit or credit card, the expiry date of the card and CVC number. They will also be required to enter their mobile phone number. Once this is done, the cardholder's mobile phone number is used to initiate subsequent payments. Authorisation of payments is done by entering the cardholder's PIN on their mobile phone

"While providing greater convenience, the cardholders have peace of mind knowing that they no longer need to share their card details online. Instead, the information remains secure with the system, which verifies and concludes payments on the cardholder's behalf. Importantly, the MasterCard Mobile solution does not levy any additional fees to the cardholder and, unlike EFTs, the payment is made instantly," says Anna Jones, GM South Africa, MasterCard Worldwide.

"The system is currently being piloted and we are looking to rollout the platform to most e-commerce sites in South Africa in the near future. In addition, it is currently used by MTN for airtime purchases."

19 Apr 2012 11:34
http://www.bizcommunity.com

Bold bid to win a bigger slice

MAYA FISHER-FRENCH - Apr 13 2012 10:15

Although Bidvest Bank is adamant that it is in no way aiming to take on South Africa's big four banks, its latest offering may just give Capitec a run for its money.

Capitec has been the whizz kid on the banking block, challenging the big four in the low-cost market. It does not have the legacy of an expensive branch network and has been able to use technology and efficiencies to lower costs and provide strong competition to the others.

Bidvest Bank is in a similar position, although its traditional client base has been built through foreign exchange rather than microloans. Like Capitec, it is offering a simple, cost-effective bank account.

Bidvest recently started advertising its transactional bank account, which has been in operation since 2009. "We identified that there was a need for customers to get a bank account on a low-cost basis but with flexibility in terms of earning interest," said Darren Abrahams, the bank's head of deposits and investments.

He is clear, though, that Bidvest is not interested in competing head-on with the other banks. "We have appealing deposit products and high interest rates to grow customers, but we don't believe in entering a price war."

Capped fees very appealing
The major selling point of the Bidvest Bank account is that fees are capped at R72 a month. It means that no matter how much banking a person do, the fees will never exceed this amount. And because it is a basic pay-as-you use bank account, the banking fees of a customer who only does a few transactions a month could be even lower.

Bidvest Bank does not have a niche target market -- it services everyone. As part of its client-acquisition strategy, it waives the R15 monthly account fee for clients younger than 21, which makes it an attractive offering for a student or child, whose savings can be eaten away by monthly fees.

In addition, point-of-sale transactions are free for all customers.

But it is pensioners who really benefit, because all fees are waived for customers older than 65. This offering is combined with aggressive interest rates for fixed deposits.

Bidvest Bank has already positioned itself fairly aggressively on the deposit-taking side and its 121-day notice account, which has an effective interest rate of 6.5% a year, is one of the best on the market. Abrahams said it had attracted a great deal of deposits for the bank.

Traditionally, smaller banks have always offered better interest rates than the big four, because they price in a certain amount of risk by not having the kind of balance sheets into which the large banks can tap.

This risk was fully understood in the banking crisis in 2000, when Saambou Bank fell and BoE had to be rescued by Nedbank.

However, Abrahams said that Bidvest Bank had an A3 rating from Moody's rating agency and the backing of the Bidvest Group, whose market capitalisation is about R59-billion. The bank, he said, was compliant with the Basel III capital requirements.

Bidvest Bank's entry into the transactional bank account space is part of its strategy to offer "simple, competitively priced and transparent customer solutions". It is in a position to offer cost-effective banking.

"We come from an environment where we don't have a current client base that will be cannibalised by the new offering. We are trying to keep pricing low to build customers as part of an acquisition strategy and to develop the brand," said Abrahams.

He added that the bank was not spending huge amounts of cash on above-the-line marketing campaigns, allowing it to keep the cost of acquisition relatively low. "We want to grow customers and for them to use it as their primary account by paying their salaries into it, but we do not offer an overdraft facility."

Personalised service
As a small, specialist bank, Abrahams said Bidvest Bank was able to offer a personalised service. Customers can open a bank account in just 10 minutes with a minimum balance of R50.

So should you be banking with Bidvest Bank? It is a very compelling offer if you are looking for a children's bank account and so is the account for customers older than 65.

Lower-income earners who have limited transactional needs may find that Capitec offers a better solution -- its monthly fee is a third of Bidvest's fee and the transactional costs are generally lower.

Interest rates on Capitec's Global One account are also higher for lower balances, paying 6% for amounts under R10 000.

However, if you are a higher income earner who transacts frequently, the R72 cap on Bidvest's account is appealing and could substantially cut your banking costs.

The downside is that Bidvest has a limited number of its own ATMs -- only 52 -- and customers would have to rely on those of other banks, which is more expensive.

Although customers would only pay R2 to draw cash at major retailers such as Pick n Pay and Checkers, it would cost about R11.40 to withdraw R500, for example, if they used another bank's ATM. But once you reach the R72 a month limit on fees, all ATM withdrawals are free.

http://mg.co.za

Chargeback works for ticket refunds

April 16 2012 at 10:51am
By Wendy Knowler


If you own a credit card, there’s a good chance you’ve been using it for years without ever having heard the term “chargeback”, much less understood how it could work for you.

Chargeback is a wonderful consumer protection, offered by banks and their credit card company partners, which sees those who have paid for goods or services with their credit cards being refunded if they don’t get what they paid for.

You can also apply for chargeback in the case of billing errors, duplicate charges or fraudulent transactions. Essentially, your payment is reversed if your application is successful.

So, for example, if you make an internet purchase with your credit card and the item doesn’t arrive, or is not what you ordered or is defective, and the seller won’t refund you, you can apply to your bank for chargeback.

The same applies to any purchase made with your credit card.

But there’s relatively little consumer awareness of chargeback in this country, so many consumers have suffered a loss when they could have applied to the bank that issued their credit card for chargeback.

Early last month, when it became clear that budget airline Velvet Sky was in trouble, I began advising Consumer Alert readers about chargeback and exactly how to go about applying for it, having sourced specific information from each of the four major banks.

I’m happy to report that I have received e-mails from several readers who followed that advice and have since been refunded.

“Thanks to your article on March 5 on chargebacks, I approached Nedbank for a refund, which has now been reversed into my account for the unused Velvet Sky tickets,” wrote Mike Caminsky.

“I applied for a refund from Velvet Sky first, but am still awaiting a response or acknowledgement from them. The last time I called them I was told that their bank account had been frozen!”

Veenay Bennideen applied for chargeback at First National Bank, having had no response from the airline to his request for a refund.

“The chargeback was successful and I got all my money back,” he reported last week. “Thank you sincerely for your advice and support in this matter. I would never have known about this option were it not for your advice.”

Parlan Moodley was thrilled with Nedbank’s response to his chargeback request: “The card division initially told me that it would take up to 45 days. I filled in the forms and faxed them off on Friday and on Monday they informed me that my account had been credited.

“I wasn’t aware of the chargeback facility until I e-mailed you,” Moodley said. “Banks should advise all clients applying for a credit card of this.”

Indeed.

Prominent disclosure – and the consumer awareness which results – is essential if the chargeback remedy is to be meaningful.

So Consumer Alert is doing its bit, again, to raise awareness about chargeback.

Here’s how to go about requesting chargeback from the various banks – you will be asked to provide substantial supporting documentation.

Absa

A cardholder has 120 days from the date of non-delivery of a service to request chargeback via Absa.

Cardholders need to first attempt recovery from the supplier, failing which they are entitled to initiate a chargeback dispute.

From there, a formal process is followed between the issuing bank and the merchant’s acquiring bank (the bank that processes card transactions on behalf of the supplier) to determine the validity of such dispute. Should the dispute be found to be justified, the supplier of the service is debited and the cardholder’s account is credited.

To claim chargeback via Absa, call 0861 462 273, visit a branch, or e-mail disputes@ absa.co.za

Nedbank

Nedbank clients – holders of Visa, Mastercard or American Express cards – have just 30 days from the date on nondelivery to raise a chargeback claim.

“This allows enough time for Nedbank to validate the chargeback before we finally submit it to the acquirer,” says Pamela White, the bank’s head of corporate card services.

To claim chargeback from Nedbank, call the bank’s call centre at 0860 555 111.

A dispute form will be provided, and you’ll be asked to provide the standard documentation.

First National Bank

FNB clients have 180 days from the transaction date, or the expected delivery date, to apply for a chargeback.

FNB customers should call 087 575 1111 to get the necessary form, which needs to be completed and e-mailed or faxed back.

Standard Bank

Standard Bank gives its customers 120 days in which to apply for chargeback from the time the service has not been rendered. E-mail Chargebacks.disputes@ Standardbank.co.za

A big thumbs-up to the Shoprite group for coming to the rescue of Velvet Sky would-be passengers who paid cash for their tickets at Computicket outlets.

In an unprecedented move, Computicket Travel offered to refund the estimated 1 600 affected ticket holders nationwide – to the tune of R2.2 million.

This was despite Compu-ticket (which is owned by the Shoprite group) having paid the ticket money over to the airline. For more information, call 0861 915 4000.

For those who paid cash for the tickets, or made EFTs into Velvet Sky’s account, I’m afraid it’s not looking good.

The airline’s promises to refund “grounded” ticket holders within 21 days appear to have come to naught.

http://www.iol.co.za