bankmonitor south africa

FNB sells an iPad every minute

2012-03-01T15:30:00.000+02:00

Derrick Cramer February 29, 2012

Firstrand bank CEO Sizwe Nxasana sheds some light on iPad sales through FNB

First Rand limited is the largest vendor of Apple iPhones and iPads in the country according to company CEO Sizwe Nxasana.

Nxasana made the revelation in an interview with Moneyweb’s Alec Hogg, where the two discussed First Rand’s success in the current market.

Nxasana noted that FNB was seeing great sales success with the iPad tablet device. “We’re selling one iPad a minute,” he said.

This impressive sales figure has seen FNB make a name for itself in the smartphone sales space. “We’ve become the biggest vendor of iPads and iPhones and smartphones generally,” Nxsana went on.

In addition to the sales figures, Nxasana said that the smartphone and tablet sales continue to drive volumes of new customers signing up to FNB to take advantage of the deal.

Another interesting bit of information revealed by Nxasana is that FirstRand deals directly with Apple, rather than going through local Apple distributor Core to source stock of iPad tablets. “We’re importing directly from Apple and we deliver them directly to customers,” concluded Nxasana.

The FNB smartphone and tablet specials are available to Gold and Platinum FNB account holders, as well as Private banking clients. Devices from a range of manufacturer’s including Apple, Samsung, HTC and BlackBerry are available for a set monthly amount over a 24-month period.

FNB smartphone and tablet deals:

Device	Monthly price (for 24 months)	Gold Cheque Account	Platinum Cheque Account	Private Clients Account
Contract is for 24 months. Account fees are R92 p/m for Gold, R110 p/m for Platinum and Private.
HTC Sensation	R200	R292	R310	R310
BlackBerry Curve 8520	R70	R162	R180	R180
HTC Flyer	R229	R321	R339	R339
Apple iPad 2 16GB 3G Wi-Fi	R265	R357	R375	R375
Apple iPad 2 16GB Wi-Fi Only	R205	R297	R315	R315
Apple iPad 2 32GB 3G Wi-Fi	R309	R401	R419	R419
Samsung Galaxy Tablet 7″ plus 16GB	R219	R311	R329	R329
Samsung Galaxy Tablet 10.1″ 32GB	R279	R371	R389	R389
Samsung S2 Smartphone	R225	R317	R335	R335
Samsung Galaxy Note	R295	R387	R405	R405

http://mybroadband.co.za

What Standard Bank should have done instead of going after FNB on Twitter

2012-02-28T10:19:00.000+02:00

By Tony Seifart
02.27.12

Much has been said about the recent online spat between Standard Bank and First National Bank (FNB). If it really can be called a spat, since FNB hardly reacted to the attack. Both the official FNB account @rbjacobs and the FNB CEO @michaeljordaan chose to “remain above it all”.

In truth, the actions of Standard Bank seemed to mobilise an army of avid FNB fans who condemned the actions of the bank. The allegations were rebuked with seeming religious fervour and harking back to the old days of IRC, I stood amazed at the virtual flaming of @StandardBankGrp.

If you missed it all, here’s a quick recap:
Late afternoon Thursday, Standard Bank announced via its Twitter feed that it had instructed its lawyers to approach the Advertising Standards Authority (ASA) to lay a complaint against FNB for false advertising. It then followed up with specifics regarding a print ad that appeared in the Sunday Times about FNB claiming to have a few “firsts”, such as free internet banking and free accounts for low-cost earners.
It said (and this seemed hard to swallow for many people on Twitter) that it was doing this because it had the public’s “best interests” at heart. Come now, who really believes that?

So what should Standard Bank have done?
Even though Standard Bank has more Twitter followers than @rbjacobs, a fact it bandied around as proof of its superior social media strategy, FNB is far more engaging with its clients. Simply read through both tweet-streams and you’ll see the difference in interaction. Standard Bank remains professional, it’s almost aloof, while FNB makes the point of building a relationship with the people it interacts with — the very essence of a social media strategy.

FNB has Standard Bank waxed on many levels
The ease-of-use of its online banking app is beyond world-class. I’ve played with the apps of a few UK and US banks and find the FNB app far superior. Standard Bank doesn’t even have an app.

FNB has an easy to understand pricing-structure for accounts — a fixed fee per month for almost everything you need — even my maths-based engineering brain can’t figure out Standard Bank’s fee structure.

FNB offers its Gold and Platinum clients discounted tablets and smartphones with 0% interest loans to encourage transactions without needing to go into a branch. Standard Bank has no such offer.

FNB give you access to your own branch or you work directly with a Relationship Manager. Standard Bank insists you work through a call centre — every time you call, you have to talk to a different person, and explain everything all over again.

With FNB you can do everything over the phone, email, or Twitter. With Standard Bank you have to go into the branch for something as simple as changing a PIN.

My point is that it’s really quick to draw up a list areas Standard Bank can improve in — especially when working with a group of techno-savvy upwardly mobile customers — who are based on Twitter. It’s exactly what it should have done.

The irony is that the true issue from Standard Bank’s point of view, the false advertising, was completely lost as more and more people pointed out the bank’s short-comings.

Standard Bank went about this completely the wrong way — if you’re going to take on your competitors in a field they are completely dominating — then make sure that the product or service you provide exceeds theirs. And if it doesn’t, rather keep quiet and work on it.

Making a statement the way it did made Standard Bank look petty. Whether its claims are true or not is for the ASA to decide, but what is rather obvious is that, no matter what the result, Standard Bank comes out looking like sore losers.

I have spoken to a few FNB clients since the incident. They all told me they felt compelled to personally defend the bank. Every FNB Client who is active on Twitter has had some interaction with @rbjacobs who feels more like a person than a corporate Twitter account. It seemed as if the big corporate bully was picking on a friend who had helped people out of difficult situations — and friends protect friends.

So what’s the lesson for us all here?
Interacting on social media is unpredictable. I don’t think anyone at Standard Bank expected the highly zealous reaction from FNB clients. It tried to look like our “Banking Saviour” and, to put it bluntly, ended up looking a bit like the village idiot.

It’s also worthwhile considering whether or not Twitter is the right medium for such an announcement. It’s not easy to get a succinct message across without losing the plot in 140 characters. If you’re going to make announcements on Twitter, surely it would be better to provide a full press-release on your website or blog post and use Twitter to link directly to that.

The tweet is simply too short a message form to handle any really complex argument. The message can easily get lost and confused in the tweet stream, something which was made abundantly clear last week.

If your competitor online is doing something better than you — rather look to yourself. How can you improve your product or service? How can you turn clients into brand evangelists? It’s a strategy that has worked incredibly well for FNB — and it’ll work well for your business too.

http://memeburn.com

FNB lets you send money to Facebook friends with cellphone banking

2012-02-27T10:12:00.000+02:00

First National Bank (FNB) has launched a service that allows cellphone banking customers to send money to their Facebook friends.

According to the FNB vouchers page on the bank’s website, standard charges apply for the transaction and the procedure for sending a voucher is as follows:

Login to Cellphone Banking
Select Prepaid
Select Buy FNB Voucher
Enter your One-Time PIN (OTP)
Select the purchasing account (incl. credit cards), enter your voucher amount and select an FNB Voucher PIN
Confirm the transaction

You’ll receive an SMS confirming your purchase and FNB Voucher Number
Login to Facebook, locate the FNB Vouchers application and send the voucher to your friend.

FNB added that vouchers can only be sent to Facebook users with South African mobile phone numbers. If you don’t send a voucher within 7 days, you will be refunded for the voucher purchase, excluding the service fee.

The recipient of the voucher can use it to redeem Prepaid Airtime or Convert it to cash using FNB eWallet.

FNB’s Facebook-oriented service joins that of another South African run startup, ZunguZ.

ZunguZ lets users of its Facebook application send money to any other Facebook user, which can be withdrawn at any South African bank. For now, international users are limited to using their Visa or MasterCard credit card.

http://mybroadband.co.za

Bank fees: baffle me with waffle

2012-02-24T10:56:00.000+02:00

Pravin Gordhan says banks charge too much. So I asked my bank why an e-mail confirming a payment costs 65 cents.

By Ivo Vegter, Contributor
24 Feb 2012

I like my bank, by comparison with the rest of the big-four cartel. I like my bank like a mugger who doesn't stab me. By all accounts, it is easily the least expensive among the big four, and it gets a lot right about customer service. Seriously, you should all move to my bank (although I've heard good things about a smaller bank with a limited set of services but great value).

I asked my bank – let's call it Bank A – why it charges 65 cents to send a confirmation e-mail to the recipient of a payment.

After all, sending an e-mail costs... hey, anyone know this stuff? I mean, I know what I pay for bread per loaf, and bandwidth per gig. But what do you actually pay per e-mail? An entirely automated, outgoing e-mail, possibly encrypted, which requires no human intervention and is a feature of your business software?

E-mail is a truly trivial application in the 21st century, so I dug up a 10-year-old white paper. It said for an in-house solution sending 10 000 e-mails a week, you'd pay about 10 South African cents per e-mail. By 100 000 e-mails a week, it'd cost one cent, and for higher volumes, even less. Let's assume, generously, that it didn't get any cheaper in the last 10 years.

The price of 65 cents (a profit margin of 6 400%) looks extraordinarily high by this standard. Bank B charges 48 cents. Bank C charges 65 cents too. Bank D couldn't find space in its 58-page fees brochure for this information.

So I asked why. The customer service agents, who happily hang out on Twitter so I can yank their chains in near real-time, said: “This is a service charge associated with the technical administration of secure data.”

Ah, right. The technical administration... what?!

This is 2012. Banks don't employ typing pools anymore. The “technical administration of secure data” today involves no work at all. After a once-off installation of secure mail server software, connected to an Internet pipe on one end and a banking server on the other, it costs nothing measured in units bigger than bytes or microseconds.

In short, it's waffle. There is no such thing as the “technical administration of secure data”.

When I asked how many people the bank employs at their very own Bletchley Park for this evidently quite expensive service, they dodged the question again: “Every e-mail you send needs to be secure, as it contains personal data. Hence we need to have systems that maintain your privacy.”

So, none then.

In a subsequent e-mail, a spokesperson for the bank said the price was intended “to address infrastructure and other costs”.

More lies, then. After all, neither my e-mailed statements nor the paper ones the mailman sticks in the gate next to your mailbox for any passing identity thief to find, attract this “technical administration” fee. Yet they are far more complex, both in the database query that produces it and the infrastructure costs that support it.

The average customer, with average access to the average call centre, is meant to get baffled by this very average waffle.

The CEO of the bank in question was more honest. “Convenience fee. Just copy and paste screen in mail to save 65c,” he told me. At least he's honest: banks do it because they can, and because while it costs them nothing, it's a pain in my neck not to ask them to do it.

However, a similar argument goes for other fees, which aren't so easily dodged.

Internal transfers, which can't cost the bank more than a fraction of a cent in computing time, get billed to the customer at R3.30 a pop. Inter-bank transfers – despite being a simple data message – cost far more. On top of that, the banks between them sit on the electronic data representing your money for 48 hours, stealing your interest.

The pricing guide that lists all these fees runs to 148 lines in a spreadsheet, and that's just for one type of account. There are dozens of these little bitty fees for essentially cost-free actions. Some of them can be avoided, and some can be bundled into flat-fee type accounts, but many can't. When multiplied by the number of transactions and number of customers a bank has, they add up to loads of lovely lolly.

Even bottom-of-the-range “Mzansi” accounts siphon off fees this way, which explains why low or irregular income earners aren't too keen on formal banking. It doesn't earn or save them any money, and the costs are just too high relative to their income.

Pravin Gordhan, in his budget speech on Wednesday, 22 February, said: “Fees for many products in the financial sector remain too high. High costs in savings products undermine the national objective of getting our people to save more.”

Indeed. Saving once earned customers money. Now, they pay to deposit money, pay to keep money in the bank, pay when they withdraw it, and pay hefty penalties for the most trivial “offences”. To add insult to injury, the interest they get is hardly enough to cover the price of an e-mail.

In the heavily regulated world of banking, the barriers to entry for new competition are very high. Cartel incumbents have no incentive to shoot themselves in the foot by aggressively going after each other on price. It is much less expensive to compete on brand marketing and customer service. There's no need to throw in cost-free services as extras just to make an account more attractive, because they're too small to quibble about individually.

So banks get away with the drip, drip, drip of surreptitious gouging, and when a customer does make a complaint, they baffle them with plausible-sounding nonsense. And, as my bank demonstrated, even the best of them do so.

Back when I was a young tech reporter, the exact same bank explained the great benefit of information technology: it allows banks to change their business model, from making money the old-fashioned way, on the difference between loan interest and deposit interest, to making money by charging for every single transaction you make.

“Brilliant,” I thought. “That way you can charge both savers and borrowers, and they'll never even notice how they're being swindled.”

No wonder nobody saves anymore.

http://www.itweb.co.za

Time to smash SA’s bank charges racket?

2012-02-24T10:46:00.000+02:00

Chinese government gets tough on bank charges. SA should do same.

Author: Jackie Cameron |23 February 2012 12:37

BEIJING - South Africans are right up there with Chinese consumers in paying exorbitant, hazy bank charges. The difference is that the Chinese government has heard the voices of discontent and is set to implement rules aimed at preventing banks from charging excessive fees.

China wants to make bank charges more transparent and less complicated. Chinese consumers are fed up of trying to figure out how their bank charges are levied – and the huge profits banks are making on their backs has been a growing source of irritation.

If only the South African authorities would consider doing the same. Finance Minister Pravin Gordhan grumbled about high bank charges when he unveiled the National Budget this week, and threatened further steps, but what we need is some firm, fast, Chinese-style government action.

South Africa’s shockingly high bank charges have long been a bone of contention. It is clear banks can’t, or won’t, jack up their act on their own.

In spite of the occasional shock report or exposé that reminds customers how hard they have it in South Africa, banks continue raking in easy money through retail bank charges. This has been brought home to me living outside South Africa and watching bank charges being continually deducted while there is next-to-nothing going on in my accounts back home.

In one case, an ordinary Big Four personal cheque account – a requirement for taking out a mortgage with that bank some years ago – costs more than R150/month. And that’s before there’s any movement in my account, like a request for an annual interest statement that hasn’t arrived in the post or telephone payments.

Add up all those monthly instalments for a year and I’ve got enough to pay for an out-of-season budget flight on the high traffic Beijing-London route. This is more than most people earn in a month in South Africa.

Tally the basic charges on two accounts and I could soon have enough for a return air fare from Beijing to Johannesburg. That really seems like money-for-jam for the Big Banks involved, which there’s no point naming because they’re all the same.

Looking at it another way, my life assurance which is deducted from that same bank account costs roughly the same each month as my basic bank charges. The financial planner who sold me the insurance cover is counted among that group of intermediaries regularly chastised for doing a job once and getting paid a steady income stream indefinitely.

Yet, my bank is doing exactly the same, and arguably worse. I get nothing back from the bank, really, other than a place to facilitate five monthly electronic payments. There’s no interest being earned on my credit balance, so the bank gets my cash for free.

At least there’s a potential financial benefit at the end of the R150/month life cover - which, incidentally will include various fees, like commissions, that are deducted behind-the-scenes.

Banks usually like to tell us that their bank charges are going up less than the rate of inflation, so are in effect declining in real terms. We’re supposed to be grateful that we’re being squeezed a little less than the banks have in their power to do.

It is hard to shop around because the fee structures vary, and are being continually re-arranged. And, even if you do, you can’t really expect a significantly different picture out of your current bank’s nearest competitor.

It is a similar picture for Chinese consumers. But, this is a year in which a change of national political leadership and growing social unrest globally and nationally are giving the ruling Communist Party of China clique the heebie-jeebies. Growing consumer unhappiness about hefty bank charges is an obvious problem to nip in the bud.

The Chinese government has drafted regulations to compel banks to follow government-directed prices in some cases and in others to be more transparent in setting out market-related prices. It’s not dilly-dallying about the matter either: earlier this month it asked for public comments on the regulations by 20 March.

Last year three banks - Industrial Bank, CITIC Bank and Postal Saving Bank of China – were given large fines for levying excessive charges. One money-spinner entailed charging every time individuals re-set their secret passwords. That apparently netted not far off ¥6m (about R6m) for the banks involved (shhh: don’t tell our Big Four.)

Bank fees contribute about 20% in revenues for China’s banks. These banks already take a juicy income on the back of a guaranteed gap between lending and deposit rates.

China has some of the biggest, most profitable banks in the world. This includes ICBC – which owns a sizeable chunk of South African blue chip Standard Bank, which is listed on Johannesburg’s stock exchange (JSE: SBK).

ICBC was the world’s most profitable bank in 2011, according to China Daily newspaper. It is rated in the top 10 most valuable banking brands in the world, with Brand Finance also including other Chinese banks in the world’s top 20 (ICBC: 8; China Construction Bank: 10; Bank of China: 17).

South Africa’s banks don’t look too shabby, though. Moody’s, a ratings agency, gave the South African banking sector the thumbs up in a report in late 2011. And, Standard Bank and Absa (JSE: ASA) are rated among the top 100 most valuable banking brands internationally; Nedbank (JSE: NED ), Investec (JSE: INL) and FNB (part of JSE-listed FirstRand )are in the world’s top 200.

There is a well-worn saying in some circles that you are likely to enjoy a better return if you buy a life company’s shares than give it your money to invest on your behalf. The same credo could be applied to South Africa’s major banks as well as China’s big banking organisations: it probably makes more financial sense to buy their shares than be one of their customers.

http://www.moneyweb.co.za/

In South Africa, banking convenience meets controversy

2012-02-21T09:44:00.000+02:00

By Dave Mayers | February 20, 2012, 9:58 AM PST

JOHANNESBURG–The launch of a new online system meant to track South African users’ spending habits has erupted in controversy here, calling into question the close-knit structure of South African banking and the power these banks wield over local startups.

Three weeks ago Christo Davel launched 22seven, an aggregated web-based financial management application meant to give users insight into their spending habits. While not a new idea — similar tools like Mint have been available for years in the U.S. — the continuously updated 22seven is the first of its kind in South Africa.

Allistar Fairweather at the Mail & Guardian describes how the app works

"It collects data on your financial habits, slices and dices it, and reveals the hidden costs of those impulse buys and late-night ATM visits. Then, by prodding you gently, it shows you how to save and spend more wisely."

On its face, what 22seven is offering is pretty straightforward — more information on a user’s spending patterns. However, to get that information the company first needs banking log in details. Michael Jordaan, CEO of First National Bank, one of the “big four” of South African banks, summed up the feelings of the country’s banking sector on twitter:

In the immediate aftermath of 22seven’s launch, all the members of the big four cautioned against giving out account details, some going as far as trying to block the service and saying they were no longer responsible for any fraud on users’ accounts if they disclosed banking details to 22seven, even if the fraud was unrelated to the Davel’s application. People were understandably wary of giving their banking information to the site.

For its part, 22seven has assured the safety of its users’ information. The site uses a U.S.-based company, Yodlee, to collect and store account information. It’s all done automatically, and at no point does anyone from Yodlee or 22seven have access to any account details. Yodlee boasts a long track record of keeping its users’ information safe.

Some within South Africa were disappointed in what they saw as an overreaction on the part of the country’s banks. Simon Dingle at the local technology site Tech Crunch said:

What does surprise me is how SA banks, instead of partnering with Yodlee like their leading international counterparts have done, are advising customers not to use the system. It’s just another example of how backward our banks are in their thinking about personal finances, even if they are improving on the service front.

Some argue that this whole dust up could have been avoided if 22seven had approached the local banks beforehand and arranged for a free application programming interface, or API, to be made available to third party sites. Even an official at local bank Absa, Christo Vrey, has singled a willingness to make an API available, although he remains ambiguous about a time frame for doing this. Absa is reportedly also working on its own financial management application that it wants to roll out to its customers soon.

Last week Jordaan’s FNB became the first bank to break from the big four, indicating its desire to work with 22seven in an email sent to its customers. The bank decided to allow users to create a limited profile in order for the company to gain to access their accounts.

22seven will be free while it’s in beta testing. The full version will cost users roughly $10 a month. While the site is being heralded by some as a “world-class” product, the current version runs on oft-maligned Flash, making its design outdated at launch. The company has said that it plans to develop apps for mobile devices like iPhones and iPads that aren’t Flash-friendly.

http://www.smartplanet.com

Mzansi accounts reach dead end

2012-02-17T09:09:00.001+02:00

The big banks in South Africa are scrambling to lure the country's 27-million customers in the mass market with more innovative and cheaper product offerings in a move that marks the near death of the Mzansi account.

FNB was the first bank to challenge Capitec in offering a no-frills, simple bank account when it launched EasyPlan almost two years ago. The other banks have followed and all are now aiming to provide low-cost banking for less than R30 a month.

In July last year Nedbank launched the Ke Yona account; this month Absa extended its Transact account across all its branches and Standard Bank will soon announce its Access account, a paperless, electronic origination bank account.

These banking products are in essence a maturing of the Mzansi bank account. For some banks, Mzansi was a kneejerk reaction to the financial sector charter and it never became fully integrated into their overall banking model. Instead, it was an expensive exercise written off as a social obligation, rather than a real acquisition strategy.

"Mzansi was loss-making," said Leon Barnard, director of Standard Bank inclusive banking. "It had high cost origination in-branch, servicing was expensive and customer utilisation was very low."

Even Nedbank, which had a highly successful Mzansi drive resulting in the largest number of Mzansi accounts of the big four banks, conceded that it experienced a shift away from the Mzansi account as clients' needs continued to change and more appropriate products were designed.

"With the Nedbank Ke Yona offering, we have seen a significant uptake more than three times that of the Mzansi account. Nedbank has more than three million entry-level clients, which include the youth," said Anton de Wet, managing executive of client engagement at Nedbank.

Gift Manyanga, chief executive of FNB EasyPlan, said customers tended to feel ambivalent about Mzansi. "Some customers find it a good fit; others felt it was a poor person's bank account. There are also limits and it becomes expensive with a high number of transactions, or if you have more than R15 000 in the account." Manyanga said there had been a dramatic fall in the uptake of new Mzansi accounts, but the transactional levels remained static.

For many customers the banks' own branded accounts are now cheaper than Mzansi. For example, an FNB Mzansi customer will pay R5 for a cash withdrawal, whereas an EasyPlan customer will pay R2.95. The only real cost advantage of Mzansi is that there are no additional Saswitch fees when withdrawing from another bank's ATM.

More than a bank account
The key for the banks is not to make the same mistakes. Therefore these new accounts come with a new strategy. They need to be sustainable and offer cross-selling opportunities, and they must not be just for low-income, low-transactional earners. In most cases customers earning up to R100 000 a year will find these accounts more cost-effective than present bank offerings. For example, Manyanga said FNB EasyPlan had customers earning up to R300 000 a year. He uses the account and his monthly banking fees are about R34.

"We see this as an opportunity to roll out full financial access through the cross-selling of other accounts in order to be profitable. It is not about flogging cheap accounts," said Lawrence Twigg, managing executive of entry-level and inclusive banking at Absa.

Cross-selling is a key driver of this account, which is why Absa requires customers to have a minimum regular income of R2 000 a month. In fact, the account becomes quite expensive for a customer who does not earn that.

The Nedbank Ke Yona account comprises the pay-as-you-use transactional account, funeral cover, personal loan, JustSave account and Vodacom M-pesa, a money transfer option, all of which enable clients to transact, borrow, save and insure. "We intend to provide them with relevant solutions throughout their life cycle: from the first time they open a savings account, their first job, car, home loan, or when they get married and start a family," said De Wet.

Manyanga said branches signed 15 000 new customers a month and issued 13 000 loans and 6 000 funeral policies. Of the loans, about 35% was new customers to FNB, which offered the opportunity to cross-sell an FNB transaction bank account.

The future of Mzansi

Absa will continue with its Mzansi account because it still has its place as an account for irregular workers or grant recipients, said Twigg. There is also the Absa prepaid debit card that provides basic transactional banking such as cash deposits and point-of-sale transactions. "The aim is to migrate those account-holders into Absa Transact once they are regular earners," said Twigg.

Standard Bank Access, Barnard said, was effectively the Mzansi and E-plan accounts amalgamated into one product. It is based on the MobileMoney account that has been rolled out in townships, where customers are signed up in a paperless electronic environment, dramatically cutting acquisition costs. Customers can open an account at their workplace or at their local spaza shop, known as a bank shop, where they can deposit and withdraw money at reduced rates and buy airtime and electricity.

Like Absa Transact and Nedbank Ke Yona, Standard Bank Access has no monthly fee. "We have simplified the fees, removed ad valorem pricing and there is no monthly fee," said Barnard. He added that it would be the most cost-effective banking product for people earning up to R8 000 a month, which gave it a potential market of 27-million people.

"By the end of the year the bank will have migrated all customers across to a better product with better functionality at a lower price."

Maya Fisher-French
Mail & Guardian
Feb 17, 2012

Mzansi accounts reach dead end

2012-02-17T09:09:00.000+02:00

Switching your bank account as easy as one, two, three

2012-02-13T09:24:00.000+02:00

February 12 2012 at 12:10pm
By Angelique Arde

So you want to ditch your bank and switch to another, but you’re daunted by the prospect of switching and all that it entails?

The Banking Association of South Africa (Basa) has released an updated Code of Banking Practice, which covers switching a transaction account to another bank. It spells out your role and that of your old and new banks.

Basa is an industry body that represents all registered banks in South Africa. Its new code commits members to “making it as seamless and easy as possible for all personal transaction account customers to switch banks”.

The code relates only to transactional accounts, not deposits and loans, which are individual contracts. You may terminate deposits and loans according to the contractual terms, it says.

The code explains that since banks compete to attract new transaction account customers, you need to compare their products and services, fees and charges.

“A number of independent comparison calculators are available to assist you in this. We (your bank) will also assist you to calculate the costs for your specific transaction pattern via our website, call centre or branch services.”

Basa advises that you take the following into consideration before you start the process of switching:

* The rates and fees of your current bank versus another bank;

* Whether the location of branches and ATMs meets your needs; and

* The additional benefits on offer from both banks.

Depending on how you bank, the location of branches and ATMs may be of lesser or greater significance to you.

Once you’ve decided on a new bank, how do you go about switching? Basa says it can be done in three easy steps: open a new account, switch transactions, and close your old account.

1. Open a new account

The first step is to open an account with your new bank.

Give your new bank the appropriate information so that it can transfer debit orders, arrange new stop orders and, if relevant, load your payment beneficiaries.

Most of the banks will do all of this for you at no cost.

Sugendhree Reddy, the director of banking products at Standard Bank, says Standard Bank handles the switching of debit orders as a free service to new clients.

So does Absa, Arrie Rautenbach, the head of retail markets at Absa, says. The bank also notifies your employer of your new Absa account so that your salary is paid into it.

“Switching is a key service that we provide to new customers free of charge. Once a new customer applies for a transactional account, either online or in a branch, Absa’s dedicated switching team will facilitate the necessary changes for the customer,” Rautenbach says.

Andrew Bladon, the head of sales at the Core Banking Solutions division of First National Bank (FNB), says at FNB debit-order switching, salary switching and the loading of beneficiaries are done free of charge for new clients. To switch to FNB, all you do is give the bank your most recent bank statement, for it to identify your debit orders, and sign a one-page mandate, which gives FNB permission to act on your behalf when instructing your service providers about your new banking details, Bladon says.

Anton de Wet, the head of client engagement at Nedbank, says Nedbank ensures that the switching of debit orders and salaries is “seamless” and “hassle-free”.

Your new bank will also provide you with the following information:

* The terms and conditions that are applicable to your new account;

* Details of the fees, charges and interest rates that apply to your new account; and

* Contact information for further assistance in switching your account.

The Code of Banking Practice says: “When you give your new bank a signed debit order or salary redirect form, the bank may inform existing debit order originators of the new account details. You may have to confirm this with the originators.”

The code says that while the banks are committed to ensuring the process is smooth, it requires the co-operation of all parties involved – especially debit order originators and salary, income and benefit payers.

2. Switch transactions

Ask your old bank to provide you with the following information, which, in terms of the code, it must do within 10 business days of your notifying it that you are switching:

* Up to three months’ statements;

* A list of stop orders loaded on your account;

* A list of beneficiaries loaded on your account; and

* Any supplementary or linked cards or accounts that may be affected by the switch.

3. Close the old account

Instruct your old bank to close your account.

Basa says it’s advisable to keep the old account open for at least six weeks after you have switched, so that all transactions can be identified and switched. “Keep some funds in the old account to cover any transactions that are not switched in the six weeks.”

Rautenbach warns that while both accounts are open, you must budget for the cost of maintaining them. He suggests you load an overdraft facility in case payments continue to be deducted from your old account.

“If something goes wrong and an automatic payment bounces, you could be asked to pay a fee, either by your account provider or by whoever the payment was going to. The mistake may be someone else’s fault if, for example, the paperwork you provided was not processed (by the account provider) on time. If this is the case, complain. You may be able to get the fee waived,” he says.

Once you’ve switched, Basa advises that you keep an eye on your debit orders and other transactions to avoid unpaid debit orders and to ensure all transaction originators are using your new banking details.

And don’t forget those once-a-year debit or stop orders in your switching instructions to your new bank.

To download the updated Code of Banking Practice, go to www.banking.org.za. You’ll find it on the home page under “What’s new”.

COMPLEXITY HOLDS YOU CAPTIVE, SAYS BANKING OMBUDSMAN

Clive Pillay, the Ombudsman for Banking Services, says he is not surprised that his office hasn’t received complaints relating directly to switching accounts from one bank to another. Clients are hindered by “banking product and pricing complexity”, which makes it difficult for them to make comparisons, he says.

“Since 2004, the Falkena Report into competition in South African banking identified switching as a problem. The report found that consumers were deterred from switching accounts due to problems with information (insufficient) and costs,” Pillay says.

In 2008, the Enquiry Panel of the Competition Commission also found that the cost to customers of switching banks, including the cost of finding an alternative, created “a significant degree of customer captivity”, he says.

The panel recommended that the Banking Association of South Africa (Basa) develop a set of criteria for a switching code to be included in its Code of Banking Practice.

Late last year, Basa released a revised code of practice, including a switching code.

The switching code does make switching from one bank to another “relatively easy”, Pillay says. However, the problem, he says, is that the switching code in itself will not achieve the objective of facilitating the switching of accounts.

“The problem, in my opinion, lies in the fact that there is considerable product and pricing complexity in banking, coupled with information asymmetries (inequality of information).

“With regards to product and pricing complexity, banks appear to offer the same set of account-holding and transaction facilities, but these facilities are bundled, packaged and priced differently.

“The panel found that there is a need for simplified offerings that can be readily compared, both in price and content,” Pillay says.

The second problem, that of asymmetry of information, makes it difficult for consumers to understand, assess and compare the different offerings of the bank.

“It is only once a consumer understands the product and the pricing and has sufficient information at his or her disposal to be able to make a comparison, that he or she can then make an informed decision, and then switching becomes an option.”

Pillay says: “There is a need for banks to simplify their products, be more transparent with pricing and supplement this with sufficient information so as to enable a consumer to make a meaningful comparison between banks and ultimately an informed decision on switching.”

* You can contact the Ombudsman for Banking Services by telephoning 0860 800 900, faxing 011 483 3212 or emailing info@obssa.co.za

BE SURE TO SWITCH FOR THE RIGHT REASONS

To lure new clients into opening a transaction account, some banks are offering enticing extras – from discounted tablet computers and smartphones to free subscriptions to online, cellphone and telephone banking.

Some of these offers are on condition that your salary is paid into a new cheque account and that you switch your debit orders to the new account.

Excellent as these offers may be, make sure your decision to switch banks is carefully considered and based on sound reasons.

FNB is offering smartphones and tablets at reduced rates to new clients who open a cheque account with the bank. (The offer is also open to existing FNB account holders.) The beauty of FNB’s offer is that you not only stand to score a discount of up to 30 percent on a smartphone or tablet, but you also get to pay it off over 24 months interest-free.

Andrew Bladon, the head of sales at FNB’s Core Banking Solutions division, says the demand for the offer has far exceeded expectations.

Bladon says that since the offer was launched (in October last year), FNB has seen “significant month-on-month growth in new account sales volumes”.

He says the offer is aimed at giving clients access to “aspirational innovative technologies” at less than what the devices cost at retail outlets.

FNB’s offer should also be seen in light of its active promotion of day-to-day banking via electronic banking channels, such as the FNB Banking App, internet and mobile banking, as well as paying for goods with your card rather than cash.

“Our proposition is that a customer will never have to visit our branches unless they choose to,” Bladon says.

Absa offers new clients who open a transactional package the following:

* Free subscriptions to online, cellphone and telephone banking;

* An unlimited number of debit and stop orders;

* Overdraft facilities;

* A free garage card with no debit transaction fees;

* Free SMS notification; and

* A bundled offering, including the option to switch your home loan to Absa.

Arrie Rautenbach, the head of retail markets at Absa, says some banks throw in freebies such as free travel insurance. He says some of these come with a catch and advises you read the small print before signing up.

CAPITEC’s NEW CLIENTS ‘ARE FROM OTHER BANKS’

Capitec Bank, which is reportedly signing up 100 000 new clients a month, says most of its new clients are switching from other banks, as opposed to being previously unbanked clients.

Capitec offers just one account: a savings and transaction account in one.

Carl Fischer, the head of marketing and corporate affairs at Capitec, says during the 11-year-old bank’s “establishment phase” clients were predominantly previously unbanked. But since 2009, most of Capitec’s clients have come from other banks.

Fischer says that although the bank does not record the reasons clients switch to Capitec, feedback and research suggests that the simplicity of the bank’s offering compared with the complexity of their competitors’ offerings is the main reason clients are switching.

Capitec promotes its “simplified services and pricing structure”. The bank charges a fixed withdrawal fee of R3.75 (or R7 at other banks’ ATMs) instead of charging fees on a sliding scale. The penalty fee on unpaid debit orders is R3.75, versus R90 on most accounts at Nedbank, for example.

Arrie Rautenbach, the head of retail markets at Absa, says Absa has identified the key reasons for switching. He says transparency, language, customer needs, fees, skills, and bundled offers all play a part in a client’s decision to switch.

“If information on products and fees is not presented in a user-friendly way, it’s misinterpreted. Many South Africans don’t have English as a first language and have difficulty making sense of brochures or understanding the terms and conditions of a product. Bank employees are not always au fait with bank products and cannot advise clients with regard to the best banking options.”

Sugendhree Reddy, the director of banking products at Standard Bank, says clients often switch because they perceive they can get a better price elsewhere.

“Standard Bank encourages customers to take an interest in their bank charges and understand why they pay the fees they do.”

None of the big four banks – Absa, First National Bank, Nedbank and Standard Bank – would disclose the number of transaction accounts that they have lost over the past year. They say they are growing their new business, and new clients include those from other banks.

RMB Private Bank scoops 6 2012 Euro money awards

2012-02-10T13:35:00.000+02:00

The 2012 Euromoney Private Banking Survey has awarded RMB Private Bank six awards for private banking services, most prominent of which was the overall winner: best private banking service provider in South Africa and Africa.

The annual Euromoney Private Banking Survey provides a qualitative and quantitative review of the best services in private banking, by region, country and areas of service. The survey covers both global and regional categories and includes over 65 countries, as well as the vast array of services the wealth management industry provides.

Factors such as assets under management, profitability and services offered, in addition to other criteria, are all considered when ranking the top private banks.

"We are extremely proud of this achievement and the recognition from our peers. These awards stand testament to RMB Private Bank's commitment to building and maintaining solid relationships with our clients and providing sound wealth management solutions tailored to suit their individual, as well as family, wealth legacy aspirations," says Gavin Tarr, head of RMB Private Bank

The awards are categorised by region and country. RMB Private Bank also won the South African categories of: Best Relationship Management, Best Privacy and Security and the awards for Best High-net-worth-specific services and Best Super-affluent-net worth specific services.

In the aftermath of the global financial crisis, the emphasis on transparency, trust and the prioritisation of clients' needs has increased, especially in the private banking sector. With the introduction of new regulation, such as Basel 3, the business models private banks adopt need to be increasingly focused on liquidity, asset diversification and expectations of higher returns.

"These evolving customer needs imply that a one-size-fits-all approach to private banking is no longer relevant and we have adapted our business model to meet these requirements," adds Tarr.

Clive Horwood, Editor of Euromoney Magazine, noted: "Each year through our survey the industry recognises the brightest and the best institutions in global Private Banking. In a challenging and competitive market, this year's winners have continued to invest in the people and resources necessary to service their clients' needs.

"With the backing of FirstRand, we are able to offer our clients the comfort and security of FNB's innovative banking platform, while still maintaining the bespoke service offerings of a boutique wealth management house. We also understand that our clients are looking for non-traditional investment vehicles and, through our Group association, we are able to offer them access to RMB's merchant banking proprietary products," concludes Tarr.

http://www.businesslive.co.za

Absa Promotion

2012-02-10T11:53:00.000+02:00

Pay the lowest credit card interest rate with Absa

How does 8.8% sound?

Pay the lowest interest rate out there.

Promotion ends 31 March 2012

Your Absa Credit Card gives you exactly what you need today.
Better yet, we already have everything you could possibly need tomorrow.

Now you can bank on more reasons to be with Absa:

Dent your debt with 8.8% interest for 8 months*
Pay no transaction fees on purchases
Pay back as little as 3% in a tight-budget month
Get up to 57 interest-free days to pay on qualifying purchases
Purchase fuel on your credit card and pay no transaction fees
To apply for an Absa Credit Card, call 0861 114 411 or SMS your name*surname*ID number*cash to 35435 (e.g.John*Smith*8005025134084*cash) and we will contact you or visit your nearest Absa branch.

Terms and conditions apply

www.absa.co.za

Briefly…Capitec crowd-sources comment on SA banking

2012-02-10T10:21:00.000+02:00

Capitec Bank has come up with a campaign that responds to South Africans’ frustration with banks. The Speak Up Report invites people from all walks of life and influence to help re-imagine banking by sharing their opinions and ideas on how things could be done, better. The most popular will be consolidated into the fully crowd-sourced Speak Up Report and delivered to key policy-makers during Budget month to help stimulate change on the ground.

“Speak Up creates an opportunity for people to have their say about banking – and to be listened to. It’s not just a platform to whinge about common frustrations either, although these certainly still exist. Rather it’s about asking what South Africans think banks could do to make things easier, more efficient and more consumer-friendly,” explains Charl Nel, Capitec Bank’s head of strategic communications.

“The desired outcome of Speak Up is that the everyday South Africans’ opinions and ideas will be taken into consideration by those in power. You never know, maybe the finance minister will even take notice – he did after all call on banks to change their ways in his National Budget Speech last year, although the status quo has improved only incrementally since then,” says Nel.

To have your say and participate in the Report, visit the Speak Up tab http://www.facebook.com/CapitecBank before 16 February 2012. Results will be made public on 26 February on http://www.facebook.com/CapitecBank, under a results tab.

by TMO Reporter
9 February 2012

http://themediaonline.co.za

Absa introduces entry-level bank account

2012-02-01T13:51:00.000+02:00

The country's biggest retail bank, Absa took a significant step towards simplified, affordable banking on Tuesday with the launch of Transact.

Aimed at customers who are looking for a basic transactional account which is easy to understand and very cost effective, Transact simplifies mainstream banking by offering a full bouquet of services.

"The key advantage of Transact is in its simplicity and affordability. Transact customers will pay no monthly service fees, no Absa ATM balance enquiry fees, no fees when purchasing at till points, no fees on airtime top-ups and no penalty fees," said Arrie Rautenbach, Head: Retail Markets at Absa.

"Transactions will be charged on a pay as you transact basis and will be extremely easy to understand. Till point withdrawals are R1.00 per transaction, electronic payments and debit orders are R2.85 and an Absa ATM cash withdrawal will cost R3.85. Depending on a person's banking behaviour, charges will be very affordable," explained Rautenbach.

"We've essentially taken banking services that are important to our entry level customers, packaged those services and created the Transact product which, on many accounts, is the most affordable of its kind."

The compelling product was tailored with the country's low income earning citizens in mind. "Government has made no secret of the fact that more needs to be done to bring people into formal banking. Absa is determined to play its part in this national imperative, and Transact will certainly help us bank more South Africans," added Rautenbach.

Backed by Absa's extensive network, the product will be available at 748 Absa branches and customers will have access to more than 8,000 Absa ATMs.

Furthermore, Cellphone banking will be free for Transact customers thereby providing the benefit of electronic banking, increased safety and convenience at no additional charge. Cash and till withdrawals, balance enquiries, statements, debit orders, point-of-sale (POS) purchases, mobile banking and ATM payments and transfers also form part of the offer to customers.

http://www.businesslive.co.za

Wealthy but disgruntled customers

2012-02-01T11:25:00.000+02:00

Capitec hopes to lure fed-up customers from big four banks, writes Sure Kamhunga

SURE KAMHUNGA
Published: 2012/01/31 08:52:11 AM

THERE is a saying that the best way to eat an elephant is one bite at a time, which best describes the strategy being used by Capitec Bank to chip away at the edges of the big four banks’ retail market share.

Capitec is making good on its promise to give the big four a run for their money in the fight for retail customers.

Not only is Capitec consolidating in its dominant entry-level segment, but it is now increasingly encroaching into the middle-to upper-income market where it is undaunted by the lack of some of the value-add products that wealthier clients usually associate with a high street bank. For a start, Capitec is opening branches in some of the affluent areas where it is under-represented, compared to the big banks which are entrenched.

The hope is that it will lure customers from the big banks whose patience has been worn thin by sloppy service and high charges. It is also offering comparatively higher deposit rates than those marketed by rivals.

"I think they can win in terms of their simple product offering and attractive interest rates," says Avior Research analyst Harry Botha.

But he cautions that Capitec might struggle to gain customers in the upper-income segment where the big banks have always been comparatively better placed to offer long-term products such as home and vehicle loans.

Capitec CEO Riaan Stassen is modest about the progress the bank has made, pointing out that banking is a marathon rather than a sprint to become market leader.

Capitec, so far, has about 3,5-million customers, the bulk of them in the middle-to lower-income segment, and is adding up to 100000 a month. Analysts say these are not entirely new customers as there is already a lot of cannibalisation in the banking sector, where banks and other credit providers such as microlenders are grabbing customers from each other.

"SA is such a multi-banked market that sometimes you wonder about the accuracy of the customer numbers published by banks, or more precisely, which of these accounts are actually active," says an executive at a rival bank.

Capitec’s strength, so far, has been its dominance in the middle-to lower-income market where the big banks have always been active, but are now intensifying their fight for more customers.

Mr Stassen appears unmoved with this activity by the big banks, believing in the power of Capitec’s brand and the financial support it is receiving from shareholders. These include controlling owner PSG Group — with a stake of about 34,6% — whose CEO Piet Mouton recently told Business Day he expects Capitec to continue to stay "ahead of the curve" and keep a gap between itself and its rivals.

PSG last year supported Capitec’s rights issue when it raised more than R1bn, and also threw its weight behind a decision to issue shares to raise nearly R800m, mostly from institutional investors. The bulk of the funds are for branch expansion and the rest is to strengthen its core tier 1 capital under Basel 3 rules.

Capitec’s strategy is to gain access to longer-term capital to match the extended tenure of its unsecured loans which can now be repaid over up to 60 months.

The bank is expanding its national footprint based on a new "designer" branch that was launched last week, and plans eventually to add 200 branches to the existing network of 500 in the next three years.

Capitec’s expansion — including adding more staff — will put pressure on its cost-to-income ratio, says Mr Botha.

"They announced two to three years ago that they will be building more branches and we are seeing it coming through their high cost-to-income ratio, which is higher relative to their (peer group which includes) African Bank," he says.

Analysts also caution that Capitec might battle to entrench itself in the middle-to upper-income segment in the same way it has succeeded in its core market.

"We must remember that some of these customers have built over time relationships and also have other benefits such as car and housing finance which Capitec Bank does not offer, and this is a major weakness it faces," says another analyst.

Capitec has, however, announced plans to launch its own credit card.

As it expands, it is safe to say only time will tell if the elephant will eventually be consumed.

http://www.businessday.co.za/

Nedbank offers hi-tech debt monitoring

2012-01-25T13:00:00.000+02:00

Johannesburg - Since mid-January this year, Nedbank Group [JSE:NED] has helped more than 13 000 struggling clients save their homes from foreclosure, said SA's fourth-biggest bank.

This followed the bank's launch of a payment solution website which assists customers failing to keep up with their mortgage payments.

The website, www.nedbank.co.za/HomeLoansHelp, allows clients to educate themselves about the best options for their circumstances.

The bank's struggling clients can use this tool to assess their situation and make the best decision accordingly.

Debi Mišura, general manager of Nedbank home loans collections and recoveries, said by making the right choice the bank's clients would be able to recover from difficult situations in the quickest possible time.

Four options

The website has four main options available to its clients, including paying back any missed payments over time and restructuring the loan over a longer period.

Other options including paying back a smaller amount each month and selling the house on the open market using a process called Nedbank assisted sales (NAS).

Miyelani Shikwambana, Nebdank's media relations officer, would not give a rough indication of how many clients the bank's home loans unit serves and how many of these stand to benefit from the website.

"Unfortunately we cannot provide this information at this time (because the bank) is in a closed period," Shikwambana told Fin24.

At the end of the second quarter last year, according to the National Credit Regulator, the total outstanding gross debtors' book of consumer credit surged by R15.9bn from R1.2 trillion to R1.23 trillion.

Topping this debtors' book was R773.37bn in mortgages.

The banks' share of the outstanding gross debtors' book was R1.10 trillion, about 89% of the entire book.

The site also provides an indication of when each option is most suitable, and an estimator that shows the financial impact of each option on the client's finances.

Once clients have an idea of how they would like to proceed or if they require additional information, they can contact a fully trained debt specialist equipped to provide advice and support for the client's decision-making process.

"Many clients have incorrect information about what happens at a sheriff auction. Our experience has taught us that these clients end up losing the most money," Mišura said.

"Our hope is that by providing information through this website and building a team of specialists to provide support, those clients will make better decisions earlier on in the process."

The two most popular options used by indebted clients include restructures and assisted sales.

Restructures are ideally suited for clients who still have a regular income but are struggling to make ends meet. By allowing the loan to be repaid over a longer period of time, the monthly repayment is reduced.

The NAS is suited for clients with severe affordability problems, typically due to a major drop in income.

Nedbank helps clients sell their property in the normal way on the open market, making use of an approved estate agent.

This gets a much better price than through a sheriff's auction. So, both the client and the bank benefit.

If the price achieved is below what the client owes the bank - and it often is - Nedbank offers appropriate terms to enable debt repayment while keeping a clear credit record.

Nedbank is currently helping between 100 and 150 people to sell their property this way each month.

- Fin24
http://www.fin24.com

Borrowers in the pound seats as bank battle restarts

2012-01-24T10:56:00.000+02:00

There are strong indications that, after a three-year lull, the Battle of the Banks for home loan market share is about to heat up again – to the benefit of homebuyers and the property market in general.

“This month’s decision by major lender Absa to once again start accepting applications for 100% loans from mortgage originators is, we believe, just the first salvo in the renewed battle,” says Lew Geffen, chairman of Sotheby’s International Realty in SA.

“The move will no doubt prompt counter-measures from the other banks anxious to retain and gain top quality clients, and shrewd consumers will be the real winners.”

There will no doubt be many people, he says, who believe this scenario is wishful thinking on his part, “but even now, most lenders are already offering bonds of up to 100% to their own existing clients in good standing – and bonds of 90% on average to new clients - despite their stated determination just a few months ago to insist that every potential borrower pay a sizeable deposit.

“What is more, I am not suggesting that the banks will immediately relax their lending criteria. Bond applicants will still need to have excellent credit records, low debt loads and good employment prospects in order to be approved – just now perhaps they won’t need to have such a large sum of cash on hand to pay a deposit and cover transfer costs.”

Geffen says that in due course – and if inflation tails down later this year as expected - the banks will probably also become more negotiable once again on interest rates.

“Meanwhile, bond applicants can at the very least expect higher levels of service and faster response times, as banks increasingly relearn that home loan borrowers are very often the most loyal consumers of their other, very profitable, banking products and services – and not just a high-risk nuisance as they have often been viewed in recent years.”

From an industry point of view, he says, the results of this shift in attitude will be an increase in the number of loans granted, and a decrease in the number of “repeat” sales for estate agents. “Indeed, originators are already reporting an increase in volumes of loans being approved over the past few weeks, and that will inexorably lead to surplus stock being absorbed and home prices starting to show real increases. In short, it will open the way to the proper recovery of the market over the next two to three years.”

http://www.sacommercialpropnews.co.za

FNB’s mobile eWallet available to non-account holders

2012-01-24T10:30:00.000+02:00

South African consumers will now be able to use their cellphones to shop and do banking – even if they don’t have a bank account.

First National Bank and retail store PEP makes the bank’s eWallet money transfer solution available at PEP stores countrywide.

This is as a result of a partnership between First National Bank and retail store PEP which makes the bank’s eWallet money transfer solution available at PEP stores countrywide.

CEO of FNB, Michael Jordaan says that the partnership is a milestone for the bank in its efforts to use innovation and technology to make banking available to South African consumers.

“With this partnership we are further extending banking services to all South Africans, with or without a bank account. This will enable them to send and receive money instantly, a simple yet safe solution in providing access to financial services”.
“FNB eWallet is a market leading FNB Innovation and this initiative takes our product to an additional 1 200 new outlets,” adds Jordaan.

Today any South African consumer with a bar-coded South African ID can deposit money, send money, withdraw money, make payments and purchase goods at any PEP store in the country.

“Previously only FNB customers were able to use eWallet, with this new initiative in partnership with PEP stores across the country enabled, all consumers now can have access to FNB’s eWallet via their cellphones,” says Yolande Van Wyk, CEO FNB eWallet Solutions.
“We are constantly looking for ways to improve on our service and delivery channels. We have seen the importance of innovation and breaking from the norm to differentiate ourselves from our peers,” she notes.

Since its launch in 2009, more than 700,000 eWallets have been created. On a monthly basis an average of 50 000 new eWallets are created.

“We are truly excited about this partnership. FNB eWallet is changing the banking industry and this is evidence that we can do so much more to include all South Africans in financial services. This will ensure that those who previously didn’t have access to banking services can participate in the economic development of our country,” concludes Yolande Van Wyk, CEO FNB eWallet Solutions.

Staff writer - http://www.itnewsafrica.com

Mobile banking explodes

2012-01-19T13:39:00.000+02:00

First National Bank (FNB) announced on Wednesday that its Cellphone Banking channel processed in excess of 25 million transactions in December 2011 with a transaction value of over R2.7-billion, compared to R1.7-billion seen in December 2010.

The bank has more than 3.5 million Cellphone Banking users.

Ravesh Ramlakan, CEO FNB Cellphone Banking Solutions, said the growth of the service was due to its simplicity and the convenience that it offered customers.

"The channel allows you the freedom and ability to bank anywhere, at anytime. Anyone on any network with any cellphone can use it. There are no complicated downloads or special SIM requirements, and registration is free."

Of the 3.5 million Cellphone Banking customers, more than 70% fall between the ages of 18 and 40, and earn less than R100 000 per annum.

The take up on FNB.Mobi had also been encouraging, said Ramlakan, "During the festive season over 600 000 visitors accessed the mobi site. It shows that FNB's investment in offering customers innovative and technology-based solutions is paying off, and that we are meeting our customers' needs."

With FNB Cellphone Banking, customers can perform a number of transactions. They can transfer money between their own FNB accounts, buy prepaid products including airtime, electricity, play LOTTO, pay traffic fines and make third party payments to pre-defined beneficiaries.

Since its launch in March 2005, FNB has taken Cellphone Banking into some of its African subsidiaries, including Botswana, Namibia, Zambia, Swaziland and Lesotho.

"Given the current take-up of Cellphone Banking in the market, we plan to introduce the service to more countries during 2012," concluded Ramlakan.

http://business.iafrica.com/news/773430.html

Pick n Pay in new cash transfer option

2012-01-18T14:10:00.000+02:00

Jan 18 2012 12:31 I-Net Bridge

Johannesburg - Pick n Pay Stores [JSE:PIK] on Wednesday said it has entered into a partnership with BankservAfrica that will allow customers to transfer money without the need for a bank account.

The company said the transfer was immediate, as a person deposits cash at any Pick n Pay or Boxer Superstore and the cash is immediately available for collection by the recipient from any Pick n Pay or Boxer outlet.

A system-generated PIN ensures the safety of the transfer, with recipients having to show both the PIN and the system-generated reference number - along with their South African identification - to collect the cash from a Pick n Pay or Boxer Superstore in their area.

Martin Grunewald, CEO for the BankservAfrica BPO division, said the money transfer system has shown a 20% month-on-month growth since inception in October.

"The 2011 festive season was the first real indicator of the value the money transfer system can bring, not only to the man in the street but to retailers as well," he said.

The money transfer system takes into account all FICA's legal requirements for money transfers.

The cheapest money transfer option on the South African market, the service is backed by Capitec Bank Holdings [JSE:CPI], a registered financial services provider.

Standard Bank to review charges on credit-card petrol purchases

2011-12-12T13:30:00.000+02:00

December 11 2011 at 12:05pm
By Angelique Arde
Following Personal Finance’s lead story looking at methods of paying for petrol and the associated costs – Standard Bank says it is reviewing its position on the fees and interest it charges clients who use a credit card to pay for petrol.

Personal Finance reported that the big four retail banks, including Standard Bank, all treat petrol purchases on a credit card like any other retail purchase: in other words, there is no transaction fee and clients enjoy the usual interest-free period applicable to their card.

However, in response to the story, readers who bank with Standard Bank reported that they are charged transaction fees and interest from day one when paying for petrol with their credit cards.

Although the information carried in the story was supplied and checked by Standard Bank before publication, it was incorrect.

In fact, Standard Bank charges a transaction fee of R3.85 and interest from the time of purchase when you buy petrol on your credit card.

Sugendhree Reddy, the director of banking products at Standard Bank, says that “no one at the bank knew” that charges and interest apply to fuel purchases on the bank’s credit cards.

She says queries by Personal Finance readers have “raised a red flag within the bank”.

“We acknowledge that fuel purchases on a credit card are treated as a cash advance, meaning we charge a transaction fee and interest from the transaction date. But Standard Bank is reconsidering its position. We would have to make system changes, which take time, but by the end of January we would like to have rectified this,” Reddy says.

The Payments Association of South Africa (Pasa) is tasked with ensuring that South Africa’s payments system is world-class and aligned with the South African Reserve Bank’s policies and principles in respect of the National Payment System.

According to Pasa, “a fuel purchase must be treated as a retail purchase” and not as a cash withdrawal, Arif Ismail, the executive of payments strategy, research and communication at Pasa, says.

But Pasa does not regulate pricing – it is up to each bank to decide what it charges for a retail purchase, Ismail says.

Typically, banks do not charge clients a swipe fee for purchases on a credit card, and Standard Bank’s charge for fuel purchases on its credit cards appears to be the only anomaly.

Personal Finance contacted Absa, First National Bank (FNB) and Nedbank again this week to verify the accuracy of information supplied for last week’s article. All three banks confirmed that they treat petrol purchases on a credit card as regular retail purchases and not as cash withdrawals.

The law no longer prohibits petrol from being sold on credit.

In July 2009, the Department of Energy introduced a regulation under the Petroleum Products Act allowing for the use of payment cards to pay for petrol products.

Up until the regulation was passed, South Africa was one of a few countries in the world which prohibited the buying of fuel on credit, “and it was an absurdity”, Tony Twine, a senior economist and director of Econometrix, says.

“The regulation (9117) does not force the banks to treat petrol sales as extensions of cash credit,” Twine says.

Getting clear and accurate information from the banks is not easy. Be prepared to mine your bank’s website and brave its call centre. Call centre staff are often not adequately informed. An operator at FNB card division yesterday gave inaccurate information – checked by his supervisor – to Personal Finance telephonically and via email.

www.iol.co.za

Poor snub Mzansi account

2011-12-12T13:27:00.000+02:00

By: Andile Ntingi
2011-12-11 12:49
Johannesburg - The Mzansi account is on the brink of extinction.

Launched by major banks in 2005 amid fanfare, the low-cost bank account is quietly being dumped because it is expensive to roll out and consumers are shunning it for affordable new-generation products that allow them to transact more and qualify for bigger loans.
The 2011 FinScope survey, published this week by the FinMark Trust, noted Mzansi’s rapid decline as more and more accounts became dormant.

“The research indicates that banks seem to be encouraging their clients less to take up Mzansi accounts than in 2010. It is also often the case that the banks will persuade clients not to open this account,” FinMark Trust said this week.

According to the FinScope study, Mzansi reached its zenith last year when 5 million customers were reportedly using the account. But the number of account holders plummeted 36% to 3.2 million this year.

Despite this drop, the number of banked South Africans has remained stable, with 62.8% of the adult population, or 21.2 million people, still being served by the banking sector.

Major lenders - such as Standard Bank Group [JSE:SBK], First National Bank (FNB) and Nedbank Group [JSE:NED] - confirmed this week that there was a shift away from Mzansi to other advanced low-cost options. Standard Bank and FNB went so far as declaring that the Mzansi account was on its way into obscurity.

But the country’s largest bank, Absa Group [JSE:ASA], said it had seen a growth in customers signing up for the product at its branches.

Leon Barnard, the director of inclusive banking at Standard Bank, said the lender would stop selling Mzansi from early next year.

“Mzansi brought awareness in the market, but we have moved on since then. Our model is based on including more people in the financial system, much more than Mzansi allowed,” he said.

Gift Manyanga, the chief executive of FNB’s low-cost branches, known as EasyPlan, said customers had been migrating en masse from the Mzansi account to other affordable products because Mzansi carried the “stigma of being a poor man’s product”.

“If the rate of migration from the Mzansi account to other products continues, Mzansi will fade away,” said Manyanga.

“Despite the drop in the use of Mzansi accounts, banks are still catering for low-income customers. New customers also prefer more advanced products than the Mzansi account.”

Anton de Wet, the managing executive of personal banking at Nedbank, said the bank was experiencing a shift away from Mzansi, but he was not sure if this was a signal of the beginning of the end for the product.

“We are still selling the Mzansi account, but we are selling the Keyona (Nedbank’s low-cost product) three times more than the Mzansi,” he said.

Absa said its Mzansi sales were growing. not shrinking.

Harriet Heymans, the managing executive responsible for pricing and products at Absa, said she did not foresee the abolishment of the Mzansi account anytime soon.

“What is important to remember is that Mzansi works well for a specific sub-segment of customers. These are customers who only require access to basic financial services.

"We have other products that customers with slightly more sophisticated financial needs can consider,” she said.

“We carefully consider a customer’s needs and behaviour before offering them an account. If their needs are most appropriately serviced with Mzansi, then we will offer the customer the Mzansi account,” Heymans said.

Jabu Khumalo, a research specialist at the FinMark Trust, said: “Postbank is the only bank that is pushing the Mzansi account in the market, but other banks are moving away from it.”

- City Press

Cellphones as payment devices

2011-12-08T10:18:00.000+02:00

2011-12-06
Absa Bank embarks on South Africa’s first live NFC trial that enables cellphones as payment devices

Absa today announced the launch of South Africa’s first live user trial of Near Field Communication (NFC) technology on mobile phones. The trial will kick off in mid-December and involve 500 of the bank’s own staff members, operating in a live commercial environment.

“Absa is the first institution in South Africa to bring Near Field Communication (NFC) capabilities with an EMV (Europay, Mastercard and Visa) card payment application to a handset,” says Arrie Rautenbach, Head of Retail Markets at Absa.

He adds: “The trial paves the way for consumer market utilisation of the mobile phone as a payment device by using the revolutionary NFC technology. While this trial will facilitate low value payments in retail and transit in early stages, we envision many more exciting new forms of mobile payment in the future.”

Absa, in partnership with Mastercard, have embedded their Paypass Tap and Go™ payment card on the handsets for the trial. This will allow trial participants to load funds into a prepaid store of value on a secure element on the phone, at point of sale, through Absa Online or at Absa ATMs.

The mobile payment system also contains the National Department of Transport data structure which will, in future, facilitate more advanced payments in transit. The application on the phone will store details of the commuter, the day and time, where they entered and exited the transit system - and use this information to calculate the fares.

Adrian Vermooten, Deputy Managing Executive of Absa Digital Banking, explains that all the payment and NFC services that are available on the handset will be accessed from the mobile phone’s main menu, in addition to information about each service and customer support.

“By simply tapping one’s phone in front of a contactless NFC-enabled pay point, the value of the transaction will instantly be debited from one’s bank account,” states Vermooten.

From the customer’s perspective, the benefits of NFC will include faster transactions, shorter queues, increased levels of security and the ability to electronically track their spending habits.

Vermooten adds that the trial will enable participants to pay for goods at coffee shops, canteens, and later, at other service providers that are located at Absa’s head office in central Johannesburg.

Research In Motion’s Blackberry models will be the initial handset for mobile payment trials. The Blackberry device will be equipped with an NFC wireless chip, making it well-suited for mobile payments.

Today’s announcement follows Absa’s pioneering of the "tap-and-go" technology which is equipped to make payments by means of tapping cards on a reader. The NFC trial uses the same readers to accept payments from smart-phone devices that are enabled with the NFC technology.

“Both technologies are exploring new ways to add convenience and value to payments, typically leveraging off the NFC technology for mobile phones to breathe new life into ‘tap, pay and be on your way’ payment capabilities,” Vermooten says.

“This trial is going to provide key insights which will prove crucial to refining the customer experience as we bring NFC on mobile to market,” adds Vermooten, adding that “we are currently at the start of this journey”.

In time to come, consumers will store any type of payment cards in their mobile wallet on their handsets, and either pay online by tapping the phone on a merchant’s reader or on a person-to-person basis,” he explains. “This new technology is paving the way and building acceptance networks for mobile payments in future.”

Absa has worked extensively over the past few years with its global parent company Barclays, through its card division Barclaycard, who are global leaders in contactless and this form of mobile payment. Earlier in the year, Barclaycard released an NFC mobile payment product with Orange, the UK mobile network operator. “Our relationship with Barclaycard has provided our Absa team with both the inspiration and the expertise that is necessary to make this new payment form a reality.” says Rautenbach.

He notes that international experience and various research papers have shown that for NFC to become a reality, the close cooperation of major players in the “NFC ecosystem” such as banks, network operators, retailers, cellular handset manufacturers, information technology partners and other players with an interest in creating a customer-focused NFC solution, is required.

“As we learn from the practical, hands-on experiences of the trial, we will continue our discussions and deepen our relationships with the major players in the ‘NFC ecosystem’ to develop the commercial models, and extend the variety of payments instruments made available by the wallet,” says Rautenbach.

In July this year, Absa and Vodacom announced the formation of a strategic alliance to accelerate the pace of innovation in mobile financial services. One of the focus areas of this alliance is NFC.

www.absa.co.za

Financial exclusion up, formal inclusion unchanged

2011-12-08T09:08:00.000+02:00

While overall levels of formal financial inclusion in SA were stable compared to 2010 figures, the FinScope 2011 survey - released on Wednesday - found that the percentage of adults who were financially excluded had increased.

While 73% of adults were financially included - meaning they used financial products from the formal or informal sectors, 68% used formal financial products - mainly from banks.

However, the survey concluded that there had been a decrease in the informally served market, leading to a rise in the number of South Africans that were financially excluded and who kept money in a safe place at home.

According to the survey, 27% of South African adults (just over nine million) were financially excluded in 2011, up from 23.4% (almost eight million) in 2010.

The survey also found that Mzansi account awareness and usage had decreased from last year.

"This raises an important question that needs to be understood further and that is: Are banks substituting Mzansi accounts with in-house entry level banking products or are Mzansi accounts becoming dormant?"

FinScope said this was "significant" especially since the Financial Sector Charter required the banking sector to make banking more accessible to South Africans.

It was found that 36% of individuals had never heard of the account before and those who used it, often indicated that it was their first account.

The majority of individuals who had not heard of Mzansi fell within the LSM [living standards measure] four to six range.

"This particular market is concerned with fees, and trust in a product, and in financial institutions will impact decision-making.

"Furthermore, the research indicates that banks seem to be encouraging their clients less to take up Mzansi accounts than in 2010. It is also often the case that the banks will persuade clients not to open this account."

The survey also found that 57% of the adult population in the country did not have any form of insurance in 2011 compared to 50% in 2010.

The percentage of South African adults making use of formal insurance products also dropped from 40% in 2010 to 34% in 2011.

"Perceptions of insurance products are generally quite positive and they are mainly associated with protection from risk, safety and reliability.

"On a functional level, insurance seems to be more likely to be associated with funeral cover, followed by an understanding of insurance as a savings and investment mechanism."

The survey revealed that many South Africans saw death in the family, funeral expenses and loss of the main income earner as a main threat to their livelihoods or income.

FinScope said that in terms of livelihood drivers of financial inclusion, the survey indicated that financial literacy was vital.

"Those served informally have a negative perception about informal services and those who are financially excluded lack support and the capacity to work - they also generally have a negative outlook on life."

The most significant predictors of formal financial inclusion identified in the latest survey included financial literacy, the ability to save money, access to facilities such as water, sanitation and electricity as well as the position held within the household.

The survey concluded that there were three key interventions possible to increase financial inclusion in SA in a sustainable way.

These included building capacity through financial literacy programmes where it was lacking, providing financial products, services or mechanisms that served a specific need and removing barriers, in particular, regulatory barriers to create a conducive and enabling environment for financial inclusion.

http://www.businesslive.co.za/

Savvy petrol shopping for cheaper holiday

2011-12-05T10:04:00.000+02:00

December 4 2011 at 12:25pm
By Angelique Arde

In light of the recent hikes in the petrol price, is it possible to offset this cost – or at least some of it – by becoming a more savvy petrol shopper?

In addition to cash, petrol cards, debit cards and cheque cards, increasingly petrol stations now also accept credit cards. Whichever method you use to pay for petrol, it’s costing you – be it card fees, transaction fees and/or interest.

So what is the most cost-effective way to pay for petrol? As always, it depends on your circumstances: the type of account you have and your banking habits.

As of November 2, the most recent increase, petrol costs you an additional 23 cents a litre and diesel an extra 36 cents a litre. Assuming your tank takes 45 litres of petrol, it now costs you about R477, or R10.35 more, to fill up inland. Ninety-three octane costs R10.60 a litre inland and 95 octane petrol sells for R10.47 a litre at the coast. The wholesale price of diesel with a sulphur content of 0.05 percent is R9.81 at the coast and R10.01 inland, but the retail price of diesel varies among filling stations.

The advantages and disadvantages of the various ways of paying for petrol are discussed below.

CASH

Cash is king, or so the saying goes. But is it really? Not always. Withdrawing R500 from your bank’s ATM can cost you R9 if you bank with Absa and have a standard current account. It will cost you even more if you withdraw the cash from another bank’s ATM.

Depending on where you bank, you may be able to escape cash withdrawal charges altogether if you maintain a minimum monthly balance of R10 000 in your account. On some accounts, maintaining a certain minimum balance entitles you to either unlimited or a limited number of free transactions a month. However, these accounts earn little or no interest.

Certain accounts, such as Absa’s Platinum current account, have unlimited free transactions of a certain type in return for a fixed monthly fee. Other accounts, such as Standard Bank’s Prestige account, offer a limited number of free transactions a month.

The Platinum and the Prestige accounts are aimed at clients with an income of at least R25 000 a month. Professionals with certain degrees and who earn at least R5 000 a month also qualify for a Prestige account at Standard Bank.

Absa’s Platinum account costs R180 a month and Standard Bank’s Prestige account costs you R209 on the fixed monthly fee option.

Alternatively, Prestige clients can go for the pay-as-you-transact option, which has a minimum monthly fee of R85.

If your transaction charges are less than R85 a month, the bank still charges you R85 a month. If your transaction costs add up to more than R85 a month, you pay for each transaction after you’ve spent R85.

With the fixed monthly fee option, Prestige clients receive, among other things, 12 cash withdrawals from a Standard Bank ATM. Once you exceed your 12 withdrawals, it’ll cost you R3.90 plus 1.17 percent of the value of your transaction each time you draw cash from a Standard Bank ATM. So it will cost you R9.75 to draw R500. It costs you even more if you draw from another bank’s ATM.

Standard Bank clients with Prestige, Elite, Achiever or Achiever Go accounts would pay a whopping R16.45 for a R500 withdrawal from another bank’s ATM.

Drawing from your own bank’s ATMs and drawing large sums of cash less frequently may enable you to save on cash withdrawal fees. If you don’t know what you’re paying in cash withdrawal fees, make a point of finding out.

CREDIT CARDS

Since July 2009, when regulations were changed to allow retailers to accept credit cards for fuel purchases, the major fuel retailers have been phasing in facilities to enable customers to pay with plastic in all its forms. Apart from the convenience to the customer, petrol stations want to minimise their exposure to crime by handling as little cash as possible.

Of the 1 100 Engen stations countrywide, about 600 accept credit cards and most accept debit cards, Pierr Roodt, the retail marketing manager at Engen, says.

The acceptance of cards is at the discretion of the individual who owns the garage, Roodt says.

More than half of all fuel sold by Engen is paid for by cards, he says.

Caltex, which has about 800 stations nationwide, accepts debit cards at “90 percent of service stations” and all forms of card payment at selected stations, Teresa Booth-Oliveira, the general manager of products at Chevron, says.

Shell has almost 700 stations around South Africa, of which 450 take all cards and the rest take debit cards, Vuyiswa Mamputa, the local brand and marketing implementer for Shell, says.

But is it a good idea to buy fuel on credit? That depends on how disciplined you are at managing your credit card.

A credit card can be the most cost-effective method of payment, because there are no transaction costs. There are annual fees, but these are sometimes included in a bundled account.

Remember that when you pay with a credit card, you’re using the bank’s money and not your own. The bank lends that money to you interest-free for between 25 and 50-odd days. But after that grace period is up, the interest rate is typically very steep.

To save yourself interest, be sure to pay off your credit card in full before the interest-free period expires. If you don’t, you can easily be caught in a debt trap.

In an article entitled “Managing your debt” on Standard Bank’s website, the bank says it is wise to use credit only to buy assets, and if you have to use credit to buy consumables – such as petrol or food – you should pay it off as soon as possible.

“One of the golden rules of good money management is to ensure that you are not paying for something you no longer have or use,” Standard Bank advises.

What does it cost you to buy petrol on your credit card?

At Absa, First National Bank, Nedbank and Standard Bank, the transaction itself costs you nothing. The big four banks regard fuel purchased on a credit card as a regular retail purchase, so you benefit from the usual interest-free period set by your bank. But once the interest-free period is up, you pay interest at the rate that your bank charges you.

Your interest rate will be determined by your credit profile and the type of credit card you have. Credit card interest ranges from nine to 21.1 percent a month.

On most credit cards, the interest rate is about 17 percent, which is hefty considering that the prime rate is only nine percent. Only clients who qualify for credit cards at the top end of the market pay interest of nine percent.

Capitec does not yet offer a credit card. The bank plans to launch one in the new year.

DEBIT/CHEQUE CARDS

Safety and convenience are the big selling points of a debit card. Carrying cash is dangerous and debit cards are the answer, but what does it cost you every time you swipe your card?

Capitec clients enjoy unlimited free debit card transactions.

The bank’s only account – the Global One account – comes with a debit card that attracts no transaction fees when the card is swiped.

Absa clients on the Platinum package get unlimited free debit card transactions, while those on bundled pricing options, such as the Silver and the Gold current account packages, enjoy limited free transactions, including debit card transactions.

Absa’s Mzansi clients pay a flat fee of R2 for every debit card transaction. And clients on Absa’s pay-as-you-go accounts pay R3.75 plus R0.75 per R100 or part of R100.

So, if it costs you R477 to fill your tank, it will cost you R7.50 to use your Absa debit card if you’re on the pay-as-you-go option.

Nedbank clients with bundled accounts, such as the Savvy Electronic or the Everyday current account, have unlimited debit card purchases included in their monthly fee.

Nedbank clients with current accounts and who are on the pay-as-you-use payment option pay R3.65 for debit card transactions, while Transactor Plus or Savings Deposit account holders pay R2.25 for debit card transactions.

For clients on Nedbank’s Ke Yona account, debit card transactions cost a flat fee of R1.

Standard Bank’s debit card charges also differ according to the underlying account. For example, clients who pay a fixed monthly fee on some current accounts don’t pay to swipe their debit or cheque cards. But clients who are on the pay-as-you-transact option pay R3.75 plus 0.75 percent of the value of the transaction, with a maximum fee of R17.

First National Bank clients can use a cheque card to pay for petrol and incur no additional charges – unless you have a petrol card linked to your cheque account, in which case you pay R3.90 per transaction. Transactions with an Electron debit card cost R2.75 for clients on the pay-as-you-use option, but are included for those on the unlimited option.

In a recent survey on bank charges, the Solidarity Research Institute notes a distinction between debit and cheque cards, which function much like credit cards and allow for online purchases.

The institute says cheque cards and debit cards typically incur the same transaction fees, but it’s more expensive to replace a cheque card than it is a debit card.

TILLPOINTS

Remember that you can also draw cash from tillpoints at retailers. If you’re a Capitec client, it’s cheaper to draw cash from a tillpoint than from the bank’s ATMs.

Capitec charges its clients a flat fee of R1 to draw cash from Shoprite, Checkers, Pep, Pick n Pay and Boxer stores. (You have to make a purchase in order to draw cash at Shoprite, Checkers and Pep.)

First National Bank (FNB) clients who pay a fixed monthly fee for transactions can make an unlimited number of tillpoint withdrawals at no additional cost. FNB clients with Easy Plan, Smart or Personal accounts and who are on the pay-as-you-use option pay a flat fee of R0.90 irrespective of the amount withdrawn.

At Absa, clients with packages (what the banks call bundled options) can draw cash from tillpoints at no cost, until the number of bundled transactions is exhausted.

Depending on the bank, a package can include access to an overdraft facility and a credit card. Packages are offered to clients who are middle- to high-income earners.

Absa clients who have pre-paid debit cards can withdraw cash from tillpoints for free. But Absa’s Mzansi clients pay a flat fee of R4.75 to draw cash from a tillpoint. The Mzansi account is a transactional bank account aimed at people with a low income.

Standard Bank’s Mzansi clients pay R3.50 for cash withdrawals at tillpoints, while Eplan clients pay R5. Clients with a current account on the pay-as-you-transact option pay R3.75 plus 0.75 percent of the transaction, up to R17. Standard Bank’s clients with current accounts on the bundled option don’t pay for tillpoint withdrawals.

For clients with Nedbank’s Ke Yona account, drawing cash from Pick n Pay and Boxer stores costs a flat fee of R1.

Nedbank clients with current accounts and who are on the pay-as-you-use payment option pay R3.65 for cash withdrawals at tillpoints. The bank’s clients who don’t have current accounts but who have the pay-as-you-use payment option pay R2.25 for cash withdrawals at tillpoints.

GARAGE CARDS

Trade union Solidarity’s Research Institute chose not to include garage cards in a recent survey on bank charges, because they’ve become largely redundant. “Most filling stations, if not all of them, now also accept payment by debit and credit cards, which makes a petrol card unnecessary,” the report says.

Standard Bank says its garage card is still on offer because some fuel stations do not yet accept cheque and credit cards.

The bank charges an annual fee of R115 for a garage card and a flat fee of R3.85 for each transaction. For clients with a bundled pricing option, garage card fees are included in the bundle.

A Standard Bank garage card must be linked to a current account or a credit card. If it is linked to a current account, purchases made on the card are debited to the current account. If it is linked to a credit card, purchases made on the garage card are debited to your credit card – in other words, they are treated like any other debit on your credit card.

The same interest rate charged on your credit card applies to purchases made using a garage card that is linked to your credit card. So if you have a credit card with Standard Bank, it makes more sense for you to use your credit card. The only time a petrol card would be more useful is if the petrol station doesn’t accept credit cards.

The interest rate charged on a credit card differs from client to client, depending on the client’s profile.

If your Standard Bank garage card is linked to your credit card, your credit card limit applies. If it’s linked to your current account, there is no limit to the credit on your garage card, which can be used for all motor-related expenses.

Beware though: if you have an overdraft on your current account, and your account goes into overdraft, transactions associated with your garage card will be debited to your overdraft. The banks do not allow you to buy petrol on a budget facility.

A garage card from Absa can either function as a stand-alone card with its own account or be linked to your credit card. A stand-alone garage card functions separately, with its own limit, and is paid separately.

When linked to your credit card, the Absa garage card shares the same limit, and transactions are included in the minimum payment due. Absa charges R3.50 per garage card transaction.

Nedbank offers a garage card linked to a current account, as well as a garage credit card.

Petrol transactions on a garage card linked to a bundled product, such as the Everyday and the Savvy current accounts, are free.

Nedbank’s garage credit card incurs a monthly fee of R14.25 and a transaction cost of R3.65 per swipe.

First National Bank (FNB) offersa stand-alone petrol card at a cost of R275 a year. This annual fee includes membership of the Automobile Association. Every time you swipe the card to pay for petrol or other motor-related expenses, it costs you R3.90.

FNB also offers clients a petrol card that can be linked to a cheque account. If you are on the pay-as-you-use option, each time you swipe the card, it costs you R3.90. But if you’re on the unlimited option, these costs are included in the monthly fee. The card incurs a monthly fee of R10 (or R120 a year)

http://www.iol.co.za

Nedbank Group named South African Bank of the Year for 2011

2011-12-02T10:48:00.000+02:00

1 December 2011

The Banker magazine, a leading global banking publication, has named Nedbank Group as the South African Bank of the Year for 2011 at a gala function in London on 30 November 2011. This prestigious award recognises excellence in banking across the globe.

The Banker noted that "the trust that clients have shown in Nedbank Group through the recent financial crisis contributed to the recognition of being named ‘South African Bank of the Year 2011’ and is also testimony to Nedbank Group’s strong management, sound business model and prudent risk approach". The award is even more noteworthy given the fact that South Africa was rated second in the world in terms of "soundness of banks" in the recent World Economic Forum’s Global Competitiveness Report.

Nedbank Group’s Chief Executive, Mike Brown, said: "At Nedbank we pride ourselves on being a world-class financial organisation that always strives to be admired by our staff, clients, shareholders, regulators and the communities in which we operate. We are deeply honoured by this award, but at the same time recognise that we are on a journey and more still has to be done to achieve our vision of building Africa’s most admired bank.

"The award is testimony to the hard work of all the Nedbank Group staff over the past few years. We have been building on our strengths in our wholesale businesses, growing our wealth business and repositioning our retail business to become more client-centric. To this end we have launched various innovative new products such as Ke Yona, Savvy and Mpesa to focus particularly on the youth and entry level markets; we are expanding our branch footprint and ATM network; extending our branch hours to make banking more convenient for our clients, kept price increases below inflation over an extended period; and improved our risk practices within our retail areas. The outcome, as reflected in the group’s interim results to 30 June 2011, is strong growth in non-interest revenue thereby unlocking value for our shareholders, while continuing to build strong capital and liquidity positions with core Tier one capital of around 11%.

Nedbank Group is increasingly becoming a great place to work, a great place to bank and a great place to invest.

www.nedbank.co.za

FNB launches online insurance

2011-12-02T09:56:00.000+02:00

FNB has launched wholesale online life cover direct to its customers for up to 50% cheaper than market related equivalent products.

The offering includes life, disability, critical illness and retrenchment cover, with no pre-exclusions on death on life cover.

Critical illness cover includes heart attack, stroke, cancer, and open heart surgery, among other conditions.

"Life cover and its related offerings are one of the highest priorities in the minds of South African parents. We need only look at the enormous popularity of stokvels offering funeral cover to see how important this is. The fact that there is such a wide insurance gap only indicates that affordability excludes large numbers. By offering cover at wholesale prices, I believe we can bring about a wide-spread improvement in the financial stability of families," FNB CEO Michael Jordaan said at the launch on Wednesday.

"To ensure that our customers are getting the best possible value for money, we have stripped out all unnecessary distribution costs, such as advertising and broker fees, enabling us to pass the saving on to our customers," added Johan Nagel, CEO of FNB Insurance.

Only 3.8 million out of a potential 12.4 million South African income earners are currently insured for life cover.

http://business.iafrica.com

FNB takes on life insurance industry

2011-12-01T09:16:00.000+02:00

No stranger to innovation and never afraid to test uncharted waters, First National Bank (FNB) is now rattling the cage of the life insurance industry.

The bank has launched wholesale online life cover direct to its customers for up to 50% cheaper than market related equivalent products.

The offering includes life, disability, critical illness and retrenchment cover, with no pre-exclusions on death on life cover.

Critical illness cover includes heart attack, stroke, cancer, and open heart surgery, among other conditions.

"Life cover and its related offerings are one of the highest priorities in the minds of South African parents. We need only look at the enormous popularity of stokvels offering funeral cover to see how important this is. The fact that there is such a wide insurance gap only indicates that affordability excludes large numbers. By offering cover at wholesale prices, I believe we can bring about a wide-spread improvement in the financial stability of families," FNB CEO Michael Jordaan said at the launch on Wednesday.

On average, South Africans spend 4% of their after tax income on life insurance, equating to approximately R4.4 billion per annum. "We are able to strip out the unnecessary costs resulting in up to 50% less on life cover premiums, potentially saving South African consumers up to R2 billion in premiums per annum," said Jordaan.

"To ensure that our customers are getting the best possible value for money, we have stripped out all unnecessary distribution costs, such as advertising and broker fees, enabling us to pass the saving on to our customers," added Johan Nagel, CEO of FNB Insurance.

Asked whether FNB was changing its line of business, Jordaan responded: "Our primary business remains banking, but we also want to enrich our clients. We want to give wholesale insurance direct to the public. It's a value add product.

"We're not trying to make money out of this. It's just another reason for people to bank with FNB, But obviously we have to cover our costs.

Any FNB client who is a South African citizen, between 18 and 60, who holds an FNB credit, cheque or home loan account, may qualify for the FNB Life Cover policy. FNB has done away with the need to complete application forms. Instead customer will only need to complete a telephonic application and answer a few medical questions, to be accepted for cover. Applications are approved within 24 hours.

"This process allows us to give customers a premium that is as affordable as possible and, it protects them from unfairly subsidising people with higher risk profiles," said Nagel.

"Our integrated system means that we have access to our customer's profiles, simplifying the process and ensuring that customers do not have to transfer funds from one place to another in times of payment," he added.

Life cover is seen as a national priority, with only 3.8 million out of a potential 12.4 million South African income earners currently insured for life cover - and some 62% of those insured are under-insured.

"We have done our best to address this need and add value to our customers, creating a product that is simple, hassle-free and affordable," Nagel concluded.

http://www.businesslive.co.za

Capitec Can Help Businesses Too

2011-12-01T09:05:00.000+02:00

http://www.cbn.co.za/dailynews/5901.html
1 December 2011

WHILE Stellenbosch-based Capitec Bank does not offer business banking for close corporations, companies, partnerships or trusts, it does offer a range of services to help companies save money and improve productivity.

Its point-of-sale payment solution is ideal for traders, retailers and wholesalers, and supports both restaurant and retail terminal software applications. It offers a competitive fee structure and one can keep your existing banking relationships. Merchant terminals are available as either a portable or desktop unit, and accept all debit, credit, chip and charge cards (American Express/Diners Club International if you are registered with them) so customers have more payment options.

The bank’s secure and convenient web-based salary transfer facility allows one to make cost-effective salary transfers and bulk payments at the lowest transaction fees, any time or place. There’s no monthly subscription, special software, call-out fees or hidden costs, and you can keep your existing banking relationships. Paying employees electronically is also safer than drawing cash at an ATM, Capitec says.

Employees who are under financial stress are typically the least productive because they are anxious and unfocused. Equipping your employees with basic financial skills will empower them to take control of their finances and become more productive with a newfound sense of financial wellbeing. Capitec’s financial skills presentation for employees, community groups and schools was developed in recognition of the fact that basic skills are the foundation for financial independence. The presentation is free of charge and supports national initiatives such as the National Skills Development Strategy.

Most employees are simply unable to visit a bank during the week, citing tight production schedules and lack of transport as some of the factors. Fortunately, Capitec can now bring the bank to them so they can open bank accounts onsite. This service is offered free of charge and helps reduce absenteeism, which maintains overall productivity. Global One is a single solution to money management that offers transparent banking with lower bank costs and fixed fees per transaction, and employees simply cannot afford to miss out, the bank argues.

FNB OFFERS DISCOUNTED CONTRACTS

2011-11-29T10:03:00.000+02:00

Tuesday, 22 November 2011 11:00 Written by Bonnie Tubbs

In what First National Bank (FNB) has termed a “phased approach” to integrating cellphone operators into its client offering, it now offers customers cellphone contracts with handsets at subsidised rates through Cell C.

FNB has incorporated its banking system with Cell C's retail systems, and customers can take up the offer through FNB's existing account opening process by applying at an FNB branch or online.

FNB cellphone banking solutions CEO Ravesh Ramlakan says customers will know immediately whether they qualify for a cellphone contract. “No additional paperwork is required and the cellphone application process is completed in a few minutes.”

Ramlakan says the three cellphone contracts on offer have been specifically designed for and targeted at FNB's mass market customers, both new and existing, who earn up to R100 000 per annum.

Discounted deals

The subsidised contracts are available to FNB Smart account-holders at discounted rates, starting from R39 per month. Each contract includes a handset, monthly airtime and SMSes.

The first offer, at R39 per month, includes a Nokia X2-01 on a Control Chat 50 contract. The contract, which usually costs R50 per month, includes R50 airtime and 25 SMSes per month.

Cell C's Control Chat 100 offer, usually R100 per month, is available through FNB for R79 per month and includes a Nokia C3 handset, R115 airtime and 100 SMSes per month.

At the top end of the deal, the Control Chat 125 contract is available through FNB for R125 per month, which means a monthly saving of R26, and includes a Samsung Galaxy Y handset, R145 airtime and 100 SMSes per month.

“Customers will [also] have the budget control of prepaid; in other words, when they run out of their monthly airtime they can recharge instantly using FNB's cellphone banking,” says Ramlakan.

He says customers will be required to either open a Smart account or have an existing Smart account to qualify. “Qualification for the cellphone contract is subject to the cellphone operator's standard credit vetting rules. As a general rule, customers must earn a gross income of R1 500 or more and have a clear credit record.”

Phased approach

According to Ramlakan, this move marks phase one of FNB's mapped integration of cellphone contracts into its banking offerings. “Our intention is to include all other operators in the near future.

“We have adopted a phased approach in FNB branches to integrate with one service provider initially, and designed our systems to enable easy integration with other operators in future.”

Cell C's executive head of sales and distribution Sue Kennedy says the partnership makes business sense and will be instrumental in helping the cellphone operator achieve its goal of bringing affordable communications to South Africans.

FNB smart transactional banking CEO James Fowle says as well as pushing the proliferation of electronic forms of banking, the move will facilitate everyday banking by providing customers with access to quality handsets and equipping them with the platform of cellphone banking.

http://www.mydigitallife.co.za

FNB makes changes to mobile wallet

2011-11-28T13:41:00.000+02:00

First National Bank today announced that it has enhanced its eWallet solution with two striking new features – enabling users to pay money from eWallet directly to a bank account, and enabling the payment of bills.

FNB has enhanced its eWallet solution with two new features.

“When we created the eWallet, recipients were only able to send money to another cellphone. With this enhancement, eWallet users are able to pay funds directly into an individual’s bank account at any of the major South African banks, or easily make a payment to one of our pre-loaded beneficiaries such as municipalities, Edgars etc,” says Yolande Van Wyk, CEO of eWallet Solutions.

“Enabling South Africans to transfer money directly into a bank account or pay their bill without having to leave their homes is taking us closer to making banking truly accessible to the previously unbanked,” notes Van Wyk.

Following customers’ feedback, the eWallet can now hold a maximum balance of R3 000, an increase from R1 000.

At the time of being launched by FNB in 2009, eWallet customers could transfer a maximum of R1 000 per day to another person using the eWallet. This maximum was recently also increased, to R1 500 per day.

“The beauty of eWallet is that the recipient doesn’t need a bank account to be able to access the money sent to them. In addition to withdrawing cash, buying prepaid airtime or sending the money to another person, they can also pay their bills instantly and conveniently,” concludes Van Wyk.

http://www.itnewsafrica.com

PayPal for non-FNB accounts a headache

2011-11-28T13:38:00.000+02:00

First National Bank may have opened its PayPal services to customers at other banks, getting it to works has proven to be quite a headache

It’s great that FNB has not only brought PayPal’s wider services to SA, but have opened it up to customers at other banks as well.

However, trying to link my PayPal account to a non-FNB bank account to be able to write an article on the experience has proven troublesome to say the least.

While writing this piece, I was on the phone to FNB’s online banking support who seem to be as confused as I am about the whole situation.

It turns out that the FNB online banking system, despite the fact that I registered the profile on Monday, is detecting an old eBucks account that I got with my student account – an account which was closed more than 5 years ago.

According to the FNB online banking support representative that handled my case, I’ll have to go into a branch and explain to them that they have to fix my online banking profile. A prospect that is as daunting as it is unlikely to happen.

The special circumstances surrounding my particular case aside, there were a number of general issues that came to light when registering for an FNB PayPal account:

1. User names, passwords, and e-mail addresses
Usernames have to be 8-30 characters long and passwords have strict requirements placed on them.

Password must contain mix of alphanumeric characters (capital and lowercase) as well as a special character, and consecutive characters aren’t allowed. This means that if you want to use a long (and safe) password – such as “bearyoketomatooccupation” – you can’t because of the repeating characters.

FNB doesn’t let you use the Gmail trick of adding a plus and any text behind your email address. This trick is handy to both label incoming mail and track who is giving away (or selling) your email address, so it’s sad that FNB doesn’t allow it.

2. Submitting FICA documentation
Once you’ve completed the registration for your new FNB Online Banking profile you’ll need to send them a standard batch of FICA documents: Proof of identity, residence, and banking.

However, the e-mail address provided (applications@PayPalLink.co.za) didn’t work and the PayPal support desk had to supply me with another: paypalkyc@fnb.co.za.

Once you’ve submitted your FICA documents you have to wait for FNB to validate your profile. In my experience this was nice and quick.

3. Possible bugs in FNB online banking portal
While trying to figure out how to access the “PayPal Services” section of my FNB Online Banking profile I came across numerous bugs on the website. However, it is unclear whether these are general bugs, or whether they manifest because of the issues surrounding my account.

4. Online support queries don’t work
In trying to get my account to work I tried to use the support query form on the FNB Online Banking portal. No response.

Your best bet is to phone the call centre (0861-PAYPAL, or 0861-729725) or send an e-mail (paypalenquiries@fnb.co.za).

Lessons learnt
Here’s what you should know if you’re considering using FNB PayPal to transfer money into your non-FNB account.

If you’ve ever had an FNB account, or have a dormant/inactive eBucks account you’ll probably have to go into a branch.
Usernames have to be 8-30 characters long.
Passwords must contain mix of alphanumeric characters (capital and lowercase) as well as a special character, and consecutive characters aren’t allowed.
E-mail FICA documentation to paypalkyc@fnb.co.za and not the address provided.
Don’t try to get support from the FNB Online banking portal – call or e-mail instead.

http://mybroadband.co.za Jan Vermeulen

Absa rolls out tap-and-go payments

2011-11-23T15:22:00.000+02:00

http://www.southafrica.info
23 November 2011

Paying for low-value purchases in South Africa is about to get a lot faster and more efficient, with banking group Absa making its "tap-and-go" contactless payment facility available both to standalone point of sale (POS) merchants and to those using advanced or integrated point of sale till systems.

In line with its soon-to-be-released prepaid offering, and the launch of several public transport initiatives, Absa is starting to gear up a merchant base to accept this form of contactless payment.

The system allows for customers quickly and conveniently to pay for small purchases simply by waving their contactless card in front of a secure contactless reader at the point of sale.

With no signature to check or PIN to enter, merchants can expect faster transactions, shorter lines and being able to serve more customers in less time.

"There is no additional transaction fee to the retailer as these are treated as normal debit or credit card purchases," said Absa Card's Willie van Zyl in a statement this week.

"Furthermore, it is aligned with global trends in mobile payment where, in future, consumers will be able to tap their mobile phones against these readers to pay for their low value payments."

Ideal for high volume businesses
The contactless payment solution is ideal for merchant outlets with high volumes of customers where speed of service is essential - in particular, fast food outlets, coffee shops, movie theatres, convenience stores, fuel forecourts, pharmacies and parking lots.

Absa has imposed certain limits on this contactless payment which are aligned with the special exemption to control and manage these cards.

Tap-and-go transactions are limited to R200 per transaction and users will be able to load a maximum of R1 500 on the card at any time. The total monthly value load limitation is R3 000 per month.

"We are pioneering this new way to pay as part of making payments simpler for consumers, thereby making their lives easier," said Van Zyl. "We have a roadmap of innovations that will change the way consumers purchase, hear about offers, redeem vouchers and coupons as well as make payments."

Absa is also offering incentives to merchants to ease the cost-burden of the reader prior to the cards reaching critical mass.

SAinfo reporter

Capitec is cheapest bank, survey finds

2011-11-22T15:30:00.000+02:00

November 13 2011 at 12:05pm

By Angelique Arde

Capitec is both the least expensive bank and the bank with the simplest product offering of all the banks considered in the Solidarity Research Institute’s latest survey on bank charges, which was released late last month.

The survey – entitled “A comparative analysis of the cost of personal transaction accounts at five South African banks” – compared the charges levied by the “big four” retail banks – Absa, First National Bank (FNB), Nedbank and Standard Bank – and Capitec.

According to the survey, “on an overall sliding scale, Capitec’s transmission account is the cheapest, followed by FNB, Nedbank, Standard Bank and Absa.

“There is, in general, very little difference between Standard Bank and Absa’s transmission accounts – the charges of both are high,” according to the survey.

Capitec does not segment clients according to their income level. The bank offers just one transaction account – the Global One account.

The survey quotes Riaan Stassen, the chief executive of Capitec, as saying he has yet to understand why a high net worth client and a blue-collar client should pay different charges for using the same banking facilities.

Capitec’s fees have remained unchanged since last year, whereas all the “big four” banks increased their fees this year.

The limitations of the Global One account are that it does not offer a credit card, an overdraft facility, a cheque book or cellphone banking. However, Capitec does offer internet banking, which is free.

Capitec plans to launch a credit card in the new year. In the meantime, you can link your Capitec account to a credit card from another financial services provider. You could pay the amount owing via internet banking – by making your credit card a beneficiary. Paying a beneficiary costs R2.75, irrespective of the value of the transaction.

At Capitec, debit card transactions are free and cash withdrawal fees are lower than those charged by the other banks.

The Solidarity survey also notes that it is “relatively cheap” for Capitec clients to draw money at the ATMs of other banks.

“Capitec charges a fixed fee of R3.75 per withdrawal at a Capitec ATM and a fixed fee of R7 per withdrawal at the ATM of another bank.

“To put it into perspective, an Absa client with the standard current account pays R9 to draw R500 at an Absa ATM, whereas a Capitec client pays only R7 to withdraw R500 at the same ATM. It therefore costs the Capitec client less to use the Absa ATM than it costs Absa’s own client,” the survey says.

Capitec’s penalty fees (such as the fee for a debit order that is dishonoured because of insufficient funds in your account) are only R3.75 – the lowest of all the penalty fees of the banks in the survey.

Another attractive feature of Capitec’s transaction account is that the bank currently pays interest of six percent on balances below R10 000 and interest of 4.75 percent on balances exceeding R10 000.

The interest is calculated daily and capitalised monthly. These rates are higher than those of the other banks’ savings accounts and this means that any cash left in the transaction account earns interest.

“Capitec is therefore suitable for people who do not need a cheque book or overdraft facility and who do not mind using an external ser-vice provider’s credit card.

“People who are able to maintain positive balances on their cards are rewarded with interest, which has the potential to cover all bank fees on the account,” the survey says.

South Africa’s youngest retail bank, Capitec was founded in 2001. It has 3.2 million clients and attracts on average 90 000 new clients a month, according to the company’s interim results, which were released in September.

The bank was recently named the overall winner at the annual Ask Africa Orange Index Awards. Surveying close to 100 brands across 18 industries, the award is based on the opinions of 10 000 consumers surveyed nationally over six months.

Capitec won on the strength of its transparent benefits and services that put the customer first, Sarina de Beer, the managing director of Ask Africa, says.

http://www.iol.co.za

Nedbank announces pricing increase

2011-11-22T15:13:00.000+02:00

Says the average increase remained below or in line with inflation.

Johannesburg, Nov 17 (I-Net Bridge) - Nedbank (NED) on Thursday announced its annual pricing increase that will become effective from 1 January 2012, adding that the average increase remained below or in line with inflation.

Maintaining its focus on continuing to offer great value banking, Nedbank said it understands that simplicity; affordability and transparency were the main attributes customers look for in a bank.

"Our commitment to continue making banking accessible for all in South Africa requires that we provide innovative products and services that suit the needs of our clients at every stage of their lives. As such we continue to simplify our product offering and pricing structure," said Anton de Wet, Managing Executive of Personal Banking and Client Value Management at Nedbank.

The bank's pricing review over the past years has seen its fees reduced, simplified and aligned to ensure affordability and more importantly allow clients to understand what they are paying for.

De Wet stressed that several services remain free, some fees have remained unchanged, while others have been increased below or in line with inflation.
Relatively higher increases have, once again, been limited to traditional banking channels and cash handling where input costs - such as security, transport, wages and insurance - have gone up significantly.

De Wet said that keeping increases in line with inflation has been achieved despite staffing and cash handling costs rising by 8.3% and 34.2% in 2011. We are mindful of the impact of increases of other input cost of daily necessities such as food, fuel, transport and electricity with average rises of 17.2% and 23.5% in the eight months to the end of August for electricity and petrol respectively.

"We urge our clients to engage with us to review their current banking transacting habits. It is in many instances possible to reduce your fees, notwithstanding the fee increase.

"Firstly, start by choosing the right product based on your individual needs. Secondly, understand your banking behaviour. Lastly, choose cost-effective channels such as withdrawing cash at a point of sale (POS) or Nedbank ATM rather than another Bank's ATM or going into a branch," explained de Wet.

"Research has shown that clients are not always aware of the free services on offer as part of our great value banking offering. We urge clients to make use of the financial tools, as these can help them build their financial fitness over time. For example, our Bank Fees Calculator allows clients to compare our fees against other banks and more importantly will help you choose the right product. By doing this, you may be able to save a large share of your bank charges," concluded de Wet.

http://www.moneyweb.co.za

Nedbank tries to shed its elitist image

2011-11-21T15:23:00.000+02:00

2011-11-20 10:00

Andile Ntingi http://www.citypress.co.za

Nedbank, long regarded as a bank that caters for the elite and looks down on the poor, is slowly making inroads in its bid to capture a slice of the low-income market, where it faces stiff competition from rivals Capitec and African Bank.

Ciko Thomas, managing executive for consumer banking at Nedbank and the man spearheading the lender’s foray into the low-income market, is under no illusion that shedding Nedbank’s elitist image will take a long time.

“You don’t change that image overnight. We still have to go through a long process,”
he says.

Just over five years ago, it was unthinkable that Nedbank would one day open branches in rural towns and townships, where most lowly paid people live. Today, about 161 of its 676 branches are in rural areas and townships, and most of these outlets were opened after 2005.

Last week, Nedbank opened a new branch in Mount Frere, a dirt-poor rural town in the Eastern Cape, a province where the unemployment rate stands at 26.9%, above the national average of 25%.

Nedbank has followed up its branch roll-out by offering new products that are designed for low-income earners.

One of these products is the Ke Yona bank account, which enables customers to transact, borrow and save.

The account, which has a monthly fee of R5, also comes with funeral cover worth R2 000.

“Ke Yona is convenient for low-income earners, but anyone can use it,” says Thomas.

In conjunction with its parent company, life insurer Old Mutual, sister company and short-term insurer Mutual & Federal, and empowerment partner Wiphold, Nedbank is rolling out greenshops, where loans, livestock cover, funeral cover and savings products are offered to poor customers.

At these greenshops, customers are offered micro loans, known as Zakheleni, which many use to start
small businesses.

Says Thomas: “Through Zakheleni, a group of people or clubs can save collectively for six months, after which they may apply for a loan based on the amount they have saved – up to three times – capped at R10 000.

“We are delighted that Zakheleni has resulted in the creation of more than 700 clubs, translating into 3 500 new Nedbank clients. This is a significant milestone for us as part of our commitment to continue creating a culture of saving in our society.”

One of Zakheleni’s beneficiaries is Eastern Cape hawker Posiwe Kekana, who has used a R2 000 loan from Nedbank to buy more stock to strengthen her business.

“The business is doing well and I am able to repay my debt. The business supports me, my husband, who is unemployed, and my seven children,” says Kekana.

Thomas says Nedbank was growing its customer base in the entry-level market, which comprises low-income earners and middle-income earners. The bank has about 3.2 million customers who are in the
entry-level market, earning less than R9 000 a month.

Capitec, African Bank, and major lenders such as Standard Bank, First National Bank (FNB) and Absa are fiercely vying for this highly profitable market.

“We are acquiring about 333 000 clients in this market a year,” says Thomas, who expressed his respect for Absa, FNB and Standard Bank.

“I admire FNB’s innovative spirit and I admire Absa’s size,” he adds.

Absa is the largest bank in South Africa in terms of footprint, with 889 branches. It is followed by FNB (with 801 outlets) and Standard Bank (with 705).

- City Press

PayPal withdrawals open to all SA banks

2011-11-21T15:16:00.000+02:00

PayPal withdrawal service now available to customers at any South African bank

First National Bank (FNB) has announced that its PayPal withdrawal service is now available to non-FNB customers.

Users have to register a free FNB online banking profile and submit a “Know Your Customer” form, as well as FICA documentation.

Once your information has been validated, FNB said that you will be able to link your nominated bank account to your PayPal account through your FNB online banking profile.

There are no additional fees for making use of the service, FNB said, adding that non-FNB customers will have exactly the same service, except without PayPal TopUp.

This means that non-FNB customers won’t be able to load money onto their PayPal to make payments. According to FNB, most customers link credit cards for payment rather than keeping a positive balance in a PayPal account.

At the time of writing, the e-mail address provided by FNB to which one sends FICA documentation wasn’t working, but customer support representatives indicated that they are working on resolving the issue.

The full press release announcing the launch is below:

First National Bank (FNB) and PayPal today announced that it has extended its FNB PayPal service so that South Africans can withdraw funds from a PayPal account to any South African bank account. All South African banking account holders now have the ability to receive funds from PayPal’s more than 100 million active users in over 190 countries and territories and in 24 currencies. This service was previously exclusive to FNB customers.

“One and a half years after launching our exclusive Top Up and Withdraw services for FNB customers we are pleased to open up the PayPal service for receiving funds to all customers with a South African bank account. They will now be able to withdraw funds from a PayPal account into a qualifying South African bank account regardless of which South African bank that they bank with. FNB is a proud supporter of entrepreneurship in South Africa and PayPal provides entrepreneurs with a safer and easier way to get paid by anyone, anywhere in the world, and in over 24 currencies,” says Chris Savides, FNB’s General Manager for FNB Complementary Online Services.

Over 20,000 FNB-banked merchants and individuals have already signed up for the PayPal service to-date. By opening up the ability for individuals and businesses that do not bank with FNB, it is able to offer the more than 500,000 South Africans with registered PayPal accounts the ability to receive funds through PayPal into their selected bank accounts.

“Although most of the current 500,000 South African PayPal customers use their accounts to buy goods and services from overseas merchants there are several merchants and entrepreneurs who could be using PayPal to grow their business globally and receive payments securely and conveniently with PayPal”, says Savides.

South Africans already making use of PayPal but not banking with FNB have been able to make credit card-based payment transactions and benefit from the added security of transacting online with PayPal by linking their credit card to an authorised PayPal account.

Receiving funds and withdrawing these funds into a South African bank account was previously offered exclusively to FNB banking customers. “The new PayPal withdraw service for non FNB customers is similar to the current service whereby users are required to link their verified South African PayPal account to a South African bank account,” explains Savides. “It is for this reason that customers who want to make use of the PayPal service to receive funds into their nominated bank account are still required to create a free FNB Online Banking profile in order to link the accounts, even if they do not bank with FNB. It facilitates the Know Your Customer (KYC) and reporting requirements of the South African Reserve Bank (SARB) and ensures that all transactions take place within the exchange controls.”

FNB’s agreement with PayPal enables international businesses and individuals to transact with South African service providers via a secure and convenient payment service.

Customers can simply open a PayPal account by visiting www.paypal.co.za and are then required to link it to a qualified South African Bank account by visiting www.fnb.co.za. They will be able to receive payments in 24 different currencies via PayPal and FNB will convert the currency to South African Rand when the money is withdrawn into their South African bank accounts.

Savides adds that the internet has changed the global commerce landscape and encourages South Africans to think about selling their goods and services to people outside of South Africa’s borders. “Anyone has the ability to become a global online retailer. There is a diversity of businesses and individuals receiving payments with PayPal, from taxidermists to tour operators, philanthropists to philately; but it’s not just for small business to charitable donations. One of South Africa’s leading online floral and gifting retailers, NetFlorist.co.za started making use of PayPal after it realised that 30% of its business comes from outside of South Africa’s borders. PayPal is a trusted and safer payment service for people transacting from abroad,” he says.

“FNB and PayPal have a similar focus on innovation, so it makes sense that we would work with FNB to make online payments even easier for merchants and consumers in South Africa,” said Oded Zehavi, head of PayPal’s business in Israel and South Africa.

“With South Africa’s solid financial infrastructure and its status as one of the continent’s largest economies, we have seen great strides in eCommerce in this market. The succeess of FNB and PayPal’s intintal offering will be further bosltered by offering all customers with a South African bank account the a safer way of getting paid online with PayPal,” concludes Zehavi.

“The opening up of the withdraw service from PayPal by FNB sees FNB take another step forward as South Africa’s most innovative financial institution and responds directly to our ‘how can we help you?’ brand promise,” concludes Savides.

The PayPal service is offered in cooperation with FNB and has received approval from the Financial Surveillance Department of the South African Reserve Bank.

http://mybroadband.co.za

No need to go to bank to open account says Absa

2011-11-08T13:50:00.000+02:00

Opening bank accounts the traditional way - at a branch - is almost a thing of the past as a result of a cutting edge technology solution called remote opening capability, retail bank Absa says.

In a briefing on its consumer payments innovations on Monday, Arrie Rautenbach, head of retail markets at Absa, explained that the bank had developed an android-based smartphone and tablet device that enabled the opening of bank accounts and the issue of debit cards remotely to new customers in less than 10 minutes - and only one interaction with a client was required.

"The on-device application scans one's ID book to identify and verify the customer's details, captures all the relevant information and enables the imaging of supporting documents."

The existing proof of concept process had already reflected highly positively on the opening turnaround speeds as well as that of an actual increase in sales volumes on savings accounts during the trial period December 2010 to April 2011.

Rautenbach said that the system would enable Absa's sales consultants to open 50% more accounts than they presently did - "and after submitting applications, customers are notified in the space of two minutes that their accounts have been opened."

He explained that cost of servicing customers in the traditional branch based manner was prohibitively high.

This had a direct impact on Absa's cost to serve product pricing strategies and profit ratios.

There was therefore a need to evaluate alternative delivery strategies that would reduce the cost of delivery and enhance customer experience.

"This project forms part of the bank's key goals. In addition the remote opening capability forms a key aspect of ELIB's [Entry Level and Inclusive Banking outlet's] branchless banking strategy.

"The creation of an effective remote opening capability will allow the bank to actively service customers within the ELIB segment of the market by making account opening more accessible and cost effective."

Rautenbach said the remote opening platform created also had the potential to be used by other segments of the bank to service their customers more effectively.

Developing a mobile application of this nature was a fitting strategy as android was regarded as one of the most dominant mobile operating systems around and was used to power a number of different smartphone and tablet devices.

Rautenbach added that the application would show GPS co-ordinates of where images were taken which would allow the bank further compile customer and sales data.

Absa to push NFC for payments

2011-11-08T13:48:00.000+02:00

Absa, SA’s largest retail bank, is to roll out contactless payment systems by the end of this year.

Supported at first by cards that are equipped to make payments by means of tapping them on a reader, these same readers will eventually be able to accept payments from devices like smartphones that are enabled for near-field communications (NFC) technology.

Absa also plans to extend the functionality of its point of sale (POS) machines in retailers to allow for both deposits and withdrawals in addition to basic banking services like balance enquiries and prepaid purchases.

These steps are all part of what Absa is calling its long-term strategy to add mobility and convenience, particularly for small payments at first. The bank is also in talks with transit operators, particularly taxi companies, to roll out contactless payment solutions for public transport.

Rival Standard Bank is also using contactless payments systems and is testing NFC technology, most recently at the Oppikoppi music festival.

Absa reckons POS terminals will move from chip-based cards to NFC solutions — whether in cards or mobile phones — and expects consumers to make the same migration from chips to NFC.

The bank says its relationship with Barclays in the UK is helping to drive innovation at the company by offering it a perspective on global trends in mobile payments and banking.

Cowyk Fox, chief information officer for Absa Card, says the bank is seeing a shift away from credit cards to debit-based facilities and adds its expanded options in this area mean those without credit cards will be able to shop online.

Fox says introducing new forms of payment like “tap-and-go” payment solutions presents a “chicken-and-egg problem” because consumers won’t adopt the technology before payment points are widespread. Retailers have the same reservations about installing payment points until the cards that support the technology are in enough hands to justify the expense.

He says digital transacting is good for both retailers and consumers because it is secure, cheaper for both parties and more convenient. “Consumers shouldn’t think about how payments work, they should just happen,” says Fox.

Tap-and-go payments allow consumers to make low value purchases — be they in retailers or for public transport — by tapping the contactless-enabled cards against a reader. At first, these transactions will be limited to R200/day and users will be able to load a maximum of R1 500 on the card at any one time. The total monthly transactional limit is R3 000.

Simon Just, Absa Card’s head of consumer issuing services, says increased debit card usage can also be attributed to the move away from carrying cash. He says the bank is rolling out “multi-application cards” that allow consumers to access any of their accounts from a single card.

Absa is also offering general-purpose prepaid cards which can be used by temporary workers or similar, where a flat fee is paid at the time of deposit and no further fees are payable until the next deposit.

In a similar vein, the bank now offers “corporate prepaid disbursement” solutions, where company-branded cards (reusable or single use) can be issued to employees. Just says 170 000 such cards have been issued and that the transactions through these will soon exceed R500m.

In terms of contactless or tap-and-go solutions, Just says Absa has begun rolling out prepaid standalone cards for use in transit industries such as minibus taxis and buses. Standard Bank recently launched a contactless payment system for use on transport infrastructure in Durban.

Absa hopes to encourage retailers near transit hubs to embrace the technology and install the necessary hardware in their stores, which should help to drive consumer uptake.

Just says the similarities between the chips found in bankcards and Sim cards mean there are “similar application structures between both kinds of cards” and that “there are many ways to take card functionality to phones”.

He says Absa plans to have 4 000 tap-and-go devices in service by the middle of next year. He adds that Absa will make announcements about its plans for NFC before the end of the year but won’t elaborate before the official announcement. NFC devices will be able to use the same tap-and-go devices that Absa has begun to deploy for its new range of cards.

In the short term, Absa predicts a gradual move to mobile wallets for simple banking, and then sees this expanding to tickets, vouchers and coupons.

Absa is also planning to launch a debit card aimed at “young professionals or recent graduates” that will include built-in NFC and a built-in dynamic PIN generator for online purchases. — Craig Wilson, TechCentral

http://www.techcentral.co.za

ABSA tap-and-go payment details emerge

2011-11-07T13:48:00.000+02:00

More details about ABSA’s mobile products recently emerged

ABSA’s tap-and-go cards will allow be limited to R200 per day and a maximum of R1,500 on the card at any given time, the bank announced this morning (7 November 2011).

Earlier this year (August 2011) ABSA and Vodacom announced a partnership that included, among other things, a contactless “tap-and-go” card as an alternative to cash payments.

In a press release issued today, ABSA revealed more details about their plans for this so-called “tap-and-go” payment system. ABSA said that the card is aimed at low value purchases in retail outlets and public transport fares.

The total monthly transaction limit is R3,000.

ABSA representatives were not immediately available to comment on how one would go about getting a tap-and-go card and what it would cost, but an employee at a branch explained that the system was still being trialled.

Another development announced by ABSA today was a “remote account opening application” for Android.

According to ABSA, it would allow the opening of bank accounts and the issue of debit cards to new customers in less than 10 minutes. The app scans your ID book, captures all the relevant information and “enables the imaging of supporting documents,” ABSA said.

The full press release is below:

In today’s fast-paced, ever changing payment environment, consumer purchases are motivated and driven by much easier, accessible, convenient and secure ways of paying.

“In line with our ongoing pursuit of providing innovative solutions and services that enhance customer experience, we have a portfolio of innovations with significant benefits to our customers,” says Arrie Rautenbach, Head of Retail Markets at Absa.

He adds: “Our customer base has become increasingly diversified and more sophisticated. We have consistently endeavoured to innovate with our payment options in line with the evolving customer needs and trends.”

Some of the initiatives that demonstrate the group’s commitment to sustainable innovative solutions include the following:

Contactless payments: The “tap-and-go” payment allows consumers to conveniently pay for low value purchases in retail outlets and fares in public transport vehicles by simply tapping the contactless cards against the reader. Tap-and-go transactions are limited to R200 per day and users will be able to load a maximum of R1 500 on the card at any time. The total monthly transactional limit is R3 000.
In-store Banking: In 2011, Absa has extended the application and use of its Point-of-Sale devices to include basic banking transactions which can now be performed in-store at selected merchants. In addition to conducting normal purchases, we now offer consumers the ability to perform basic banking transactions such as cash-in and cash-out transactions, the purchase air-time, obtaining mini-statements and the checking of balances at point-of-sale machines) at registered merchants. This innovation extends Absa’s reach nationally and promotes financial inclusion, while creating foot-flow and additional revenue streams for the retailers.
Remote Account Opening App: This Android-based smartphone and tablet device enables the opening of bank accounts and the issue of debit cards to new customers in less than 10 minutes. The on-device application scans one’s ID book to identify and verify the customer’s details, captures all the relevant information and enables the imaging of supporting documents.
Absa CashSend™: CashSend makes receiving and sending money quick and easy. It allows Absa customers to electronically transfer funds by using their card at an Absa ATM, a self-service kiosk, mobile banking or internet banking, to a recipient. The latter is then able to withdraw the funds at an Absa ATM using only a reference number and access code – without needing a card or bank account.
Pay in Your Currency™: It will allow international customers to enjoy the confidence and convenience of paying for their bills in the currency they understand best – their own.
“By pioneering these initiatives in the South African banking industry to ensure convenience, accessibility, safety and efficiencies for customers and consumers, Absa has positioned itself as a leader in banking and financial services,” states Rautenbach. “Our innovative and customised solutions have turned us into a bank of choice in South Africa for many.”

He adds: “In line with customer expectations, we are committed to innovating on an on-going basis. This is significant as the ways of payments have evolved and continue to evolve.”

Looking at possible future trends in payments, Rautenbach projects that, unsurprisingly, the mobile phones will become the key device for making payments.

According to the 2011 World Wide Worx’s Mobility report, 44% of urban mobile-phone users now access banking services via phones. Customers aged between 26 and 34 years are the highest users at 41%, while 11% of people older than 45 utilise it.

“What makes Absa’s contactless or ‘tap and go’ developments so significant is that these solutions provide the key gateway to mobile transactions. To provide a consistent and seamless service to retail merchants with regard to card payments, our cards are becoming virtual, they are moving to mobile, and – going forward – consumers will simply need to tap their mobile phones against the same readers to pay with their mobile phones in future,” says Rautenbach.

“With the above in mind, we expect that over the next five years, the mobile-phone will become a commonly used device for effecting payments. Absa is already playing in that space. Keep an eye out for impending innovative firsts from Absa in this domain,” hints Rautenbach.

He emphasises that Absa continues to invest substantial human capital and finances into retail banking technology and innovation.

“While consumers clearly have a strong appetite for new ways to pay for their purchases, we continue to educate them about the safe usage of these platforms. There is still work to be done in this regard and banks, acquirers and merchants also need to promote the benefits of contactless and mobile payments.

“Breeding familiarity will lead to a growth in usage, and ultimately, allow both consumers and merchants to benefit from faster check out and convenience,” concludes Rautenbach.

Staff Writer November 7, 2011

Finweek Digs Deeper Into Bank Charges

2011-11-07T13:32:00.000+02:00

http://allafrica.com/stories/201111041265.html

South Africa's revenue hungry banks have continued to pile on bank charges as they try to make up for lost interest revenue.

This is one of the key findings from the 2011 Finweek Bank Charges Report which will be released on Friday. Now entering its seventh year, this annual research into the charges banks levy on their customers has played an important role into the discussion around charges which are regarded as amongst the highest in the world.

"Bank charges are obviously an emotive issue in South Africa and a combination of the global financial crisis and the decreasing demand for lending has meant that banks are going to be looking for alternative ways including fees and penalties to boost their revenue line," says Finweek editor Marc Ashton.

One of the challenges around preparing the research has been the challenge of comparing products on a like for like basis from the banks.

Traditionally this has been an incredibly difficult task and for the duration of the research Finweek has employed the services of Horwath Forensics to conduct and verify the results of the study which uses only the channels to which you have access: branches, brochures and call centres.

Key findings of the 2011 study include:

Standard Bank remains is the most expensive in terms of both package and Pay as You Use (PAYU) options.

FNB is cheapest, but has the highest penalty fees.

It costs twice as much now to bank with Absa and Standard than it did seven years ago.

Banks continue to push ever greater numbers of clients to the default of buying package options

On average banks are driving up the annual costs of package options in double digits.

Penalty fees are becoming an increasingly important revenue source, especially on cheaper package options.

Call centre and branch staff remain broadly incapable of accurately interpreting official literature.

Give kids control of their cash

2011-11-07T13:15:00.000+02:00

05 NOVEMBER, 2011 22:37
TINA WEAVIND

As parents, we can go only so far to educate our offspring about personal finance. At some point, the theory must end and the practicals must begin.

The best lessons are ultimately learnt when they are given real control over their own money and are treated like the responsible citizens we hope they will one day become. After you've done a few practicals, like getting the little darlings to wash the car for their pocket money, you could do worse than taking them to a bank and opening an account that they can operate with some measure of independence.

Most of our major banks have products designed for young people who want access to their money without corrosive bank fees and complicated extras - like credit - that they don't need. Here's a breakdown of what's available out there, so you and your fledgling can make an informed decision.

If your child is under 16, don't forget to take along their birth certificate, as well as your ID book and proof of residence.

Capitec

Capitec has built its success on one simple product that is available to everybody - young people starting out, Josephine Soap who has a small income, and her supersized millionaire counterpart. Everyone gets the same treatment, the same bank fees and the same interest rates.

Your child would get a debit card to access whatever cash was in the account. He or she could make deposits either at an ATM or in a branch, and you or anyone else could make deposits via electronic funds transfer.

There would be a R4.50 administration fee to pay monthly. If your child has between R1 and R10000 in the account, 6% interest will be paid.

First National Bank

The Fluid account is a transactional and savings account for people who are 18 years old or younger. As well as going into the branch, you get access to your account via cellphone, telephone or online banking.

There are two pricing options for the Fluid account, the standard and the unlimited.

If you have less than R1000 you'll have to pony up R5.25.

You get two free debit transactions, which include FNB ATM cash withdrawals, payments, transfers, debit orders, card purchases and prepaid purchases.

But be warned, this option won't be for you if you're going to be using a lot of cash as the ATM withdrawal fees are prohibitive. After your two free transactions, you'll pay R5.70 (more than your monthly service fee) if you withdraw anything up to R500. Between R500 and R1000, you'll pay R11.40, and if you withdraw anything over R1500 you'll be up for a whopping R22.80.

This is conditional though - other banks' ATM transactions, cash deposits, branch transactions, special instructions and penalty fees will be charged for.

The account offers discounts including:

Absa

Cash deposits made at an Absa ATM are free as long as they are below R500.

You can access the account through cellphone banking, telephone banking or internet banking, and you can top up your airtime and print mini statements from any Absa ATM. NotifyMe sends you an e-mail or SMS when there is activity on your account. You can also access mega u.mobi on your cellphone and download, among other things, wallpapers and ringtones. It also offers news, polls, banking information, and career-focused information from the Absa Financial Adviser Academy.

Each year on January 25 you will get a profit-share payout calculated at Absa's financial year-end (December 31) and based on the average daily balance in the account.

You are not charged a transaction fee for local airtime top-ups, the NotifyMe facility, cash deposits under R500 or cellphone banking.

You need a 32-day notice period to access the funds after the initial three years, or you can get it 10 days after the initially specified term.

Nedbank

If you are a full-time student between 16 and 26, the Dezign Student Account is a good current account option.

It offers a range of benefits and free transactions for a fixed R15.50 a month.

You get a debit card and free access to personal money manager, which is an online budgeting tool for internet banking users that allows you to track income, expenditure and fees on your account.

You get free and unlimited access to:

Nedbank also has the NedSave and JustSave accounts that can be used to introduce young people to saving. Both can be used by those younger than 16.

In addition, Nedbank makes a one-off contribution of R2.50 towards the trust you choose out of the following options: Green Affinity (environmental conservation), Arts and Culture Affinity, Sports Affinity or the Nelson Mandela Children's Affinity (Nelson Mandela Children's Fund). After this, Nedbank makes a quarterly contribution, the size of which depends on how much money you have in your account.

If you have a transactional account with Nedbank, an internal stop-order can be set up to transfer money to the JustSave account.

Not only will this be free, but Nedbank credits your JustSave account with an extra R2 each time.

The money has to be withdrawn from a branch and 24 hours' notice is required.

The interest rates on this account are tiered up to 3.9% a year.

Standard Bank

Standard Bank's youth product, Sum1, is an option if you are 16 or younger. There is no monthly management fee or minimum amount you need to have in the account. You get a pin-protected debit card, which can be used at any shop with a Maestro sign. You also get free transactions each month, including:

You will pay for things like debit orders, dishonoured items and cheques, but these aren't usually relevant for people in this age bracket.

The account also has a savings "pocket" which pays a bit of interest. This interest rate is variable and is lower than the rates paid on pure savings products like ContractSave and PureSave. You can transfer money from your spending pocket to the savings pocket at a branch or AutoPlus machine, but you can only draw from your savings at a branch.

PureSave

The PureSave option has no monthly management fee and it lets you earn interest on as little as R50 a month. You can also access the funds whenever you need them. Electronic transfers into a PureSave account from a Standard Bank transaction account are free and there is no monthly management fee. What's more, the first two cash deposits up to R3000 each month are free and the more you save, the higher your interest. You can also open more than one PureSave account, so you can have a different one for each of your savings objectives.

ContractSave

The ContractSave is a fixed-term investment product. You choose the length of time you want to save for - from one year to 20 years - and how much you want to save each month, from a minimum of R100. You can also set the amount you want this to increase by periodically so that your savings aren't eroded by inflation. Interest rates are calculated each day and are tiered, so the higher the balance, the higher the returns. As a further savings incentive, if savings are maintained, a bonus interest is paid at the end of each year for up to four years. You can withdraw your money before the date you set, but you will pay a penalty.

Switching bank accounts to be easier

2011-11-07T12:54:00.000+02:00

05 NOVEMBER, 2011 22:11
THEKISO ANTHONY LEFIFI
BUSINESS TIMES

The Banking Association of SA (Basa) will soon announce details of a new policy that will make it easier for customers to switch their accounts between banks.

The new method is known as bank account "porting", and is similar to that used by cellphone companies that enables users to retain numbers when changing service provider.

The association has been working on a switching code and has included it in the 2011 Code of Banking Practice (COBP) update.

Anton de Wet, Nedbank's executive for personal banking and client value management, said standardised processes will apply to the exchange of information between banks when a consumer wishes to switch banks. This will, in addition to the guidelines in the COBP, make switching easier.

Mathew Warren, a banking analyst with First Avenue Investment Management, views it as a pro-consumer move that would increase costs for banks as well as sharpen the level of competition.

Capitec Bank's executive for marketing and corporate affairs, Carl Fischer, said bank account porting was more complex than cellphones as transactions would have to be processed individually rather than in batches - which may increase banks' costs.

"This cost might be passed on to consumers," Fischer said.

Bank account portability would allow customers to move debit orders and mortgage accounts to a new bank with minimal fuss. Whereas banks may face additional costs, consumers could win at the banks' expense, said Fischer.

The only potential negative consequence for customers would be that, because of the increased cost and higher level of competition, banks might more closely scrutinise the profitability of marginally profitable customers.

Warren said porting was "not good for banks" as a whole. "If it were to happen though, the bank that would be best positioned would be Absa, due to its large branch and ATM network, while Nedbank would be the least well positioned as it has a smaller distribution footprint for retail customers."

Harriet Heymans, head of products, pricing and rewards at Absa, said that in the past three months Absa had an average of 34% new customers who switched their primary accounts from other banks.

Emilio Pera, lead financial services director at Ernst & Young, said the cost of conversion of IT systems, together with the administrative cost of managing the transfer of accounts, could be "significant".

"In an environment where banks already have to spend significant amounts to enhance systems to comply with proposed regulatory changes, these costs will have an impact on the cost base of the banks and ultimately on the consumer," Pera warned.

Simon Russell, MD of financial services at Accenture SA, said his company's research indicated that a fundamental power shift from banks to their customers had occurred since the financial crisis.

Consumers were more confident in making financial decisions on their own, more sceptical of their bank brands, more price-conscious and more willing to move away from institutions that provided poor service. This trend would be the key driver of account switching, said Russell.

SA's major banks tap entry-level segment

2011-11-02T10:02:00.000+02:00

Nov 01 2011 22:00
Mzwandile Jacks

Johannesburg - South Africa's big three banks on Tuesday reported a significant surge in personal loan books, indicating big players are lending aggressively to the entry level market previously dominated by small players Capitec Bank Holdings [JSE:CPI] and African Bank Investments [JSE:ABL].

Absa Group [JSE:ASA], South Africa's biggest retail bank, on Tuesday announced 12.4% growth in its personal loan book to R12.6bn.

Standard Bank Group [JSE:SBK], Africa's biggest bank by market capitalisation, said its personal loan book had surged 33% year-on-year (y/y).

FNB, a subsidiary of FirstRand [JSE:FSR], South Africa's third-biggest bank, said its personal loan book, including its low cost banking unit EasyPlan, has seen 24.4% growth y/y.

Analysts said this meant profit "margins were getting ever wider" in SA's unsecured lending space.

However, they said this growth did not necessarily mean that the banking sector, which experienced depressed profits since the onset of the 2009 recession, could be turning around.

Safs Narker, a banking analyst at Metropolitan Asset Managers, said secured lending has become "mooted" while unsecured lending has seen "double-digit" growth in the past few years.

Secured lending is when the borrower pledges collateral to the lender to secure repayment of the loan. Unsecured lending is not attached to any collateral. This type of loan is called "unsecured" because the bank has nothing to go after if clients default.

"Big banks have successfully exploited the double-digit growth in unsecured lending. They now see unsecured lending as an avenue to make more profits," Narker said.

Steve Meintjes, a senior analyst at Imara SP Reid, said it was too early to talk of a turnaround in the banking sector.

"Growth in personal loan books is very good. But one swallow does not make a spring," said Meintjes. He added major banks were expanding aggressively in the unsecured lending space.

"Our improved performance can largely be attributed to this," said Tshiwela Mhlantla, managing executive of Absa personal loans.

She expects lending to grow faster than industry average of 15% a year. "The bank has strong growth plans over the next few years, particularly in the entry level market," Mhlantla said.

Peter Schlebusch, CEO of personal banking at Standard Bank, told Fin24 the company moved into the entry level market because of the slowdown in the secured lending market. "We found the unsecured lending market to attractive as well," he said.

Peter du Toit, the head of FNB Smart Product House, said: "The establishment of our EasyPlan branch network has contributed significantly to the successful growth of our book. Since launching in 2009, FNB EasyPlan has disbursed more than R1bn in loans." - Fin24

Cut bank fees to foster savings – Nene

2011-10-26T14:53:00.000+02:00

October 21 2011 at 05:00am
By Donwald Pressly

THE Government was still in discussions with the banking sector to encourage it to reduce transaction fees to foster savings, particularly among the poor, Deputy Finance Minister Nhlanhla Nene said yesterday.

His remarks were made after he addressed a co-operative financial institutions’ indaba in Cape Town. After the conference he remarked that in the context of encouraging savings, it was important to draw people – including the poor – into the banking system.

He said some institutions – without naming them – were “coming into the (banking) market with lower fees”.

It was a hint that co-operative banks might be the mechanism to promote competitive banking charges, especially among the poor, many of whom felt excluded from the commercial banking system.

In Pretoria, Solidarity released a report in which it argued that the most expensive commercial bank’s fees were “now even higher”. The union’s deputy general secretary, Dirk Hermann, said banking giant Absa, which was one of the two most expensive banks, had increased its charges by 8 percent in the last year.

Citing research by the Solidarity Research Institute, Hermann reported that Standard Bank and Absa were still “overall the most expensive of the five banks” with FNB and Capitec the cheapest.

The report compared the bank charges of the various personal bank accounts of the five large commercial banks – Absa, FNB, Standard Bank, Nedbank and Capitec – with each other. It did not study business bank accounts.

Hermann noted that Capitec had not increased its charges at all and its “global one” account was the least expensive.

The average bank charges of this account, over eight different user profiles, amounted to R67.35 a month and had not increased since 2010, according to Paul Joubert, a senior researcher at the institute.

Joubert reported that Absa’s cheapest account had average monthly charges that were more than double those of the Capitec account. The charges also rose by 8 percent from R140.90 to R152.15 between 2010 and 2011.

Noting that the cost was calculated as an average of the eight profiles, excluding minimum balances and the effect of interest or forgone interest, Solidarity Research Institute said Capitec had the least expensive transmission account, but if a client wanted an overdraft, a chequebook and a credit card directly linked to the account, FNB offered the cheapest current accounts.

Nedbank, it reported, offered the third cheapest rates.

Hermann said it was important for consumers to shop around for bank accounts.

Meanwhile, Nene announced the launch of the Treasury’s financial co-operative retail savings bond, which he said was an ideal instrument for co-operative financial institutions.

“These one-year, two-year and three-year co-operative retail bonds will provide financial co-operatives with a safe instrument to invest and to earn a competitive return on their members’ investments with no charges”.

He said the bonds also had some unique features, which took into account the uniqueness of the financial co-operative model “through top ups and early withdrawals”.

Nene looked forward to when all co-operative financial institutions would be registered as co-operative banks.

http://www.iol.co.za

Banks open doors for affordable housing

2011-10-26T14:36:00.000+02:00

http://www.thenewage.co.za

One of the major objectives of the financial services charter – stimulating delivery of affordable housing through joint public-private interventions – is showing significant progress since the charter was established seven years ago. All the major banks are capitalising as they write billions of rands worth of loans in the low-income sector.

On Monday, First National Bank (FNB) announced that it had exceeded its target of R9bn in the affordable housing market by providing new homes to more than 86000 middle-class families with a no-deposit policy for qualifying customers.

The bank said a deposit was a major stumbling block for most customers wanting to get their foot on the first rung of the property ladder.

This followed Standard Bank’s announcement last week that it had reached the R10bn mark in its affordable home loan book and that it expected to double the figure by 2015.

In July, financial services group Old Mutual’s investment arm raised R9bn for its innovative Housing Impact Fund for South Africa, aimed at helping South Africans earning less than R15 000 a month to meet their housing needs.

The fund, one of the largest of its kind ever raised in South Africa, finances the construction of affordable homes for sale and rent, as well as providing housing loans and rental accommodation for struggling families.

Marius Marais, CEO of FNB housing finance, said the R9bn lent since the bank formed its affordable housing division 10 years ago, was “a significant contribution in the provision of decent and affordable housing for first-time homeowners who form the backbone of the future housing market”.

“We are deeply committed to stimulating this under-developed sector, which caters specifically for those who earn too much to get a government housing subsidy, but struggle to qualify for a conventional home loan.

“Playing a role in housing people in this income bracket is important to us and this achievement shows that we are making great strides,” said Marais.

FNB said the under-supply of homes in the R180000 to R500 0000 range had forced them to focus on the development of new housing projects for the middle class, as well as in the creation of tailored financial solutions to meet the market’s needs.

“Our goal is to provide end-user finance to over 100000 housing units and house more families by 2012,” Marais said. In addressing the housing backlog and housing first-time homeowners, FNB said it was working with various partners to develop quality alternative building technologies that could assist in bringing down prices and increase energy efficiencies.

“Even though a holistic approach is required to address the backlog, we believe that good alternative building systems will enable consistent production of quality products at a faster pace,” said Marais.

To capitalise further in the sector, the bank vowed to continue to give 100% bonds in the affordable housing market space, despite the global financial downturn. “Developing tailor-made housing solutions that speak to the unique needs of our customers has enabled us to retain our no-deposit policy for qualifying customers, as a deposit can be a major stumbling block for most customers.

“We have learned many lessons in the first 10 years and there’s no doubt that the bank will continue to do the same thing in future. Our experience has not only ensured that we continue to grow our affordable housing book, but we are well positioned to ensure we continue to play a leading role in this sector in the future,” he said.

bernards@thenewage.co.za

10 ways to invest R500 a month

2011-10-26T14:31:00.000+02:00

October 25 2011 at 04:48pm
By Martin Hesse

Half a grand doesn’t buy you much these days, not even a trolley of groceries; perhaps a dinner for two at a moderately upmarket restaurant, if you choose a cheapish bottle of wine.

Conversely, it’s probably not very difficult to find R500 a month to put aside for a rainy day. Let’s say you’ve given your budget the once-over and found a spare R500 that you can afford to put away month after month for at least five years. As with any investment, you want the best returns at as low a risk as possible, and preferably a savings or investment vehicle that is flexible enough to allow you to deposit extra or, in an emergency, withdraw your money at short notice.

You may be immediately attracted to the obvious safe banking options (or “solutions” as they are happily called in bank-speak), such as a debit order from your current account into a separate savings or notice account. But these generally offer very low rates of return. Looking further afield, you should find ways to earn a better return without necessarily taking on more risk.

At the very least, you want to beat inflation, which eats into your savings relentlessly and mercilessly, and which can result in an alarming drop in the value of your money over time - just how alarming is illustrated in the following example:

Assume you want to save up for a specific consumer item that today would cost you R30 000. If there was no inflation, your R500 a month over five years would exactly pay for it – you could stash the money under your mattress.

But assuming a constant annual inflation rate of 4.2 percent (the figure for year-on-year CPI inflation at the end of April 2011), the item will cost you R36 852 five years from now. You would have to save for more than an extra year to make up the shortfall (by which time the price would have risen again, to over R38 400!).

Putting your cash under the mattress, you might think you could keep up with inflation by increasing your contributions by the inflation rate (4.2 percent in this example) each year. Your contributions would look like this (the figures have been rounded off to whole rands):

Year 1: R6 000 (R500 a month)

Year 2: R6 252 (R521 a month)

Year 3: R6 515 (R543 a month)

Year 4: R6 788 (R566 a month)

Year 5: R7 073 (R589 a month)

Total: R32 628

It may come as a surprise that you are still not close to the R36 852 you’ll need. This is because not only are your yearly increases lagging behind inflation, but you are accumulating your target amount over a long period (five years), whereas inflation is taking its toll on the entire cost of the item from the very beginning. In fact, you would have to increase your monthly amount by around double the inflation rate each year to have enough to buy the item after five years – or save a constant R614 a month.

So, for saving to be worthwhile, you need not only to earn an above-inflation return but you also have to increase your contributions each year so that the value of those contributions doesn’t diminish. However, for ease of comparison, we’ll keep the contributions at a flat R500 a month.

It’s time to move out of the bedroom and see what is available to you – and compare returns, risks, costs and accessibility. The break-even figure to beat inflation is R33 365 – that’s what you would save at a 4.2-percent interest rate, equal to the inflation rate. All bank rates and costs are quoted as at May 31, 2011, and it is assumed that the interest rate and inflation rate remain constant over the five years. Bear in mind, though, that we’re at the bottom of an interest rate cycle and inflation is rising, and interest rates are likely to rise too.

Only products that fit the investment criteria of R500 a month for five years have been reviewed – there are various other products for investors with larger amounts, for longer-term savings, and for lump-sum investments.

Also, you have to consider tax. For the 2011/12 tax year, you pay income tax on interest of over R22 800 a year if you are under the age of 65 – this means that you will have to invest more than R456 000 at five percent, or R228 000 at 10 percent, to begin paying tax on your returns. Also, dividends on local equity investments are currently tax-free but will be subject to tax from the 2012/13 tax year.

You are also liable for capital gains tax (CGT) on any capital gains that you make when you sell or surrender your investment. For the year, your first R17 500 is tax-free and you pay tax at your marginal rate on 25 percent of the rest of your gains. Note that these are discretionary, medium-term savings – the options presented should be considered only after you have fulfilled your long-term financial obligations, such as being on track to save enough for your retirement and saving for your children’s education.

Except where otherwise indicated, the information is from the websites of the relevant finance houses.

1. SHORT-TERM DEBT

Before you start looking at investing money, you need to look at your debt, because, as any financial adviser will tell you, that’s the first place you can score: what you pay in interest rates on debt is normally a lot higher than what you receive in interest rates on savings. First eradicate any debt on your credit card account and your retail accounts, because they usually charge the highest interest – often around 20 percent a year.

While the interest rates on credit card debt are generally high, if you use your credit card account as a savings vehicle, the rates on a positive balance are zero or very low. On ordinary credit cards, Nedbank offers zero percent annually, Absa 0.2 percent and First National Bank (FNB) 0.25 percent to 0.5 percent. Standard Bank has tiered rates, from 0.4 percent to a more respectable (but not inflation-beating) 3.3 percent on an amount over R20 000.

2. LONG-TERM DEBT

Another way to put your half-grand to good use is to channel it into your mortgage bond.

By putting the money into your home loan account, you are, in effect, saving at the rate of interest of the loan, without paying tax on the interest saved, which is almost certainly more than you’d be guaranteed anywhere else. (You might make more in a high-risk investment such as an equity unit trust, but it would be a bit of a gamble over five years.)

Absa Bank has kindly done the calculations for the following example: If you have 15 years remaining to pay back a home loan of R500 000, your monthly repayments at nine percent (the prime rate at the end of May) would be R5 071, and after five years the balance on the loan would be R402 393. If you upped your repayments by R500 to R5 571, your balance after five years would be R359 759, a difference of R42 634 – far better than your savings with any of the interest-bearing investments mentioned below. If you have an access bond, Absa says, you would have access to what you have paid in advance, subject to the contract terms.

If you continued putting R500 a month into your bond, you would pay it off after 11 and a half years and save nearly R80 000 in finance charges.

3. SAVINGS ACCOUNTS

Most of us have a bank account for everyday transactions, so opening a separate savings account into which to transfer R500 a month is certainly an attractive option as far as convenience goes – except that most banks’ savings options fall far short of what is needed in the way of returns.

* Standard Bank’s PureSave, Nedbank’s JustSave, FNB’s Simply Save and Absa’s Money Builder are simple, flexible savings accounts. You can deposit or withdraw money at any time, and they generally attract no charges if you are only depositing money and not using the account for day-to-day transactions. All have tiered interest rates according to how much is in the account, so you progress to higher rates as your savings increase: they are 0.25 to 2.3 percent (FNB), two to 2.75 percent (Standard), 1.35 to 3.90 percent (Nedbank) and 1.3 to 3.90 percent (Absa). None would give you an above-inflation return on an investment of R500 a month, so in effect you would be losing money.

* One bank, Capitec, offers a daily savings account with substantially higher rates, which will give you a positive after-inflation return: six percent on amounts under R10 000 and 4.75 percent on R10 000 or more (the more money in your account, the lower the rate, unlike other banks). For all Capitec banking, you first need to open a Global One transaction facility, on which there is a R4.50 monthly administration fee. If you save R500 a month, for the first 19 months, while your balance was under R10 000, you would earn six percent, and you’d earn 4.75 percent thereafter, giving you a total of R33 590 (net of the monthly fee).

* Standard Bank has an innovative savings product called ContractSave. You must deposit a minimum of R100 a month for a year, but thereafter it is as flexible as the bank’s PureSave option. There are no fees if your debit order is from a Standard Bank account. Interest is 3.5 percent on less than R10 000 and four percent on more than R10 000, and you get a bonus of between 0.5 and two percent a year, depending on how long you have been saving. Standard Bank’s online calculator shows you would have R34 695 after five years.

* Postbank, the Post Office’s banking facility, has an inflation-beating account, Bonus Save, whereby you choose the amount you want to save monthly and the term – up to 60 months. Once these parameters are fixed, a penalty applies if you break the contract. You earn bonus interest at the end of the term if you have fulfilled the conditions. Over 60 months, the account offers annual interest of 4.5 percent plus a 0.5-percent bonus, which equals five percent a year. Your final amount would be R34 144. There are no charges on your account.

4. NOTICE DEPOSITS

Notice deposits are relatively flexible in terms of depositing money (some banks specify a minimum balance of, say, R1 000 and minimum deposits of, say, R250), but you must give a defined period of notice to withdraw what you have saved. This limits your accessibility, which is bearable only if the interest rates are worthwhile.

* Standard Bank’s 32-day notice deposit offers tiered interest of zero to 3.5 percent a year, depending on the amount invested. Nedbank has a minimum investment amount of R1 000, and interest tiered up to 3.25 percent a year. At Absa, the minimum deposit is R100 and rates are tiered from 2.5 to 4.2 percent. And at FNB, the rates are tiered up to 2.55 percent a year. As with the savings accounts, you would not get an inflation-beating return.

* Bidvest Bank offers a welcome 6.3 percent annually on its 121-day notice account, but the minimum balance is R5 000. Here it would be worthwhile to use another account to save until you reached R5 000 (after 10 months), and then transfer your savings to the 121-day account. Assuming a rate of three percent on your pre-R5 000 savings, your total savings after contributing R500 a month for five years would be R35 072. The drawback is that you have to give four months’ notice to access your money.

* Absa’s TargetSave is similar to a normal 32-day notice account but requires a minimum monthly deposit of R100 for six months. Interest is tiered from 3.2 to 3.65 percent and there is bonus interest of between 0.25 percent and 0.75 percent after six months. Absa has calculated that you would have R33 451 at the end of five years.

5. FLEXIBLE FIXED DEPOSITS

Fixed deposits are designed for lump-sum savings, but a couple of banks offer more flexible arrangements that allow you to make multiple deposits over a fixed period.

* FNB’s Flexi Fixed Deposit requires a minimum deposit of R100. You can deposit more at any time, but withdrawals are limited to two of not more than 15 percent of your savings. There is a fixed term of three or 12 months, which you can then renew. Interest is tiered at 2.25 to 4.25 percent. Unlike a regular fixed deposit, where the interest rate would remain fixed for the investment term, the rates fluctuate in line with general interest rates.

* Capitec offers a fixed-term savings plan with multiple deposits for clients on their Global One facility. You can deposit money when you like but cannot withdraw anything before the term is up. Interest rates are fixed for the term (six, seven to 12, 13 to 18, or 19 to 24 months) and range from 6.1 to 6.6 percent for amounts in our investment range. Taking an average rate of 6.4 percent, and deducting the monthly R4.50 administration fee, the final savings figure would be R34 947. Bear in mind that, because the interest rate is fixed for the investment term, you would lose out if the rate had to rise.

6. SUBSCRIPTION SHARES

One small bank, GBS Mutual Bank based in Grahamstown, offers a unique – and highly competitive – savings scheme of a type that used to be popular in South Africa in the days of building societies. The bank has branches in Port Elizabeth, Cape Town and Port Alfred, and agencies in other areas.

With a monthly subscription that starts at R50, you can select a maturity date of between 36 and 240 months. Interest is compounded monthly and dividends are capitalised annually. Redemption notice of three months can be given at any stage after the first 15 months. At maturity, the term can be extended for between 12 and 36 months. This product offers interest of 6.25 percent, which would provide a total of R35 293 after five years. The rate is subject to fluctuations in the interest rate.

7. RETAIL BONDS

Currently, there are two retail bonds on the market for individual investors:

* RSA Retail Bonds, the government bonds available to the public, offer attractive returns on lump-sum investments at almost zero risk. The bonds require a minimum deposit of R1 000, can be for a term of two, three or five years, and there are no costs involved. On May 31, 2011, the fixed-rate two-year bond offered 7.25 percent a year and the fixed-rate three-year bond 7.50 percent a year. (There are also inflation-linked bonds, which, at the current inflation rate, offer lower returns.)

The bonds are not designed for month-to-month savings. However, with a little ingenuity you could structure your savings to take advantage of their attractive rates, especially if you also used a higher-interest savings account, such as Capitec’s savings account. After saving for a year in the Capitec account, you could put the accumulated amount into RSA Retail Bonds for two terms of two years each. After saving for another year at Capitec, you could put that year’s savings into a three-year RSA bond, and after saving for a third year at Capitec, you could put that year’s savings into a two-year bond. For years four and five, you would have to keep your money in the savings account – unless, of course, you wanted to carry on beyond five years (see table, link at the end of this article).

* Nedbank has recently advertised retail bonds with similar conditions to the RSA bonds (also R1 000 minimum, zero costs), and on May 31 they were offering higher rates: 7.37 percent for two years and 8.66 percent for three years for people under 60, and 7.49 percent for two years and 8.81 percent for three years for people over 60. Using the above calculation method and the under-60 rates, your total after saving R500 a month for five years would be R35 584.

8. UNIT TRUSTS

Unit trust funds are an extremely flexible type of investment, allowing you to withdraw money or put in extra when you want to. Your choice is extremely wide – currently there are nearly 800 funds in South Africa available to individual investors, excluding offshore funds marketed here. These cover all asset classes, asset sub-classes (for example, resources shares or financial shares) and various mixtures of asset classes. However, not all funds are available to someone who wants to invest R500 a month; for many, the monthly minimum is higher.

There are various types of funds, according to the assets the fund invests in. We consider here just three common broad types of unit trust: low-risk domestic money market funds, medium-risk domestic prudential funds, and high-risk domestic equity funds.

Only the money market funds offer yields in line with prevailing interest rates, but they are usually better than most bank deposit rates, although yields can fluctuate daily. The others are subject to the fluctuations of the markets and returns can vary widely. You can consider past performance when assessing a fund, but this is no indicator of future performance. To get a good idea of consistency of performance versus the amount of risk taken by fund managers, it's advisable to look at a fund’s PlexCrown rating (refer to link at the end of this article).

In the unit trust universe, actively managed funds, in which fund managers move in and out of assets to take advantage of market conditions, generally have higher asset management fees and often also charge performance fees.

All funds publish a total expense ratio (TER), which represents the annual management costs, administration costs and various other fees, including bank charges and taxes as a percentage of your investment. The TER can range from less than one percent to more than three percent. It does not include the initial investment fee that unit trust companies often charge, nor does it cover the commission or fee that goes to your financial adviser, if you are using one.

* Money market funds. Those that accept a minimum of R500 a month or less are Allan Gray, Community Growth, Coronation, Metropolitan and RMB. At the end of May 2011, annualised yields ranged from 5.16 to 5.67 percent (net of costs), according to ProfileData. TERs are low, ranging from 0.3 to 0.63 percent.

* Asset allocation prudential funds. These funds distribute their assets across equities, property, bonds and cash, and cannot hold more than 75 percent of their assets in equities. Their performance is not generally as spectacular as equity funds but, because of the diversification of investments, neither are they as volatile. Although their risks vary widely, they are generally lower risk than pure equity funds. Over the past five years, to the end of the first quarter 2011, the top 10 prudential funds achieved an average of 10.72 percent in annualised returns (according to ProfileData), net of costs. TERs are higher than money market funds – those of the top 10 funds range from about 1.2 to 1.88 percent.

* Equity funds. Domestic equity funds invest at least 75 percent of their portfolios in shares on the JSE, and many invest up to 95 percent. In the past they have provided the most attractive returns for long-term investors, but, because of the volatility of share markets, there is a relatively high chance of capital loss over the short term. If you are saving R500 a month, two factors count in your favour:

* You are investing monthly, rather than investing a lump sum, and this tends to smooth out your returns (when the unit price drops, your monthly R500 buys you more units); and

* Your savings are discretionary, so that, in the case of the markets taking a dip just before your five years are up, you could probably afford to keep them in a while longer to “ride out the storm”.

Over the past five years, to the end of the first quarter 2011, the 10 top-performing equity funds (including specialised equity funds, such as resources funds) achieved average annualised returns of 16.56 percent (according to ProfileData). TERs of the top 10 funds range from 1.15 to 2.65 percent.

9. EXCHANGE TRADED FUNDS

Exchange traded funds (ETFs), a relatively new type of investment, are similar to unit trusts in that they invest in the financial markets and are as easy to access. If you go through the online platform etfsa.co.za, which covers all exchange traded products in South Africa, the minimum monthly investment is R300.

Most ETFs passively track an index, such as the FTSE/JSE Top 40, by holding the shares in the index in the same proportions. As such, they perform in line with how the index performs (although there is the drag of costs), which is often better than many actively managed funds. Currently, you don't have the wide choice that unit trusts offer, especially regarding the underlying asset classes.

ETFs are mostly equities-based, and these have a similar risk profile to equity unit trusts. However, some newer ETFs invest across asset classes – one range, Absa’s NewFunds Multi-Asset Passive Portfolio Solutions (or MAPPS), even complies with regulation 28 of the Pension Funds Act, which governs the asset allocation of retirement-related investments.

Only relatively few ETFs have been around for longer than five years. One of the most established, the Satrix 40, which tracks the FTSE/JSE Top 40 index, has had annualised growth of 12.17 percent over five years to the end of the first quarter of 2011. However, the more specialised Satrix Fini, which tracks the FTSE/JSE Financial index, has returned only 5.44 percent annually, on average, over the same period, in line with the relatively poor performance of financial shares, especially through the global credit crisis.

The best-performing ETF over three years has been the Satrix Divi Plus, which tracks an index of shares that provide good dividends – annualised growth to the end of the first quarter of 2011 was 17.3 percent.

ETFs have become popular because they are less costly than active funds: TERs are mostly under one percent, although, according to etfsa.co.za, some specialised ETFs have TERs of up to 1.68 percent. However, because ETFs are traded like shares on the stock exchange, they incur some additional costs, such as brokers’ fees, which are usually not included in the TER.

10. ENDOWMENT POLICIES

Life assurers offer discretionary investments in the form of endowment policies. These force you to save, because you are bound to a contract for a fixed period. Generally, there are heavy penalties if you break the contract by, for example, stopping payments or withdrawing your money early. The penalty is up to 15 percent for those policies entered into after January 1, 2009, although the penalties typically decrease the longer you save, especially after the first year. Depending on the policy, you may be allowed a no-payment window period, have access to part of your investment (but only once in the first five years), or borrow against your investment if you need the money urgently.

You generally have a choice of investing either in market-linked portfolios, which are subject to the vagaries of the markets and offer no guarantees, or lower-risk, partially or fully guaranteed portfolios and smooth-bonus portfolios.

With a guarantee, your capital at least is guaranteed on maturity, and with a smoothed-bonus investment your annual returns are smoothed (lowered in good years so that they can be raised in bad years), counteracting market volatility.

Endowment policies have tax implications of which you need to be aware. You do not pay tax on your earnings; life assurance companies pay income tax on your behalf on interest and foreign dividends at 30 percent and capital gains annually at an effective rate of 7.5 percent. This is only an advantage if your marginal tax bracket is higher than 30 percent and you expect to exceed your annual tax exemption threshold for investment income. The CGT may also be to your disadvantage because you could lose out on CGT exemptions, and you may pay more than necessary because it is calculated annually.

Endowment policies can also incorporate a risk aspect such as a “premium waiver” option, where, if you suffer a disability and lose your means of income, your premiums are covered for the contract period.

Note that these features usually cost extra, and it is worthwhile to weigh up their benefits against the drain on your returns.

Cost structures are often complex. Costs can include an adviser’s commission, annual platform administration fees (in some cases a fee per premium), and annual asset management and performance fees. With some products, you can invest directly, cutting out the adviser costs.

Because of the complexity, assurers often express total costs as the “reduction in yield” (RIY), which is the number of percentage points costs reduce the annual return on the underlying investment.

The following products, from three big life assurers and three investment houses that have a licence to sell endowment policies, offer a minimum monthly investment of R500 (or less) for a five-year term:

* Liberty Life. Investment Builder gives you access to a wide range of funds that cover all risk profiles. These include Liberty’s internal Excelsior range, selected external managers such as Stanlib, and its property portfolio. The website provides performance data for the funds. Nico-Louis Minnie, the head of investment customer value at Liberty, says there is a flat three-percent annual management fee, no matter what fund you’re in, and you can change funds at no cost. After five years, Liberty will refund you 25 percent of its management fees. If you go through a financial adviser, the adviser can charge you up to 1.5 percent a year for the first five years. An optional performance guarantee on Excelsior funds guarantees your capital for an extra annual cost of 0.4 to 1.5 percent, depending on the risk profile of the fund.

* Old Mutual. The Max Investments endowment range offers a choice of core funds managed by Old Mutual Investment Group South Africa as well as funds of external managers. Max Investments product manager Jaco Gouws suggests the Flexible Plan, which does not tie you into a contract. For tax purposes, you can choose the Life Pure Investment Wrapper (you’re taxed at 30 percent by Old Mutual) or the Linked Investment Service Provider Wrapper (you're taxed at your individual rate when you sell your investment, and may even be tax-exempt).

Gouws says the RIY over five years is 4.79 percent, but this would reduce to 3.71 percent over 10 years. For Old Mutual’s Smoothed Performance Fund, the bonuses (returns) over the five years to the end of 2010 varied between five percent (2008) and 25 percent (2006), these figures being net of investment charges and tax.

* Sanlam. The Stratus Endowment offers a selection of Sanlam and external funds, and Sanlam publishes daily reports of fund performance. Some of the lower-risk funds have a guarantee option. Or you could invest in the Vesting Bonus Fund, in which returns are smoothed (the RIY in this case would be 4.8 percent). Bonuses on the fund over the five years to the end of 2010 varied between 3.1 percent (2009) and 20.4 percent (2006). After five years you receive a loyalty bonus calculated as a percentage of accumulated costs.

* Allan Gray. Under this endowment policy, you can choose from a wide selection of Allan Gray and external unit trust funds. Apart from the fund management fee, which varies from fund to fund, Allan Gray charges a maximum annual administration fee of 0.5 percent of assets, which is reduced to the extent that it receives any discount from a fund. There is no net administration fee for Allan Gray funds. Returns are taxed at 30 percent in the hands of Allan Gray.

* Coronation. Coronation offers an endowment plan with growth taxed at 30 percent. You may select from a focused range of Coronation unit trust funds, and switching between them incurs no costs. You pay only the annual fund management fee, which varies from fund to fund; the platform administration fee is “fully subsidised” by the company.

* Oasis. Oasis’s new endowment policies invest in a high-equity portfolio (with a benchmark of CPI plus three or four percent) or a progressive portfolio (CPI plus one or two percent). Fees, apart from an adviser’s fee (up to three percent), are an annual 0.4-percent administration fee and a fund management fee of one to three percent based on performance. Returns are taxed at 30 percent in the hands of Oasis.

WHAT THREE TOP FINANCIAL ADVISERS RECOMMEND

A senior investment broker at a major investment bank is known to have scoffed at someone asking for advice on how to invest R500 a month, suggesting he spend the money instead.

The response was almost certainly tongue-in-cheek, but what message does it send to someone who may not be a big earner but who has the desire to save?

Natasja Norval Hart of Sasfin Financial Advisory Services in Pretoria has a Certified Financial Planner (CFP) accreditation and last year won the Financial Planner of the Year award. Norval Hart says that saving even a relatively small amount is at least a start.

“Remember, it is the cents that make the rands. So by reviewing your budget and rather saving R500 a month than letting it disappear into your monthly living costs, you are creating a habit of saving. We live in a society of instant gratification, and one of the biggest challenges is to show the benefits of saving and giving up on some luxuries now to have more options later. By starting to save, putting R500 a month away, you can ensure that you are changing your financial destiny,” Norval Hart says.

Alec Riddle of Consolidated Financial Planning in Port Elizabeth, a CFP who won the Financial Planner of the Year for 2009, says it’s important to take that first step.

“Just setting a goal to save or invest and accomplishing that is in itself an achievement. Achievement is, of course, the first step to self-improvement, and success breeds success,” he says. “It is also important that you understand the various asset classes and the benefits of diversification and time, plus the magic of compound interest.”

Riddle says although paying off debt should be a priority, sometimes, if clients have the means, he might suggest alternatives.

“I would suggest extra funds be directed to the bond, but at least a portion thereof be directed to a smaller discretionary investment, so that they learn about investments with a small amount. This way, they are more likely to invest appropriately when their bond is paid up, or when their provident fund becomes available,” Riddle says.

The advisers generally feel that you need to keep an eye on your overall financial plan, even with a relatively low discretionary amount of R500 a month, not least because you could be saving on tax if you put the money into a retirement annuity or, under certain conditions, into an endowment policy.

Norval Hart says: “People in the top tax bracket often use endowment policies to minimise their tax, because with an endowment you don’t declare any income or gains to the South African Revenue Service (SARS); the life company does that and pays 30 percent tax on your behalf.

“However, if your interest exemption has not been fully utilised, it may make sense to rather use a unit trust vehicle. With a unit trust, your income and capital gains are taxed in your own hands. This means that you have to declare any share dividends and interest that you earned in the unit trust during the tax year. The unit trust company sends you a certificate with the figures that you will need to complete your SARS tax return.”

One of the biggest advantages of unit trusts is their flexibility. Norval Hart says: “Liquidity is one of the major factors to consider when investing (the other two being tax and costs). With an endowment, there is a minimum investment of five years. With a unit trust, you have access to the market value of your portfolio within a few days.”

Riddle adds: “Your investment needs to be flexible, enabling you to change the amount invested or even cash in your investment, without excessive penalties, should your circumstances change. Far too many investors in the older type endowments and retirement annuities have been ‘burnt’ with excessive penalties if they have needed to change their investments.”

Riddle says he would advocate a unit trust with exposure to a variety of asset classes (for example, a prudential asset allocation or “balanced” fund), as long as it is cost-effective. “The reasons for this recommendation would be to ensure inflation-beating returns while helping you better understand the investment market.

“However, if you are a DIY investor and purely looking at a five- to 10-year time horizon, with no guidance from a financial planner, then I would encourage you to look into the possibility of investing in one of the exchange traded funds, such as a Satrix fund. A word of caution, though, if the fund is 100-percent equity-based: the markets can be very volatile.”

Ian Beere, a CFP at Netto Financial Services in Cape Town, who won the Financial Planner of the Year award in 2007, recommends a diversified investment. He suggests you invest in a portfolio that includes more than one asset class (the major asset classes are shares, property, bonds, cash and offshore assets).

Beere says: “Shares are the key driver of higher long-term returns but can also be the most risky. Thus an investment with a greater exposure to shares will have the greatest return over time, but will experience more ups and downs than an investment with a small exposure to shares.

“Cautious investors will likely elect to invest in cash with no chance of losing money but would have to accept a lower return over time, meaning they may not achieve their goal. Care-free investors will likely invest in an investment comprising mostly shares. While this would yield the best return in the long run, they may lose money if they draw it out at the wrong time.

“Therefore, we advise against investing money based on personality but based on what you need to achieve over the time you have, taking your circumstances into account. The above two investors would therefore not necessarily end up investing in different investments if we were advising them,” Beere says.

Norval Hart says you must always be mindful of costs, but by investing in a moderate-risk balanced fund, you avoid “putting all your eggs in one basket”.

She says: “Balanced funds tend to have a diversified blend of asset classes. Since one is only invested for a five-year term, this is more reason to avoid investments with high equity – if the market does take a dip, the fund might not have sufficient time to recover.”

And what investments should you avoid?

“First and foremost,” Beere says, “avoid any investment that is not regulated by the Financial Services Board. Countless investors have lost money to unregulated schemes after being attracted by the ‘too good to be true’ returns.

“Another product to avoid is one where there is no flexibility for a change in circumstances. An investment policy with a long contract term that imposes hefty penalties for withdrawing early would be a good example. You also want to avoid using the right product in the wrong place. For example, a retirement annuity is not a good way to save for a new car.

“Finally, remember that the investment strategy decision is separate from the product decision.”

Looking at how your R500 a month fits into the bigger scheme of things, Beere says it’s best to talk to an independent adviser.

“Engage with a professional and get advice and a financial plan in place,” he recommends.

This article was first published in the third-quarter 2011 edition of Personal Finance magazine

http://www.iol.co.za

Absa defends bank charges

2011-10-21T13:34:00.000+02:00

Johannesburg - Absa Group [JSE:ASA] defended its relatively high banking fees saying on Friday they focus on "value for money, rather than price".

"We believe there is sufficient evidence that we provide value to our customers with choice, convenience, accessibility and security," it said.

This followed a banking fee survey by trade union Solidarity which declared that Absa was one of the two most expensive banks in South Africa, followed by Standard Bank Group [JSE:SBK].

Absa said it welcomed any report that drew attention to the fact that customers had products best suited to their needs, and that these needs changed over time.

"At Absa we know that no two customers are alike and therefore we have online fee calculators and highly trained staff, who can advise customers on their individual and unique transactional needs."

Customers' needs went beyond just a transactional account - such as car and home finance, and lending - and Absa considered these aspects when giving advice.

Their customers also had the benefit of their relationship with global group Barclays which helped do business globally.

"At Absa we focus on value for money rather than absolute price."

With over 8700 self service terminals, its network was 28% larger than their nearest rival, said Absa.

"Convenience, accessibility and safety are factors that are very easily overlooked in reports of this nature."

Comparative charges

The Solidarity research institute (SRI) compares the bank charges of the various personal bank accounts offered by the country's five large commercial banks - Absa, First National Bank, Standard Bank, Nedbank Group [JSE:NED] and Capitec Bank Holdings [JSE:CPI].

Capitec's Global One account was found to be the cheapest.

"The average bank charges of this account over eight different user profiles amount to R67.35 a month and have not been increased since 2010," said Paul Joubert, senior researcher, on Thursday.

"Absa's cheapest option, the Silver Package account, has average monthly charges that are more than double that of the Capitec account.

"The charges also rose by 8% from R140.90 to R152.15, between 2010 and 2011," he said.

FNB's cheapest account was the Smart Unlimited with a monthly bank charge of R73.10.

Nedbank's cheapest was Savvy Electronic account at R105.04 monthly.

The cheapest Standard Bank account was its Classic Cheque fixed fee account at R133.43.

These costs were calculated using an average of eight transactional profiles and excluding minimum balances and the effect of interest.

Capitec also has the least expensive transmission account - an account without an overdraft facility.

However, when linked to an overdraft, a chequebook and a credit card, FNB offers the cheapest current accounts, according to the report.

Business accounts were not included in the comparisons and the analysis of the bank charges was based on various hypothetical scenarios.

http://www.fin24.com

Absa had the sharpest bank fee increase - Solidarity

2011-10-21T10:35:00.000+02:00

Capitec cited as cheapest, but FNB says its entry account excluded.

JOHANNESBURG – Capitec was the only bank to keep its bank fees unchanged in 2011, while Absa reportedly had the highest increase of bank charges this year compared to 2010, maintaining its position as the most expensive bank among the five main retail banks, according to a Solidarity Bank Cost Report.

The report was done by trade union Solidarity with information collected between September 22 and October 5, this year. Solidarity did acknowledge though that people’s bank fees were also driven by transaction behaviour.

The report shows that for Absa’s cheapest account, the bank increased charges by 8% or R11.25 to R152.15 in 2011, while Nedbank had the second highest rise of 7% (R6.87) to R105.04. First National Bank increased its fees on its cheapest account by 5.1% (R3.56) to R73.10 and Standard Bank hiked by 4.3% (R5.45) to R133.43. Capitec’s charges remained unchanged at R67.35.

Overall the Solidarity Report said Absa was the most expensive bank followed by Standard Bank and Nedbank, while Capitec was the cheapest followed by FNB. There was an 8% difference in the banking fees of FNB and Capitec.

As much as Capitec was the cheapest, Solidarity noted that the Stellenbosch based bank did not offer the option of a credit card, overdraft facility, cheque book and cellphone banking. So if a client wanted these offerings then FNB offers the cheapest current accounts. However, Capitec does pay interest on positive balances.

A shortcoming of the research was that it did not include cheaper entry level accounts, such as FNB’s EasyPlan, Absa’s 1234, Nedbank Ke Yona and Standard Bank’s “Bank Shop”. Solidarity noted that EasyPlan was not included because there were certain restrictions on this account.

The report said the administration of the account must be handled at a specific EasyPlan branch and that higher fees equivalent to those of the FNB Smart Account were charged on transactions done at ordinary FNB branches.

However, Solidarity’s senior researcher Paul Joubert said these restrictions should not stop people from exploring entry level accounts, especially if the offering suited their banking needs.

Responding to the report FNB’s CEO of Smart Transactional Banking James Fowle said although FNB's Smart Unlimited account fees were R5 higher ( R73.10) than Capitec's (R67.35), FNB offered far more than R5 in additional value.

“FNB benefits include free inContact, free funeral cover, free online banking and free cellphone banking. FNB sends free SMSes to customers telling them about cheaper channels - such as when they use another bank's ATM or make withdrawals in a branch. We educate our customers when they use such expensive channels,” Fowle said

“The majority of FNB customers do not incur charges per transaction as they use accounts with unlimited electronic transactions such as point of sale and FNB ATM, online and cellphone banking...The Solidarity report states that they have excluded FNB EasyPlan.FNB EasyPlan with 131 branches across South Africa offers the lowest costs at under R40.”

Fowle also said that the Advertising Standards Authority found that FNB's EasyPlan offered the lowest cost banking and “Capitec was forced to withdraw their advertising claiming to be the cheapest bank”.

On this Capitec referred Moneyweb to Solidarity’s comments that the FNB EasyPlan had some restrictions.

Capitec’s Head of Marketing and Corporate Affairs Carl Fischer said “being named the cheapest retail bank in the 2011 Solidarity Report confirms what we have known all along – Capitec Bank offers the most affordable banking fees in South Africa. And this applies to all our clients, not just segments of them. We are pleased that the findings have validated our position as market leaders in transaction fee pricing,” .

“We are committed to offering a simplified, value-driven transparent service to all our clients so they know what they get; and know what they pay. This empowers them and gives them control over their own money.”

Absa, Standard Bank and Nedbank had not responded at the time of our deadline.

http://moneyweb.co.za

Standard Bank lowers entry level for gold credit card

2011-10-21T10:00:00.000+02:00

Credit cards can now be used as a debit card.

JOHANNESBURG – Standard Bank has widened accessibility to its gold credit card by reducing the salary required for one to qualify for the card which attracts less interest than the entry-level blue credit card.

So if you have been qualifying for the gold credit card but have been shying away from it and using the blue one in order to create a perception that you earn less, think twice as your modesty could be costing you more to service your debt. Annual interest on a blue credit card is 19.5% compared to 18% in the gold card, said Leila Fourie, the director of card division at Standard Bank.

“The gold account attracts a lower interest rate. So if you have a big balance gold cards will be cheaper,” explained Fourie.

She said that in order to broaden access to its gold card the bank had decided to lower the salary required to qualify for this card to R8 000 from R10 000.

“It’s really to try and stimulate growth. We are including a broader population and allowing access. So we are doing our best to open access to the broader market.

Alan Hales, the head of consumer cards at Standard Bank added there is also “the impact on the colour of the plastic ... people tend to take their card out more if they are using a gold card”.

Although the bank is making it easier for customers to access credit, it says it is doing so based on customer affordability.

Hales also explained that using a credit card was a smarter way to bank because there were no transaction costs when swiping, whereas a client was charged for swiping with their debit card. Hales went on to say that Standard Bank customers were also allowed to link their debit orders to their credit cards.

Someone could transfer their salary from their debit card to the credit card, allowing the client to extinguish the outstanding balance on the credit card. This could save the customer from being charged interest. Debit orders can also run from the credit card. On the other hand the customer will swipe for free with their credit card, saving him or her transaction costs that could have been incurred via a debit card.

However, Hales said it was not advisable for one to use their credit card to withdraw money at ATMs although the withdrawal fees were the same as using a debit card. If you withdrew with your credit card at an ATM interest was calculated from the time you withdraw from day one, even if you settled the outstanding balance at the end of the month.

Standard Bank is the dominant player in the credit card market, according to September data from South African Reserve Bank. It has a market share of 30.5%, followed by Absa at 26.89%, FirstRand at 18.14% and Nedbank and African Bank at 14.04% and 8.23%, respectively.

Fourie said although there was a contraction in credit card growth last year. This year had picked up.

“We increased our balances by R280m last month [September],”Fourie added.

Fourie believes that Standard Bank’s credit card growth this year will be slightly above inflation. However, she said customers were paying down balances, spending responsibly and were swiping more often but in smaller amounts.

Standard Bank’s credit cards are divided into three, the emerging income groups earning between R3 000- R8 000, middle income earning R8 000- R60 000 and upper income which earns over R60 000 per month.

Overall the bank expects household credit extension growth to slow from 4.4% in 2011 to 3.4% and 3.9% in 2012 and 2013, respectively. Fourie said household demand was unexpectedly strong in the first quarter at 5.2% but contracted to 3.8% in the second quarter.

http://www.moneyweb.co.za

Nedbank is paying price for 'exclusive' customer tag

2011-10-18T09:58:00.000+02:00

Ingrid Johnson, Nedbank's group managing executive of retail and business banking, is trying hard to change consumers' perceptions of the bank as being exclusively for the elite and well-to-do people.

SA's fourth-largest bank's advertising aims to attract people in the low-income bracket - a far cry from yesteryear's "Who are those people?" campaign.

At that time, the Nedbank board decided it needed "the right customer", said Johnson. She recalled that 20% of the clients generated 80% of the revenue, while the majority of the customers were costly to the bank.

"In their maths they didn't figure out about marginal costs, and actually you need big numbers to contribute to scale," she said.

Nedbank holds the second-largest Mzansi account client base after Post Bank, which next year will be a fully registered bank and is currently preparing to fight for market share.

Johnson would ideally like to see Mzansi accounts become Ke Yona accounts, with some clients upgrading to the Nedbank Savvy bracket, an offer for middle-income earners.

The bank's strategy includes signing up a high number of customers at the Nedbank Ke Yona soccer tournaments.

The Ke Yona offering is available through more than 1000 staffed outlets as Nedbank expands into communities that were previously not served. These include far-flung places such as Ngqeleni, Idutywa and Centane in the Eastern Cape, Acornhoek in Mpumalanga and Thohoyandou in Limpopo.A branch was recently opened in Kuruman in the Northern Cape.

Ke Yona is Nedbank's answer to Standard Bank's bank shops, to FNB's EasyPlan, and to Capitec. With Ke Yona, a client can open a pay-as-you-use transaction account for R5, and with that comes funeral cover worth about R2000. Clients can withdraw cash for R1, the same price Capitec Bank clients are charged.

Johnson said Nedbank was the first bank to enable cash withdrawal at the point of sale - via Nedbank Go Banking in partnership with Pick n Pay.

Nedbank decided to absorb Go Banking in 2008 after it realised that the facility's customer base of about 90000 clients was not enough to sustain it as a separate business.

Clive van Horen, MD of Nedbank retail banking services at the time, said Go Banking was not profitable despite being in operation for seven years.

Nedbank was also the first bank in SA to pay interest on current accounts. It then had a multi-brand strategy which also controlled Permanent Bank and Peoples Bank.

Johnson reckoned it was a "mistake" to choose for customers which bank they belonged to and forcibly move them to other banks. "Don't put somebody in a box," she stressed.

Capitec Bank saw an opportunity and capitalised on being a champion for the low-income market.

According to Carl Fischer, Capitec Bank's head of marketing and corporate affairs, it has rapidly gone past Nedbank to become the country's third-largest bank in client numbers.

The Stellenbosch-based bank has about 3.2 million active clients from the 4.6 million clients registered on its books.

Nedbank added about 94000 net new clients year on year and a 14.6% increase in overall client base to five million, assisted by the acquisition of Imperial Bank. It has signed about 170000 Vodacom M-Pesa clients since the launch of the facility.

THEKISO ANTHONY LEFIFI
BUSINESS TIMES
http://www.businesslive.co.za/

‘Branchless banking’ transactions

2011-10-13T09:29:00.000+02:00

Selected merchants will offer banking facilities in move to expand domestic footprint as part of Absa’s "branchless" strategy targeting 7-million entry-level clients

SURE KAMHUNGA
Published: 2011/10/12 07:53:29 AM

ABSA yesterday launched an in-store banking facility at selected merchants in a move to expand its domestic footprint.

The launch of the facility is also part of Absa’s branchless banking strategy, specifically targeted at its more than 7-million entry-level clients. Barclays-owned Absa is SA’s largest retail bank by customer numbers, reaching more than 10-million.

SA’s banks are innovating new delivery and distribution channels that are not only cheaper, but also provide convenience to price- sensitive mainstream customers.

FNB recently launched what it said was a first for SA — an innovation called Pay2Cell that allows its account holders to make payments to other FNB customers using only the recipient’s cellphone number.

Ravesh Ramlakan, CEO of FNB Cellphone Banking Solutions, said the solution would benefit 3-million out of its total customer base of 7-million.

Nedbank also allows its customers to withdraw cash from retailers and yesterday it announced the launch of the Nedbank Intelligent Depositor, an ATM allowing customers to deposit cash and also to have immediate access to it.

Absa’s in-store banking facility enabled customers to withdraw or deposit money, purchase cellphone airtime, obtain mini-statements and check balances at point-of-sale machines.

"(In addition), in-store banking forms part of Absa’s overall branchless banking strategy, which aims to provide comprehensive banking services outside of the bank’s traditional branches ..." said Lawrence Twigg managing executive of Absa’s entry-level and inclusive banking unit.

Absa expected to deploy 1000 in-store facilities across SA by the end of this year, and a further 2000 by the end of next year.

Business Day

R200,000 later, family still paying off loan

2011-10-11T12:17:00.000+02:00

OCT 10, 2011 | CONSUMER LINE, WITH THULI ZUNGU

IMAGINE paying more than R200,000 for a loan of R16,000 and being told you still owe money? It's crazy, but true.

A Soweto family regrets ever applying for a bond to build two rooms and a garage from the erstwhile People's Bank, now taken over by Nedbank.

Nompumelelo Mallie of Dube Village said her late mother, Nomvuso, took a loan from People's Bank in 1985 to build two rooms and a garage to accommodate a family of nine.

She said after building the rooms her mother received a "happy letter" from the bank to sign and soon thereafter commenced repaying the loan.

The installment was R200, which was payable over a period of 20 years, Mallie said.

Her mother repaid the loan until her death in 1991, she said. At the time of her death her mother had paid more than R14000, Mallie said.

As the eldest child in the family she continued with the repayments with the blessings of the bank, Mallie said.

Mallie claims she paid R700 a month until 2005, when the bank threatened to sell the house at auction because they had accumulated arrears on the account.

"We paid the R45000 the bank demanded to stop the auction and continued to pay our regular installment," Mallie said.

She said she continued paying though the bank had neglected to action the life insurance cover her mother had used as collateral.

"It was only in 2009 that Nedbank realised their error and paid R63000 into the bond account leaving a balance of R3000, (which) I agreed to pay," Mallie said.

Mallie said she was now battling to get the title deed from the bank attorneys, who were demanding more money from her.

"Now their attorneys are giving me hell! They say we won't get our title deed until we pay R1400, which they claim we owe the bank," she said, adding that the bank knew nothing about the shortfall the attorneys were demanding.

She said it was good of banks to help the destitute, but it was bad if they took advantage of the situation, even though they had been paid more than enough.

"It is only when you have been taken for a ride that you end up repaying more than R200000 for a loan of R16000," Mallie said.

She said if Nedbank were fair, it would refund a portion of the repayment it should not have received had they actioned her mothers life cover in 1991.

Mallie said she would be happy to get the title deed without paying any additional fee.

Nedbank is investigating the matter and has promised to comment after it have finalised the investigation.

http://www.sowetanlive.co.za

Unbanked hop into money market via high-tech route

2011-10-07T13:18:00.000+02:00

Samuel Mungadze

The latest banking technologies have become the best solution in addressing South Africa’s unbanked population, CEO of eWallet Solutions at FNB Yolande van Wyk said on Wednesday.

She said mobile money had become a catalyst for bringing the unbanked into the mainstream financial system. FNB has already seen more than R1bn sent via its money transfer solution, eWallet.

Mobile money has become the key to solving the problem of the unbanked.

“Mobile money gives the ability to utilise a tool that people are familiar with that provides access to financial services,” Van Wyk said.

FNB’s eWallet was launched in October 2009 and does not require the recipient to have a bank account. All that is needed is a valid cellphone number.

How it works is that the recipient receives an sms informing them that they have received money and by selecting an appropriate eWallet menu item, they can withdraw cash from an FNB ATM, on-send the money to another recipient or buy prepaid airtime or electricity.

Van Wyk said the growth of eWallet could be attributed to its ease of use and convenience.

“On average, we are seeing over R3m being sent daily to eWallets by FNB customers.

“This kind of activity illustrates how convenient our customers are finding the eWallet.”

Since its launch, more than 700 000 eWallets had been created, Van Wyk said. FNB customers could send money via cellphone banking, internet banking and FNB ATMs.

Cellphone banking was the most popular channel.

Absa has joined FNB in pioneering banking technology and introducing ground-breaking mobile banking applications.

FNB was the first to launch an application for smartphones and tablet computer devices.

Absa followed with an application for android-based smartphones and tablet devices which allowed customers to open bank accounts and receive debit cards in less than 10 minutes.

A recent World Wide Worx Mobility 2011 research project showed that among urban cellphone users, 44% now use cellphone banking services, compared with 27% a year earlier.

In smaller centres and towns, 27% now use cellphone banking. In total, 37% of South Africans in urban and rural areas aged 16 and above now use cellphone banking.

Van Wyk said it was a misconception that services including the eWallet targeted the poor – they were for everyone. “eWallet is not a solution specifically for a certain target market.

“Customers from any income bracket can find benefit (from) using it. Besides being used for sending money to family or friends in remote areas, one can reimburse friends for lunch or use it to give their children pocket money.”

eWallet was recently shortlisted as a finalist for the financial world innovation awards 2011. This was in the category of innovation in the delivery of financial products –multichannel and mobile banking.

samuelm@thenewage.co.za
http://www.thenewage.co.za

Customer satisfaction: best and worst telecoms companies

2011-10-06T11:23:00.000+02:00

Latest Ask Afrika Orange Index reveals which companies have the best and worst service levels

Summary: Ask Africa Orange Index ranks MTN as the best company when it comes to customer satisfaction, followed by Vodacom, Cell C, 8ta and Telkom.

Ask Afrika released their 2011 Orange Index research results this week, which rank companies according to the overall satisfaction with the service consumers received from these companies.

According to the 2010 Orange Index, Capitec Bank provided the best service levels in the country, followed by Woolworths Food and MTN.

The overall winners in the 2011 Orange Index customer satisfaction survey were:

Capitec Bank
Woolworths Food
MTN
Pick n Pay
Woolworths Clothing

In the telecommunications category MTN finished first, followed by Vodacom, Cell C, 8ta and Telkom.

http://mybroadband.co.za

2011-10-03T09:30:00.000+02:00

'Flawed' Mzansi loses its appeal

The Mzansi account, which was designed by South African banks specially for lower-income groups, still needs further tweaking to properly serve those who have not banked before.

" It has labelled low-income customers as 'poor', a segment to which no person wants to belong.

Established through the financial sector charter that came into effect in 2004, the Mzansi account has been a major contributor to an increase in the percentage of adults banking in South Africa - from 46% in 2004 to 63% in 2008.

It now has 3.7million accounts, dropping from 4.5million in December. About 12% of the 3.7 million accounts are inactive, according to Cas Coovadia, managing director of the Banking Association of South Africa.

There has been a 19% decline in the total number of Mzansi accounts during the first half of this year.

Although the Mzansi account initially reduced the number of South Africans without bank accounts, clients have left or accounts have become dormant because of expensive fees.

It has also lost out to competition from banks that now have their own low-cost entry-level products.

Standard Bank started bank shops and Absa introduced 1234 branches for this market. FNB introduced EasyPlan branches, mirroring Capitec Bank's strategy.

Nedbank holds the second-largest Mzansi account client base. Under Ingrid Johnson, its retail and business banking managing executive, the group will relaunch its marketing campaign next Sunday, with the aim of turning Mzansi clients into Nedbank Ke Yona account holders.

The Ke Yona offering is available through more than 1000 staffed outlets as Nedbank continues to grow its footprint across South Africa with accessibility in communities that were previously not served. These include far-flung corners such as Ngqeleni, Idutywa and Centane in the Eastern Cape, Acornhoek in Mpumalanga and Thohoyandou in Limpopo.

Banks have had to make the proposition appealing without letting their clients feel as if they are in the low-income segment, or poor.

Gerhard Coetzee, a specialist adviser on inclusive banking at Absa, said the Mzansi account was still relevant because South Africa still had a substantial number of people who did not use banks.

But Nesbert Ruwo, senior analyst at research firm Intellidex, said the product had missed out on opportunities as the banking sector had changed.

Capitec's CEO, Riaan Stassen, said Mzansi was "fundamentally flawed".

He said the product labelled low-income people as "poor", a segment to which no person wanted to belong.

Coetzee said the Mzansi account needed to focus on agency and mobile phone-based banking, which eliminated the need for branches.

Coovadia said he was not surprised that the number of people using the Mzansi account had dropped.

But he believed that the Mzansi account had brought positive change to the South African banking landscape because it motivated banks to develop a variety of products to service the emerging banking market off the back of the experience and lessons gained from developing the account.

http://www.businesslive.co.za
THEKISO ANTHONY LEFIFI

Clients give credit the cold shoulder

2011-09-29T13:11:00.000+02:00

Consumers are focusing on paying off their debt and there has been a marked shift away from credit cards and overdraft facilities.

Although the banks were showing an increase of 39% in unsecured lending, much of this credit extension was being driven by debt consolidation, said Sugendhree Reddy, director of banking products at Standard Bank. In the bank's experience about 30% of customers are using fixed-term debt to pay off their credit cards and overdraft facilities.

"Consumers are now looking at unsecured products with fixed repayment terms because many were 'burned' in the previous economic downturn, using incidental credit like credit cards and overdraft facilities," said Reddy.

This enables customers to consolidate their debts and set a time frame for paying them off. By closing their credit card and overdraft facilities, they are preventing themselves from taking on further short-term debt.

FNB chief executive Michael Jordaan said customers had become far more aware of costs and were consolidating their high-cost credit card debts with less-expensive fixed-term debt.

Reddy said Standard Bank's bad-debt experience on credit cards was lower than expected and customers had a definite lack of appetite for credit cards. Many people were turning down the option to raise their credit limits and there was an increase in the number of people who settle their credit card balances at the end of the month.

"The banks are willing to lend, but customers are saying, 'no thank you'."

Consumers are also focusing on building savings, and the market share of deposits for the banking industry has increased by 6.1% in the past year. Reddy said this had taken place across the income spectrum.

"People have realised after the financial crisis that they need to take responsibility for their finances. The education around these issues is also paying off," said Reddy.

Awareness of costs and fees is changing banking transaction behaviour. People are drawing larger sums of cash from ATMs at less frequent intervals, for example, to reduce their bank costs.

Jordaan said there had been a significant increase in the number of clients switching their bank accounts to FNB because of its lower banking fees. "When we compare what they were paying previously, on average customers are saving R250 a month, which is R3 000 a year." He said consumers were becoming more price sensitive and were shopping around for better deals.

This proactive approach is the positive side of a disturbing picture of a population indebted to the eye balls. According to the National Credit Regulator's Credit Bureau Monitor, the number of consumers with impaired credit records rose by 174 000 to 8.8-million in the second quarter, a 0.3% increase. This comes against the background of an increase of 240 000 new credit-active consumers.

Consumer confidence has been falling, too. In the third quarter the FNB/BER consumer confidence index fell to the lowest level recorded since 2009. Although still in line with the long-term average, the fall from an index level of 11 to 4 signals a growing concern about the state of the economy and fewer consumers expect the economy to improve when compared with its state three months ago.

Stanlib economist Kevin Lings said there was a relationship between consumer spending and confidence and the current level could lead to a weakening retail environment in the next 12 months.

Credit extension remains subdued and although private sector credit rose by 5.6% year on year to July, this was driven by corporate debt, not household credit. Mortgage credit rose by only 2.9% for the year.

As credit extension figures suggest, corporates that have been sitting on cash are starting to spend. Stephan Claassen, FNB Western Cape's provincial chairman, said there had been a move by businesses to draw down on their cash deposits as well as a significant demand for credit to facilitate business expansion. He said commercial clients, in a trend similar to retail clients, were taking on fixed-term debt rather than overdraft facilities.

Corporates are starting to borrow to build their businesses inorganically by buying other businesses or investing in their own business in expectation of an economic recovery. A major trend is that businesses are buying their own properties.

"With interest rates expected to remain low for the next two to three years and low property prices, business owners will not get this kind of opportunity again," said Claassen.

MAYA FISCHER-FRENCH - Sep 27 2011 16:23
mg.co.za

New body to police African loan standards

2011-09-28T10:13:00.000+02:00

Johannesburg - The major South African banks (ABSA, Investec, Nedbank, RMB and Standard Bank), together with Norton Rose, have recognised the need for a regional loan market association that will provide recommended standards for loan documents used for syndicated financing in Africa.

The African Loan Market Association (ALMA) will be formally launched in Johannesburg on Thursday (September 29), with the support of the Loan Market Association (LMA) in London.

Steven Gamble, a director of Norton Rose and a member of the ALMA board, says the timing is right for an association of this kind.

"As Africa weathers the recession comparatively well, and major financing opportunities emerge across the continent, financial institutions need to facilitate a growing number of transactions as quickly and professionally as possible.

"The ALMA will align syndicated lending in Africa with global best practice, making financing more efficient and transparent, reducing risk, and generally improving the overall syndicated lending environment."

ALMA members will include local and international financial institutions, banks, law firms and other stakeholders in the financial markets in Africa. In addition to being able to access LMA-type documentation structured for the African market, members of the ALMA will also be offered dedicated training and interaction with a dynamic network of professionals operating in this key market.

Globally, several non-profit associations serve the syndicated markets in various regions. These include the LMA which covers the Europe, Middle East and Africa region, and the Asia-Pacific Loan Market Association (APLMA) which serves the broader Asian market. Both associations enjoy reciprocal honorary membership of the ALMA.

LMA director Mike Johnstone said: "I wholeheartedly welcome the emergence of the African Loan Market Association. The LMA in Europe, the APLMA in Asia, and the LSTA in the USA have all seen steady growth in membership over recent years, underlining the importance and effectiveness of trade bodies in regional markets.

"The regional associations cooperate closely with each other across a spectrum of activities such as lobbying and education, ensuring a global approach whenever appropriate. The addition of the ALMA will add to this global effectiveness. We look forward to a long and productive relationship."

Darrenth Hawken, head of business development (Europe, Middle East and Africa as well as Asia) at Thomson Reuters-Loan Pricing Corp (Hong Kong), notes that besides standardising the approach to primary and secondary documentation, the ALMA will also encourage the dissemination of expert knowledge and know-how across the continent.

"The African growth story can be fully realised with greater knowledge sharing and improved quality of available financial information. By facilitating standardisation of loan transactions and best practices across the different jurisdictions, the ALMA will be a positive contributor towards the African market's continued growth.

"The positive impacts of these practices was something already seen in Asia with the Asia Pacific Loan Market Association."

The ALMA aims to provide a comprehensive suite of syndicated loan documents adapted for the SA market and to offer simplified English law, Nigerian law and Kenyan law documentation for use elsewhere in Africa. In the long term the ALMA will promote the development of a local secondary market for loan sales and trading.

http://www.fin24.com/

NHI won’t hurt your pocket – yet

2011-09-26T10:28:00.000+02:00

This is not the right climate to increase taxes – Treasury’s DDG.

CAPE TOWN - National health insurance will not result in an increase in taxes in the short term, Andrew Donaldson, the Treasury’s DDG for public finance says. “This is not the right fiscal climate to increase taxes.”

Donaldson was addressing delegates at the Hospital Association of SA’s annual conference on the tricky subject of financing SA’s current and future healthcare needs.

Research into exactly how the national health insurance system will be funded is underway. Discussion papers will be released early next year, Donaldson says.

Healthcare costs have been rising around the world since the 1970s. In South Africa healthcare costs consume 8.5% of GDP, or R228bn/year. Roughly half of that comes from the private sector and half from private sector, with the balance from donor funding. But massive discrepancies exist. Currently the public health spending per capita is R2 600 p/year while private medical scheme contributions per beneficiary are R11 600/year.

In the US, which has no system of universal coverage, healthcare consumes 16% of GDP. Current projections suggest it will cost 25% of GDP by 2025 and 50% by 2082, says Donaldson.

In advanced economies public health spending has increased by 4% of GDP since 1970. Aging populations and rising technology costs mean this will intensify in coming years.

The cost of private health care is out of control, says health minister Aaron Motsoaledi. This is happening at the expense of member’s medical schemes. Similarly the cost of public health is escalating to the detriment of the fiscus.

The trick is how to pool the contributions in a system that will ensure equitable and affordable access to quality healthcare for all. The introduction of national health insurance is without doubt the most complex project the government has embarked upon in its short history.

The green paper on NHI is proposing a system of universal coverage, funded out of a single NHI pool. To function effectively some elements of the health system will be restructured. For instance primary healthcare will be re-engineered. This will see the introduction of district based specialist teams. Each team will include an obstetrician and gynaecologist, a paediatrician, family physician, anaesthetist, midwife and a professional nurse. Primary health services will be introduced at schools and healthcare agents will be deployed into municipal wards to oversee the service.

Critics of NHI argue that it cannot proceed until the public sector is operating effectively, but Motsoaledi counters this. “NHI is just one priority on our ten point plan. The others include human resource management and hospital revitalisation. We cannot do them one at a time – it must happen together.”

According to Donaldson, the bulk of the work that needs to be completed in order for NHI to become a reality will be done in the first phase, envisioned to take place in a breathtakingly short five years. This includes the legislative arrangements, hospital funding reforms, the piloting of ten NHI districts, six major hospital PPPs and the refurbishment of 122 nursing colleges.

Private providers, he says will be drawn into the system in the second and third phases.

The cost of implementing and maintaining the system of NHI is “daunting”, he says and will put a severe strain on the fiscus. Costs are likely to increase from 4% to 6% of GDP. “The challenge in emerging economies is to increase coverage while avoiding the high costs of healthcare in advanced economies.”

He also highlighted significant constraints in terms of institutional and human resources supplies, such as a shortage of doctors and nurses in the public sector, which will limit the amount that can be spent on NHI.

“A great deal of work also needs to be done to address bureaucratic barriers to service delivery,” he added.

He pointed to inadequate costing systems and unresponsive procurement systems as major challenges in the public sector.

“Merging public and private procurement arrangements will be an important part of healthcare reforms,” said Donaldson. “The integration of supply chain management between public and private sectors could help lower costs and bring modern logistics into the delivery of healthcare in the public sector.”

He said public and private hospitals would be placed on a level playing field under NHI. This required institutional change, including putting both public and private hospitals on a common tax footing, recognising private hospital’s investment requirements in infrastructure and creating a common set of rules governing the employment of professional staff.

Difficult questions around NHI still need to be answered. Including what exactly it should finance; who should be covered and on what terms; what role out-of-pocket payments should play and importantly, the financing of the considerable hospital and clinic infrastructure required.

But there are certain things that can be done on the way to NHI. “We need to sweat our health assets more effectively,” Donaldson says. “This is a challenge the private sector needs to address.”

Public private partnerships also present opportunities, but these are “complex”. “We need to negotiate more quickly and we need to develop mechanisms for altering long-term contracts.”

Government is still fixed on build and maintain type PPPs. None of the PPPs mentioned by government include hospital management – which is the heart of quality service provision.

And this brings us to the biggest challenge of all: trust. Government does not trust the private sector to manage its hospitals (among other things). The private sector, in turn, is wary of government.

However, the public and private sector need each other more than either cares to admit.

Without trust and genuine partnership as a foundation, even the most solid of financing arrangements is doomed to failure.

Liberate mobile payments for a more inclusive economy

2011-09-21T13:09:00.000+02:00

While mobile payments have met with astounding successes in other parts of Africa, adoption has been far more modest in South Africa.

The main reason for this is our severe banking laws, which further entrench banks in the payments industry while stopping innovative mobile operators and developers from bringing cheap, easy and secure (card-free) payments to the masses.

This raises questions about the seriousness of local lawmakers with bringing the country’s previously disadvantaged and unbanked into the economy.

M-Pesa – a Kenyan success
M-Pesa* was launched by Kenyan mobile network operator Safaricom in 2007, notes Wikipedia. The service quickly captured significant market share for cash transfers, growing to 6.5 million subscribers within two years. Estimates put M-Pesa transfers at 13% of Kenyan GDP in 2010.

The service has also met with success in Tanzania and Afghanistan, was then rolled out in South Africa (with a difference), and is slated to hit Egypt and India next.

Missed the boat in SA?
M-Pesa’s launch in SA, a country with 13 million unbanked citizens, happened in October 2010. Unexpectedly, it took off slowly. Only 150 000 accounts were opened in the first nine months of the service, and it became clear to its creators that its value proposition didn’t suit the low-income customer targeted at launch.

The main problem was that Vodacom, the mobile network involved, may not facilitate transactions without the involvement of Nedbank, the other partner. M-Pesa is backed by Nedbank’s banking licence, making it less cost-effective than if Vodacom were to offer remittances on its own ticket — in emulation of the Kenyan model.

For this reason, M-Pesa essentially failed to ignite an economic revolution. It never took off among lower-LSM populace (arguably its primary audience), and was subsequently re-launched as a higher-LSM service — a missed opportunity.

Other mobile payment efforts
All the other major banks also have mobile wallet solutions — FNB offers eWallet, Standard Mimoney, and Absa CashSend. In addition, FNB has launched a new service called Pay2Cell, which allows its account holders to make payments to other FNB account holders, using only the recipient’s cellphone number and not their bank or card details.

As another evolution in electronic and cardless banking, this is to be welcomed, and FNB’s invitation to other banks to “copy the service” is noted as support for speeding up its adoption.

Nevertheless, this does nothing to wrest control over payments from banks and thus cutting the costs of transfers. Like the banks’ approach to m-payments, card-less cell-to-cell payments will only be successful if all banks adopt it and a huge amount of integration is done. To a great extent, the driving force for payment liberalisation will come from the government, which must modernise policy. Included in this is the abovementioned issue of banking licence regulation. By making banking licences available to mobile operators, the mobile payments ecosystem will be sufficiently rationalised to simplify interoperability and bring down the cost of transactions.

The dynamism of the mobile networks will also speed up rollout, which will further bring down the cost of transactions. Operators must also invest in cheap “smartphone” handsets, possibly Android-based, which can handle m-payments. Again, the Kenyan example is instructive, where this tactic contributed to mass uptake.

Banks’ position
In all this, the banks need not lose out — mobile payments are just the thin end of the wedge.

As more and more of the unbanked join the economy, the banking services they’re likely to adopt in time will benefit the banking fraternity, a new wave of consumers, and the economy as a whole.

Great opportunity
Africans have better access to mobile phones than to clean drinking water. This sad statistic is likely to persist unless opportunities like these are seized upon, making it easier for Africa’s poor to access funds and conduct low-volume trade in entrepreneurial services that can include anything from taxi transport to utility services, fresh produce, travel and tourism.

It is an enormous opportunity for South Africa — at once a crucial step towards ensuring the sustainability of our GDP growth and a platform to show the world what responsible capitalism can achieve. It is time for bold new banking regulation, vision from bankers and energetic action from mobile operators.

* Pesa is Swahili for money, while M refers to mobility, hence the meaning “mobile money”.

http://www.techleader.co.za/wesleylynch

Battle of banks will be about fees — FNB

2011-09-14T12:01:00.000+02:00

FNB CEO Michael Jordaan acknowledges that competition for customers is stiff and says the bank that innovates and offers relatively competitive fees will win against its rivals

SURE KAMHUNGA
Published: 2011/09/14 06:41:46 AM

THE bank that offered customers "competitive" fees would probably win the battle for the biggest slice of the market, First National Bank (FNB) CEO Michael Jordaan said yesterday.

SA’s big banks are engaged in a fierce contest for customers, particularly in the mainstream market segment where they see potential to grow interest fee income from lending.

FNB said yesterday at its annual results presentation that it had grown its customer base in SA to more than 7-million, bringing it within spitting distance of nearest rival Standard Bank .

Absa is the market leader with more than 10,7-million customers, Standard has 9,3-million and Nedbank just more than 5-million.

FNB’s customer base covers the year to June, the reporting period of its holding company, FirstRand , while those of its three rivals are for the six months ending June .

It is expected the other banks would have boosted their numbers when they report their year-end results next year.

Mr Jordaan acknowledged that competition for customers was stiff. The bank that innovated and offered relatively competitive fees would win against its rivals.

The big banks are also reacting to frenetic growth at Capitec Bank and African Bank, which dominate the lower end of the market. Capitec reported a base of more than 3-million earlier this year .

African Bank used cross- selling opportunities created by its ownership of furniture retailer Ellerines to offer loans . Its disbursements for the nine months to June rose by 53% to R15,5bn.

Johann Scholtz, banking analyst at Cape Town-based firm Afrifocus, said yesterday that it was difficult to ascertain which of the big banks’ customers actively used their accounts.

Mr Scholtz said FNB appeared to have benefited from innovations, which Mr Jordaan said would be core to its growth strategy in the next 12 months.

"It is always difficult to compare client numbers of the big banks because we don’t know how many will be actively using their accounts, say for three to six months," Mr Scholtz said.

kamhungas@bdfm.co.za

Absa suspends EasyPay

2011-09-13T10:23:00.000+02:00

Sapa | 12 September, 2011

Absa Bank has suspended all credit card transactions through the EasyPay website after receiving a number of fraud complaints, according to a newspaper report on Monday.

The bank stopped all transactions on the EasyPay website last week and laid a complaint with the police, according to the Afrikaans daily Beeld.

Head of Absa's fraud detection unit Paul Mathias told the paper the bank stopped the transactions last Wednesday as a pro-active step to protect the bank's customers.

This would apply until the problem was resolved, he said.

Chief executive of EasyPay, Serge Balamant, said the company had only found out that Absa had suspended its credit card transactions with EasyPay when he read about it in a report in Die Burger.

"We will investigate all our options because Absa's lack of transparency is costing us in our business and our credibility," Balamant told the Beeld.

EasyPay is a website which encrypts credit card users' information when they pay accounts, traffic fines or prepaid electricity, which should protect these details from internet fraudsters.

Mathias said EasyPay users could still conduct their transactions at EasyPay kiosks and supermarket chain stores.

FNB, which manages EasyPay transactions, had been notified that Absa was suspending the transactions.

FNB said it had not taken similar measures, although it was aware of the problem.

Police spokesman Lt-Col Andre Traut said on Monday that the investigation had been handed over to the Hawks, who said they could not divulge any details of the investigation.

EasyPay posted a 'phishing' warning on its website, saying that customers should be vigilant against criminals who try to obtain confidential information.

The message said EasyPay users should be suspicious of email purporting to be from EasyPay requesting credit card details, as these were often send by perpetrators of internet fraud.

http://www.timeslive.co.za/

The spaza connection

2011-09-08T09:37:00.000+02:00

Standard Bank is pushing ahead with extending normalised banking services, and from next month, customers will be able to deposit money at its spaza shop outlets.

Standard Bank is pushing ahead with extending normalised banking services at its spaza shop outlets.

From next month, customers will be able to deposit money at spaza shops which, until now, have been used mainly for airtime sales and money transfers.

And the bank has big plans to enter the potentially lucrative prepaid loan market by next year, says Beyond Payments CEO Herman Singh. He claims Standard is the main player in the local prepaid market, in which it also offers prepaid insurance. “Projects are also in hand to deploy ATMs and other electronic banking channels at our 8000 bank shops,” he says.

Analysts have largely been sceptical about Standard’s entry at spaza business level and are unconvinced it will offer any benefits to the bank. Capitec CEO Riaan Stassen says Capitec tried the concept but it did not work.

But Singh, who heads Beyond Payments as a standalone division of Standard Bank, says that’s because the concept is not understood properly .

A spaza bank shop does not operate as a bank branch similar to that at a shopping mall. “We support the spaza retailer by providing a point of sale device under the bank’s trademark,” Singh says.

This entails the spaza owner offering products linked to the device, which enables the bank to monitor all transactions at a central level. “At the same time the owner becomes a client of the bank, thereby boosting small enterprise development,” he says. Another factor is prevention of wastage and crime. “Not one point of sale device has ever been stolen.”

Singh believes the bank shop concept is the future of banking. This is in marked contrast to First National Bank CEO Michael Jordaan’s view that its downloaded smartphone mobile digital channel is the future, even in the lower- income market.

Singh scoffs at this and says the Wap- based banking application could work at a high level “but not at a lower level”. He says it has too many unnecessary applications and that customers prefer simplified banking. “For example, you can use 13 functions at an ATM, but customers overwhelmingly use ATMs only for withdrawing cash .”

Beyond Payments is to extend banking services to small business as well, a crucial part of banking over which the big banks have run into flak for not lending enough. Beyond Payments developed a concept in Nigeria whereby traders in informal markets supply their cash takings to appointed agents who then deposit them collectively at nearby banking branches. “Crime has been reduced as all players have an interest in the cash not being stolen,” says Singh. He believes the system can work here.

Maarten MittnerThursday, 8 Sep 2011
http://www.fm.co.za

FNB debuts new form of mobile payments

2011-09-08T09:30:00.000+02:00

First National Bank has launched a new service called Pay2Cell that allows its accountholders to make payments to other FNB accountholders using only the recipient’s cellphone number.

To make a payment, customers must be registered for cellphone banking. To receive payments, they only need to be registered for inContact, FNB’s SMS notification service. There is a limit of R1 500/transaction.

Ravesh Ramlakan, CEO of FNB cellphone banking solutions, says the service is in line with a shift to electronic and cardless banking. “Our customers no longer need to divulge their account details in order to receive a payment,” he says. “All they need to do is provide their cellphone number.”

Ramlakan says FNB is hoping to encourage more of its customers to use cellphone banking and that of its 7m customers, 3m are already using mobile banking services.
Since Pay2Cell was launched in beta 10 weeks ago, there have been more than 7 500 transactions on the service worth in excess of R3m. Customers can use the service via USSD by dialing *120*321# or via the FNB mobile website.

The service is only available to FNB customers, but CEO Michael Jordaan said in a tweet on Wednesday: “For once I would actually like our competitors to copy FNB’s innovation so Pay2Cell can work across SA”. — Staff reporter, TechCentral

http://www.techcentral.co.za

Ombudsman supports easier bank switching

2011-09-01T14:11:00.000+02:00

I know that this is an old article but I have received many queries regarding this - Zedré Hartman

June 29 2008 at 01:21pm
By Jani Meyer

Switching banks will be easier in future. Rival banks will have to forward clients' information, including debit orders and Fica status, to the new bank without cost.

This recommendation, similar to the recently introduced changes in the cellphone industry allowing you to keep you number when you change companies, was made by the Competition Commission Banking Inquiry report released last week.

This, together with the fact that the commission is encouraging a comparison of bank fees, means customers can simply leave their banks if they're unhappy with their charges and move somewhere cheaper.

Ombudsman for Banking Clive Pillay said banks were very unco-operative when customers wanted to move "from bank A to bank B".

"They place a lot of obstacles in the way. They won't move information to the other bank," said Pillay.

The ombudsman said he received a number of complaints about the people switching banks and this proposal was "a good thing".

Another positive move would be the establishment of a central Fica (Financial Intelligence Centre Act) database. Pillay said this would save a lot of time for people moving banks.

And customers who are shopping around for a better banking deal will be able to compare services and fees with a centralised calculator service.

The commission said the calculator should be easily accessible. Potential customers should be able to input their own requirements - with assistance if necessary - and get free information about which bank would meet their specific needs.

Another bold proposal is that the minister of trade and industry should allow comparative advertising. Comparative advertising is prohibited by South African laws on the use of trade marks.

Although the commission's report only contains recommendations, it said that if after two or three years these recommendations had not been implemented or implemented badly, the commission would revisit the idea of obliging banks to provide basic banking products.

"This would enable customers to compare prices and choose their bank accordingly … this in turn would intensify price competition," the report said.

Pillay said although they could expect fewer complaints relating to people switching banks, the role of the ombudsman would be expanding to include enforcement and monitoring of compliance with the proposed codes of conduct for information disclosure and switching.

He said they would be busier, but it was a "good" busy. "It is good to be busy with something constructive."

However, South Africans eagerly awaiting paying lower bank charges will have a long wait before they have more cash in their pockets.

While some of the recommendations, like pricing information and using "plain language", would be relatively easy to implement, others require changes in the law. And Parliament is already oversubscribed with legislation until after the election next year.

The R5 cap on dishonoured debits could take longer to implement as it would have to be imposed under amendments to existing legislation or first be investigated by the minister of trade and industry.

Permitting banks to compare their prices in advertisements will also take some time as it is currently not allowed in South Africa.

http://www.iol.co.za

Tutu’s sanctions put economy back by years

2011-08-29T10:02:00.000+02:00

August 29 2011 at 05:00am

By proposing a wealth tax exclusively on white people because he claims they benefited from apartheid and because black impoverishment persists, Archbishop Emeritus Desmond Tutu displays not only an ignorance of economics, but also a degree of amnesia.

Like painkillers, the idea of throwing money at marginalised sections of society does not provide a cure, and at best, it may bring short-lived relief – and only to some. The more serious downside of punitive, redistributive economics is that it discourages wealth creation. That, in turn, results in fewer jobs, capital flight or relocation and greater impoverishment.

Tutu’s concern for the plight of those who continue to face economic hardship 17 years into the new South Africa is one shared by all reasonable people, regardless of colour. However, if accountability for this state of affairs is to be investigated, Tutu’s historical record is not without blemish.

In the 1980s he actively promoted the imposition of sanctions and disinvestment against the apartheid government, thereby triggering a massive wave of black unemployment. Between 1984 and October 1989, some 192 US companies disinvested from South Africa. They were joined by 160 others, including 76 British and 24 German firms (The Mercury, November 1, 1989).

As a result of Tutu’s disinvestment promotion, economic growth in 1986 slowed to 0.5 percent. Capital outflows of R24 billion occurred between 1985 and 1988. The damage to the economy saw the cost of living soar by 12 to 14 percent. In May 1990 the Washington-based Investor Responsibility Research Centre estimated that sanctions cost South Africa between R45bn and R60bn and that consequently our economy diminished by 20 percent to 25 percent.

When President Reagan denounced the US Congress for pushing ahead with the Comprehensive Anti-Apartheid Act in 1986, stating that “the victims of an economic boycott of South Africa would be the very people we seek to help”, Tutu said he found Reagan’s speech “nauseating” and that the “West can go to hell” (Time magazine, August 4, 1986).

Significantly at the time it was Mangosuthu Buthelezi who warned against the folly of sanctions and disinvestment, saying that its economic legacy would render political emancipation “meaningless”.

Finally, there is no need for Tutu to attempt to quantify the extent to which whites benefited from apartheid because they have already paid for it. As late as 1989, taxes paid by whites amounted to 91 percent of the revenue collected from individuals.

DUNCAN DU BOIS

Durban

Proposed white tax is counterproductive

Archbishop Emeritus Desmond Tutu’s wealth tax is sentimental, impractical and unconstitutional because of its racial definitions and, at best, would only assuage the guilt of a few.

It does, however, rekindle the important debate around the need for economic reconciliation in this unequal and divided country. In general, very few people relinquish their wealth voluntarily.

The failure of the last 17 years of neo-liberal economic policies to address the legacy of apartheid is self-evident. It is high time that the powers that be, urgently consider alternative economic policies in order to prevent explosive social unrest at the very least.

First, the immediate implementation of a basic income grant to every citizen is imperative in the context of soaring fuel, food and electricity prices, as well as the unfolding peak oil crisis and an imminent global recession. We have just read in Business Report that Iran has successfully done this in their economy (cash hand-outs of R300 a citizen a month) and averted social unrest when the government removed its fuel subsidies in spite of a seven-fold increase in petrol prices and a doubling of bread prices.

Second, we need to implement a financial transactions tax immediately (a small tax on both sides of all transactions) to raise revenue efficiently and progressively for National Health Insurance and all government infrastructure programmes while simultaneously phasing out income tax and VAT. President Nicolas Sarkozy of France is advocating such a tax for the EU.

We should not be taxing honest hard work and enterprise if we want to develop this economy, hence the need to abolish income tax and VAT and replace them with a more equitable flat transaction tax.

Third, we need a land tax, based on the land value, to free up land for redistribution at more affordable prices on a willing buyer, willing seller basis without the need for expropriation.

Fourth, we are obliged, because of climate change and peak oil, to implement a carbon tax which will incentivise investment in labour intensive job-creating ventures and renewable energy infrastructure.

Finally, we need a solid publicly owned banking system to provide the capital and credit at very low interest to entrepreneurs and small businesses for such useful and desirable enterprises aforementioned.

Fundamental transformation of the economy is required to meet the challenges of the 21st century for the benefit of all South Africans regardless of race, and not short-term knee-jerk responses like this white guilt tax of dubious effect.

Yaj Chetty

Communications officer, Association for the Study of Peak Oil

Claremont

People desperate for jobs need the mines

I note with considerable concern the prominence given by your publication on August 23 to a piece by Nick Hiltermann, the chairman of the Mapungubwe Action Group (MAG), headlined “CoAL shirks legal obligations with big promises”.

While I do not dispute your publication’s right to publish such comment, nor Hiltermann’s right to his opinion, I ask that Coal of Africa Limited (CoAL) be given the same editorial opportunity to argue its position and to take issue with at least his most glib assertions that otherwise could be taken as statements of fact.

Although I do not intend to dispute point by point the content of Hiltermann’s piece, there are some issues I must challenge immediately.

Hiltermann’s assessment of the flow of dividends is facile and thus disingenuous. To claim that cash flows will simply enrich CoAL of Africa’s offshore shareholders clearly ignores the most basic principles of economic activity. The simplest level of scrutiny will show that investors – who risk significant capital investment in new mining ventures – are the furthest down the queue regarding returns.

The most significant component of our cost base will be labour, followed by goods and services. The direct and indirect taxation on profits, VAT and that paid by employees will significantly exceed any returns to shareholders.

I also fail to understand Hiltermann’s claim of a net loss of jobs as a result of our activities. The direct jobs created by CoAL will be real, permanent and meaningful; training and development will be provided, along with the opportunity for growth and mobility. Employees’ wages and benefits will facilitate significant direct and indirect economic upliftment, and cannot be compared with the minimum wages paid to highly seasonal, part-time farm workers, who gain little from their endeavours.

Another point to note: the proposed immediate mine activities are 15km from the boundary of the Mapungubwe Park and 30km from Mapungubwe Hill. The mine will not be visible from the heritage site at any stage of its life and, at the time at which these activities will be closest (22km) to Mapungubwe Hill in around 35 years’ time, these will be underground.

Our proposal to Hiltermann is simple: take a step down from your lofty perch that envisages a world without mining and engage with local people who are desperate for jobs, education, health care and economic development. Work with us to ensure that we – and other exploration and mining companies – turn our country’s mineral wealth responsibly to account, to benefit the broadest range of stakeholders.

My closing retort to Hiltermann’s final question would be: have we as a society properly examined the actual benefits of mining, or are we allowing a very small group of those with significant wealth and advantage to satisfy their own short-term private interests, at the cost of the interests of the community at large?

John Wallington

CHIEF EXECUTIVE

CoAL of Africa Limited

Why doesn’t union want Xstrata shares?

Regarding the edition of Tuesday, August 23, “Samwu to challenge Cape order” is a very interesting round-up of strikes and possible strikes in Wiseman Khuzwayo’s article.

Tucked in this article was the fact that the National Union of Mineworkers had declared a dispute with Xstrata over the employee share ownership programme. It needs to be said that this share ownership programme is a gift from the employer to the employees. This gift has been spurned on the basis that the union is opposed to a link between benefits and grades.

This gives a whole new meaning to the phrase “don’t kick a gift horse in the mouth”. This share ownership scheme is probably the wisest way for the black staff to gain ownership in the mining sector.

Here we see a system where this ownership is being given purely as a reward for service, and the unions have turned it down.

Mineral Resources Minister Susan Shabangu has come on record to state that the government wants to increase black ownership in the mining sector.

Maybe the minister should look to the unions and ask them why they are refusing a share ownership scheme which is given to the black mining staff as a gift.

MICHAEL BAGRAIM

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

Insurance industry hit by uncertainty

2011-08-26T11:49:00.000+02:00

August 25 2011 at 11:39am

KPMG, global audit and advisory services firm, recently revealed the findings of its annual South African insurance industry survey, reporting robust financial results for both life and non-life insurers for 2010.

According to the survey, there are new forms of competition, an uncertain regulatory landscape and concerns over market and economic conditions.

Gerdus Dixon, the insurance industry leader for KPMG SA, explains: “It appears that the conventional thinking that life and non-life brands should be kept separate is no longer true.”

One of the trends emerging from KPMG's 2011 survey is the cross-selling of products. This is especially true among established insurers who are seeking to capitalise on an existing brand by moving the brand into a new market space.

For example, Discovery, which offers health and life insurance, has recently launched a short-term product and Old Mutual is now marketing short-term insurance in the form of iWyze. Conversely, short-term insurance giant Outsurance now has a life offering in its portfolio.

The insurance industry is hampered by the threat of a double-dip recession as well as a volatile investment market due to the debt markets crisis and this does not bode well for the life insurance industry. According to the report, the next six months will be vital.

“The short-term insurance industry is less dependent on the investment market, and more dependent on good claims experience, which has been favourable in 2011 to date, with no large corporate fire claims and a general improvement in the loss ratios for motor insurance. However, the traditional short-term insurers have been struggling to achieve growth in recent times and a strained economy will not make it easier,” Dixon explained.

In addition to the economic challenges, the industry also has to deal with a regulatory environment subject to significant change.

“There is a wave of new regulations that will all come into force at roughly the same time. The Solvency Assessment and Management (SAM) regime will become effective in 2014, as well as the Treating Customers Fairly (TCF) requirements. In addition, micro-insurance legislation and binder regulations are also on the horizon. This coupled with taxation uncertainties on the life insurance side make for a very fast-paced rate of change in the industry,” said Dixon.

For the time being, the impact of the proposed national health insurance (NHI) is still an unknown, with not enough solid information in the form of facts and figures emerging.

“It's definitely influencing the strategic thinking of players in the industry but the uncertainty around it makes it difficult to act,” said Dixon.

KPMG's 2011 insurance industry survey also highlights the expansion of the more established life and non-life insurers into Africa, with offices and offerings in sub-Saharan Africa and further into the continent. Often insurers' African expansion is in the form of joint ventures with local players or technology companies.

This mixed bag of challenges and opportunities will see insurance companies being more cautious in their trading and operational updates for the remainder of 2011, despite a relatively strong start to the year. - I-Net Bridge

http://www.iol.co.za/business/personal-finance/

Gordhan warns bankers of ‘milking system’

2011-08-25T09:52:00.000+02:00

Finance Minister calls on bankers to consider a rewards system that does not expose them to criticism of "milking" the system at the expense of the poor

SURE KAMHUNGA
Published: 2011/08/24 06:35:08 AM

BANKERS should consider a rewards system that does not expose them to criticism of "milking" the system at the expense of the poor, Finance Minister Pravin Gordhan said yesterday.

The remuneration of executives in the financial sector in SA and globally is under scrutiny after its role in the financial crisis had come to light. Critics say the crisis was partly due to risky trading in pursuit of high bonuses.

Mr Gordhan suggested at a banking summit in Johannesburg that executives in the financial sector should consider emulating US billionaire investor Warren Buffett, who had donated most of his wealth to a charity.

The backlash against bankers has been most severe in the US and the UK, where politicians have called for tighter regulatory oversight of their remuneration .

The CEOs of top South African banks have also been criticised by trade unions for their high salaries and bonuses compared with the remuneration of rank-and-file employees.

Mr Gordhan said there was nothing wrong with rewarding talent and skills. However, the next decade would require bold moral and business leadership that demonstrated new thinking about executive remuneration.

He said there was a need to avoid creating the perception that executives in the financial sector were "milking" the system from which the majority were not benefiting.

"The pursuit of certain objectives — with increasing rewards as the sole tool — is a race, I suggest, to the bottom," Mr Gordhan said. More would have to be done by the financial sector to establish different benchmarks based on a different value system.

"We might also ask, where are the Warren Buffetts of SA — those who will say, voluntarily, ‘I have enough, I need to share for the benefit of all’?"

Bankers contacted yesterday said they did not oppose Mr Gordhan’s views.

FNB CEO Michael Jordaan posted a tweet saying he would also support a wealth tax, "provided it is spent properly (that is) that tender corruption is routed out".

Standard Bank deputy group CEO Sim Tshabalala said yesterday he saw no conflict between his bank’s remuneration policy and Mr Gordhan’s comments.

"That said, and given factors in the macro and operating environment, this matter requires careful consideration, discussion and debate...."

The deputy CEO of Absa , Louis von Zeuner, said SA’s largest bank by customer numbers had not waited to be prodded by legislation to align the remuneration of its executives with business targets.

Absa, whose CEO Maria Ramos is one of the highest-paid bank executives in SA, had made "good" progress in this regard, said Mr von Zeuner.

Mr Gordhan also told the summit there was a need to protect the banking sector in SA in the face of the current global uncertainty.

He said while the level of fees that banks should charge their customers had not been prescribed, the government wanted "further engagements" with them as it believed more could be done to keep costs down.

Mr Gordhan is planning to meet bank executives shortly to discuss the high cost of banking and their plans to expand inclusive banking.

kamhungas@bdfm.co.za
http://www.businessday.co.za/articles

Entry-level banking to up revenue

2011-08-24T10:06:00.000+02:00

Absa plans to plant 100 entry-level outlets, known as 1234 branches, by year-end and believes this segment of banking will be a major contributor to group non-interest revenue going forward as transactional activity is likely to increase the more the bank makes banking accessible.

22 August 2011 | Phakamisa Ndzamela

Absa plans to plant 100 entry-level outlets, known as 1234 branches, by year-end and believes this segment of banking will be a major contributor to group non-interest revenue going forward as transactional activity is likely to increase the more the bank makes banking accessible.

Absa CE of Unsecured Lending Daphne Motsepe said the bank has about seven million customers in the mass market. The 1234 branches services over 46 000 customers and has under 50 outlets, since it launched earlier this year.

In these branches a customer can transact, get a loan, funeral cover and a savings account.

“Entry-level banking is volume based. If you look at the transactional activities we are dealing with a lot of volume... I do believe it will be a source of non-interest revenue.

The more people we have got and the more we make banking accessible, the transactional activity will come... “It’s very important, not just for social reasons – it’s important for the bank because that’s where the growth will come from. Many people are still underserved,” said Motsepe.

Motsepe said Absa’s hawker loans team has already lent over R220 000 at a total of 227 cumulative loans with an average disbursement of R975. Absa started the hawker loan pilot in February and wrapped it up in June. Monthly loans to hawkers range from R400 to R1 500 and are payable in monthly instalments.

Asked if this was not a very risky market, Motsepe said the bank lent in a cautious manner and used a number of methods to assess the risk profile in that market.

Absa said it worked closely with Fresh Produce in order to assess the buying patterns of a hawker and the sustainability of their businesses. Motsepe added that Absa was looking at lending more to shebeen owners and would work closely with brewers in assessing buying patterns.

“By supporting the micro-lender we also support job creation and the national agenda,” Motsepe said.

She said as Absa penetrated the mass market it was also generating income from funeral policies taken up in the 1234 branches. According to the bank, its funeral sales are running at 7% of transactional account sales, with new sales showing a 12% growth year on year.

Motsepe said the bank had an Absa In Store initiative where it deployed pay points in spaza shops. She said this allowed for people in the townships to transact without having to go to town. Motsepe did concede that Standard Bank, with its “bank shops”, was still leading in this area as it had targeted the market earlier.

“We have points of sale devices. We are not at the number where Standard Bank is but we are getting there,” Motsepe said.

Absa says it is also benefitting from the technology Barclays Group has. It also deploys cash facilities to areas where grants are paid. It also has cash dispensing machines using biometric technology.

The other area is cellphone banking.

Motsepe said the bank had about three million cellphone banking customers and 42% of the cellphone banking users were entry-level banking customers.

Another initiative was its cash-send offering which allows people to send money to those who do not have bank accounts.

– phakamisa@moneyweb.co.za

http://www.citizen.co.za

Interest rate cuts back on table

2011-08-23T11:18:00.000+02:00

August 23 2011 at 05:00am
By Ethel Hazelhurst

After months of speculation about the start of the rate hiking cycle, rate cuts are back on the table. And economists are putting deflation – falling prices – back on their worry lists.

Global growth prospects have deteriorated over the past weeks and the money market has started to bet on a rate cut by the end of the year.

Ian Cruickshanks, the head of strategic research at Nedbank, said yesterday forward rate agreements (FRAs) were signalling a 40 percent chance of a half percentage point cut three months down the line – “possibly co-inciding with the November MPC (monetary policy committee) meeting”.

FRAs are contracts that run for three months, starting at some point in the future.

Russell Lamberti, a strategist at ETM, described a cut as “a definite possibility” but suggested it would only happen next year, when inflation moderated. He added that ETM had been bearish on growth for some time, expecting gross domestic product (GDP) to expand between 2 percent and 2.5 percent this year. This compares with the 3.4 percent estimate in the February budget and the Reserve Bank’s recent forecast of 3.7 percent.

Colen Garrow, the economist at Brait, has also been bearish on the outlook with a forecast of 2.8 percent. “In an environment such as the one we are in now, inflation will probably take care of itself,” he said. “Deflation normally follows crises like these. The ‘R’ word is sufficient reason to underpin the economy with further interest rate relief.”

Deflation is associated with a recession or even a depression because businesses are unable to make profits and are forced to cut back on staff.

Other economists are preparing to revise earlier forecasts after the events of the past few weeks. Last week, fears about global growth prospects and the stability of financial markets caused a stampede out of equities into gold, which has become a barometer of market uncertainty. Spot gold hit a record high yesterday of $1 894.80 (R13 503.40) an ounce – from $1 487 at the start of last month.

The Reserve Bank’s official repo rate has been at a 30-year low of 5.5 percent since November, after retreating from a peak of 12 percent in December 2008.

The MPC will meet next month to decide whether to make another move. It said earlier this year inflation would temporarily breach the ceiling of its 3 percent to 6 percent target range at the end of the year. And economists have been expecting remedial action.

However, recent threats to the global recovery have changed the outlook for both growth and inflation.

According to Garrow, the chances of a rate cut are rising and poor numbers for second quarter GDP could prove a tipping point. Statistics SA will release the GDP data next week.

Elna Moolman, the chief South Africa economist at Renaissance Capital, saw a 15 percent probability of a rate cut. “But it would require a further deterioration of the global and domestic growth outlooks from the already subdued prognosis,” she added. She is expecting the first hike in March “at the earliest”. - Ethel Hazelhurst

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

Mutual & Federal puts on fresh face

2011-08-22T13:24:00.000+02:00

August 22 2011 at 05:00am
Wiseman Khuzwayo

South Africa’s oldest short-term insurer, Mutual & Federal, has redesigned itself, complete with a new logo, with the aim of capturing new markets.

Gone is the outline of Table Mountain in the background of the logo, which the company has used for the past 30 of its 180 years.

In comes the distinctive green font, which aligns Mutual & Federal to its shareholder, Old Mutual.

Thirty years is a lot of brand equity to suddenly decide to ditch. So is it being fixed if nothing is broken?

Managing director Peter Todd said the brand refresh was a direct response to research that Mutual & Federal had conducted into the perceptions of the company’s name and brand identity.

“The research revealed that, while the Mutual & Federal brand was well established and entrenched, we lacked recognition and relevance for the younger market and emerging markets. This was something we were eager to change.”

Brand, customer and transformation executive Vuyo Lee said the research involved all the company’s stakeholders, including the boards of Mutual & Federal and Old Mutual, suppliers, employees and clients.

“Any rebranding is a serious undertaking because of its cost implications,” she said.

Both Lee and Todd refused to say how much this cost.

What is a fact is that big brands spend lots of money to change their logo. Vodacom spent more than R200 million to rebrand and change from blue to red, the colour of its UK parent company, Vodafone.

Mutual & Federal said the brand’s rejuvenation, which the company started in November last year, was an integral part of the corporation’s three-year strategic programme. The aim was to ensure Mutual & Federal became the market leader in short-term insurance.

One of the ways to achieve this goal was to focus on partnerships, said Todd. “For Mutual & Federal, the most important part of our business is relationships. Relationships with our brokers, our reinsurers and our stakeholders. This is why trust is a core value for Mutual & Federal, which we build on a day-to-day basis, be it in settling claims or developing market-leading products.”

Mutual & Federal has 12 percent of the short-term insurance market, while Santam leads with 23 percent.

The removal of Table Mountain from the logo was part of Mutual & Federal’s repositioning in southern Africa.

Todd said: “In order to ensure that the Mutual & Federal brand is seen as a unified offering across all of southern Africa, we believed that it was essential to have one visual identifier which could apply to all our regions.”

Mutual & Federal operates in Namibia and Botswana, and had different logos there.

Marketing adviser and analyst Chris Moerdyk said rebranding was dangerous. But redesigning the logo was not too problematic if it updated or modernised the brand.

“The name Mutual & Federal is well known to its customers and this is the first time it is redesigning the logo for years. So, I have no problem with that,” he said.

http://www.sundaytribune.co.za

Absa in bed with Vodacom

2011-08-18T08:24:00.000+02:00

SA's largest retail bank, Absa (ASA), and mobile operator Vodacom (VOD) on Wednesday announced a multi-million rand agreement to accelerate the pace of mobile innovation and expand the range of banking and mobile services on offer to consumers.

These innovations would include a "tap and go" payment system, machine-to-machine solutions in the insurance space and consumer education delivered via mobile devices, bundled mobile and financial service offerings and free Unstructured Supplementary Service Data (USSD) banking.

According to Absa's chief executive for Retail Bank, Gavin Opperman, the deal helped Absa fulfil its objective of working strategically with mobile operators to enhance the propositions delivered to its customers.

The collaboration with Vodacom provided Absa with the infrastructure to enable cross-selling and the bundling of products to both organisations' customers.

Absa customers were already benefitting from the collaboration with the scrapping of airtime fees on its Cellphone Banking Lite service - an offering that worked on any model of handset and allows clients to request mini-statements and balances, purchase airtime, electricity and make CashSend (cardless ATM) payments.

"Absa has also rolled out the first phase of a 'tap-and-go' payment system at Coffee Connection, Vodacom World in Midrand. As part of this pilot programme, select Vodacom staff members can now simply tap their special 'tap-and-go' card against a machine instead of swiping it for payment. The project is expected to lead to developments in the Near Field Communication arena and usher in a new era of convenience for the customer. Our plan is for this system to eventually see the cellular handset become an alternative to cash and cards as payment mechanisms." said Opperman.

He added that machine-to-machine innovations that would serve as early warning mechanisms in the insurance space were also in the pipeline.

"The respective technical capabilities will create value-added benefits aimed at our customers through the provision of innovative products and services." he said. This will enable the two organisations to better assist their customers by sticking to their fundamental principles of convenience, choice, access and safety through the strengthening and diversification of their product offerings.

"By using Vodacom's infrastructure in conjunction with what Absa offers, we also envisage opportunities emerging from specific areas such as cross-selling and bundling of preferential products to our customers," said Pieter Uys, Vodacom's chief executive officer.

Uys highlighted the potential for this collaboration to help both companies build their positions on the African continent especially with their existing operations in a number of African countries.

"Vodacom's reach and high speed data networks will enable the groups to deliver new cost-effective services for their combined customers," Uys said.

Absa, with over 12-million customers, and Vodacom, with over 43-million customers, had previously entered into a "Master Airtime Agreement" (MAA), an agreement which governs the relationship between the two companies and serves to further strengthen their existing association. The MAA followed a master service agreement (MSA) signed between UK-based parent companies Vodafone and Barclays in July 2010.

http://business.iafrica.com/news/747244.html

FACTBOX-S.Africa's National Health Insurance plan

2011-08-12T12:39:00.000+02:00

JOHANNESBURG Aug 12 (Reuters)

South Africa plans to introduce a National Health Insurance (NHI) programme that it says will cost 125 billion rand next year, equal to about 13 percent of the state budget, and rise to 255 billion rand ($35.3 billion) by 2025.

The following are details of the plan, which is expected to be finalised in three months and be one of the most expensive pieces of legislation in the country's post-apartheid era:

* The estimated costs of the plan are 125 billion rand in 2012, 214 billion rand in 2020 and 255 billion rand in 2025.

* The plan will be primarily paid for through tax revenue and mandatory NHI contributions. Employers will also pay into the scheme.

* Increased spending on NHI will be partially offset by decreased spending on other medical schemes

* NHI is aimed at providing universal coverage and more access to quality medical care for the country's poor. Mandatory contributions will be determined by an individual's ability to pay.

* All South Africans, legal permanent residents, short-term residents and foreign students must enroll and make appropriate payments. Tourists will be required to produce proof of travel insurance upon entry into the country.

* A National Health Council will overhaul the hospital system.

The National Health Insurance Fund, to be established in 2014, will be a government-owned, single-payer entity. A multi-payer system in the NHI Fund will be studied. The NHI Fund will be an autonomous public entity overseen by the health minister and parliament.

* Private health care schemes will be allowed to continue but there will be no tax subsidies for those who chose to stay in the plans.

* No South African or legal resident can opt out of NHI, even if they keep private insurance.

* NHI contributions will be collected by the South African Revenue Service. Funding will flow through the National Health Insurance Fund Treasury

* Capacity of medical, nursing and other health schools will be increased due to a lack of skilled professionals required under the NHI plan.

* Plan calls for building six flagship hospitals and refurbishing 122 nursing colleges from 2012

* Pilot NHI programmes will be rolled out from next year to better determine costs and coverage.

* Registration for the public will start from April 2012.

http://af.reuters.com/

Pay less in bank charges

2011-08-11T15:24:00.000+02:00

South Africa's bank charges are exorbitant, but you can pay less by following these tips:

Compare your bank's different cost structures.
You may have a choice between paying per transaction or a fixed monthly fee. If you don't transact often then paying per transaction will be cheaper.

Compare banks' charging structures.
If a different bank charges less, inform your bank and negotiate for lower charges. If you are a good client the bank will be eager to keep your account.

You don't have to do all your banking at one bank.
You may get a higher interest rate for deposits at one bank and pay lower fees for withdrawals at another.

Avoid going into your branch.
ATMs, internet banking as well as telephone and cellphone banking are more cost effective.

Use your own bank's ATM.
You pay additional charges for using another bank's ATM, costing up to R15 per transaction regardless of the amount of money drawn.

Chuck the cheque.
It is more cost effective, not to mention safer and more convenient, to use debit, credit or cheque cards to pay for purchases than to pay by cheque.

Draw less often.
Withdrawing large amounts less often limits the cash withdrawal fees you pay. The saving in bank charges will easily make up for lost interest.

ATM deposits are free so avoid going into your branch.

Consolidate your transacting accounts.
Why have various accounts with smaller totals earning little or no interest? Consolidate and earn more interest. Look for an account that does not only offer you the best interest rates, but also low charges on the account.

Students should enquire about special student cards for which you pay lower service fees.

Cancel your debit orders and make the payments on the internet directly into the supplier's account.

Maintain a minimum balance.
Most banks have a facility of paying no service charges, or a certain number of free transactions, on savings accounts if you maintain a balance of more than a predetermined minimum.

Remain within your account limit.
You will avoid paying penalty fees on dishonoured items due to insufficient funds in your account.

Take care of your ATM card to avoid replacement fees.

When depositing a cheque make sure it is not post-dated, as you will be charged for these as well as unpaid cheques.

Pay your account by the due date.
You will avoid late payment charges. Consider setting up a debit order for the minimum payment so you never go into arrears. Setting up a debit order is free.

Stay within your allocated credit limit to avoid incurring "over limit" charges.

Use an electronic payment method to put money into your credit card account. You will avoid the cash deposit fee that banks charge.

Use credit cards instead of cheques or cash. The store pays the transaction costs.

http://personalfinance.iafrica.com

Standard Bank cuts minimum credit card repayments

2011-08-11T13:09:00.000+02:00

FNB, Nedbank won’t follow.

JOHANNESBURG – Standard Bank (JSE:SBK) is reducing the minimum repayment due on outstanding balances across all its credit card accounts, a move that the bank hopes will make credit more accessible and stimulate the economy, while on the other hand help customers manage monthly expenses more efficiently.

Standard Bank, which reports interim results on Thursday is cutting the minimum repayment to 3% from 5%. The new rate is expected to take effect from August 25. The bank said those clients who have an automatic payment order for their cards, will have it automatically adjusted.

“An improvement in the credit profile of our clients has allowed Standard Bank to make a number of changes to its risk appetite, thus increasing the availability of credit to credit card holders and stimulating consumer demand,” Standard Bank Card Director Leila Fourie told Moneyweb.

“We are doing our best to make sure that credit is available to those who need it because we believe that this will play a part in encouraging economic growth. However, we are doing all this in a responsible way, based on stringent affordability and credit granting criteria,” she added.

Standard Bank said given the current economic climate customers were keen to find ways of reducing their monthly spending and were also open to the idea of being able to repay less on credit-related accounts without going into arrears.

“The introduction of 3% minimum repayment will assist those customers that are distressed and in arrears. This will allow distressed customers who are paying less than 5% per month as part of a restructure arrangement to remediate their credit profile and move from non-performing to performing. It is important to note that customers have the option to pay more than the minimum and we encourage all customers to pay off as much of their debt as possible,” Fourie added.

These changes will put Standard Bank on par with Absa (JSE:ASA). Absa said previously the minimum payment required comprised 10% of the outstanding balance. However, it reduced it to 7.5%, 5% in the course of 2005 and to a further 3% in 2007.

“In addition to the normal 3% repayment option, we also offer arrangements for our delinquent customers of up to a maximum of 60 months (which works out to less than 3%) and although the limits are suppressed for the duration there is a possibility of re-issue if a % of the balance is paid down.

“By lowering the repayment percentage, customers are given more leverage and one can assume that this has had a significant impact on the ability for customers to make the required monthly payments. This, in turn, also gives our customers the opportunity to manage their finances in such a way that they are able to still make use of the credit provided that the monthly percentage required for payment is adequate and reasonable,” Absa Card Managing Executive, Arrie Rautenbach said.

The other two big banks said this was not something they were looking at and would keep the minimum repayment at 5%.

“Nedbank (JSE:NED) has no plans to reduce the minimum repayment rate from 5% to a lower percentage. Nedbank provides a budget facility to customers in order for them to make arrangements to repay their outstanding balance, and the period can be from six months to 60 months,” Nedbank Head of Card Customer Management Mpho Sadiki said, adding their clients’ ability to pay their outstanding balance has been improving.

First National Bank said previously it found that reducing the minimum instalment in bad times just allowed customers to increase their debt burden, without assisting the customer’s cash flow.

“We have previously seen that lowering the minimum instalment just increases the levels of debt, without assisting the customer with their cash flow predicament. To the bank it simply delays the bad debt impact, but after the delay, the bad debt experience is at higher levels,” the bank said in a statement.

FNB, which has required a 5% minimum repayment on their credit cards for at least eight to ten years, said the average customer who has a revolving balance, repaid about a third of their outstanding balance in a month, while around 20% of its customers settled their debts in full. FNB added that an additional 10% of its customers were currently transacting from a positive balance.

FNB also said that its credit card customers were showing very low levels of missed payments compared to the last five years.

“The low interest rates are assisting customer’s cash flow. However, we are concerned with global economic developments which could cause another recessionary environment. If South Africa were to enter another recession, customers would increasingly feel the burden of high levels of indebtedness,” FNB added.

http://www.moneyweb.co.za

Outsurance Crowned Best Short-Term Insurer At Sunday Times Top Brands Awards

2011-08-10T10:01:00.000+02:00

OUTsurance received top honours in the short-term insurance business-to-consumer category at the 2011 Sunday Times Top Brands Awards ceremony, held at Helderfontein Estate in Midrand last week

This year marks the 13th annual Top Brands survey where leading South African brands from more than 45 business and consumer categories are acknowledged and subsequently awarded with the title of "Top Brand" within their respective category.

TNS Research Surveys interviewed 3 500 South Africans, 18 years and older - to determine each brand's penetration in the market, its relative strength amongst its users, as well as its appeal amongst non-users.

Margarita Putter, CEO of TNS Research Survey comments that "for companies it's about staying relevant and not taking anything for granted and trying to maximise their value proposition, so that if things do become tougher, they can retain their market share."

As leading brand in the short-term insurance category, it would seem that OUTsurance has certainly taken this to heart. Since 2005 when they won the Top Brands Award for the first time, OUTsurance walked away as winners in the business-to-consumer category five times already. In 2010, they were voted as Top Brand in the business-to-business category and this year, they achieved second place.

In response to this year's results, Ernst Gouws, CEO of OUTsurance says that "it's only been 13 years since the company was started, so it's certainly great to see that we've managed to grow into a very large and trusted insurance brand, and into being the undisputed market leader among the direct insurers.

"That being said, we won't ever rest on our laurels. The market is getting more competitive by the day, and we know we need to work flat-out to ensure we continue to give our clients 'awesome service'. In the end, that's what our clients expect when we promise 'you'll always get something OUT. "

Enver Groenewald, General Manager for advertising revenue at Avusa, agrees: "Each year there is a shakeup in what is an increasingly demanding market. Today's consumers are very empowered, and they are no longer prepared to put up with anything less than the best."

Groenewald concludes by saying that "in this environment, brands have to sit up and take notice or face the consequences. Consumers no longer simply vote with their feet. They get up and shout about their experiences - good and bad - sharing them with other consumers and exerting an influence on brands around the globe."

About OUTsurance

OUTsurance has established itself as the leader in the direct insurance market offering car insurance, home insurance and business insurance. OUTsurance has now also expanded its product offering into the life insurance market, offering cover in case of death, disability or critical illness. For awesome service and affordable insurance premiums that will suit your budget, get an insurance quote from OUTsurance.

www.allafrica.com

payD to allow easy SA online payments

2011-08-01T09:31:00.000+02:00

Duncan Alfreds

http://www.news24.com

Cape Town - Online shopping in SA has been given a boost with the introduction of a debit card payment system that promises to make the experience easy and safe.

MTN Mobile Money has launched payD, an e-commerce platform that allows users to make purchases online using bank debit cards.

"payD removes a significant obstacle to e-commerce's mainstream adoption in South Africa - finding a convenient and cost-effective payments mechanism that doesn't require the opening of yet another bank account," the company said.

The system will work in conjunction with a users cellphone when making a payment and it is similar to a transaction at an in-store pay point, the company said.

The move may provide a boost to online retailing which has generally relied on credit cards to make purchases, but in SA, a large section of the population does not have access to them.

Micro-transactions

"On the consumer side, only 3% of our population has credit cards, and this is generally the only way to transact online.

"On the merchant side, transaction costs for credit cards cut deep into margins and this reduces the range of products that e-tailers are able to offer online," said Dave Parratt, head of new business development at MTN Mobile Money.

So-called micro-transactions have been a challenge for the industry in SA and several vendors have offered alternatives to credit card payments for online purchases.

Social network MXit allows users to make purchases with Moola, its own online currency, and recently, international payment system PayPal launched in SA.

The payD system is only available to Nedbank and Standard Bank debit card holders at present and there are hopes that will soon roll out to other banks.

One factor that may limit adoption of the system is the number of retailers.

Currently, the system is available at 77 retailers and one of the biggest brands in 1time airlines.

"payD will make paying for 1time flights even easier. Although we have a wide customer base, not everyone has a credit card with which to purchase their tickets online," said Rodney James, CEO of 1time.

Saving with insurance

2011-08-01T09:20:00.000+02:00

GARETH STOKES Jul 29 2011 13:18

Households should save up cash for unforeseen emergencies.

The experts recommend keeping between three-and six months' salary 'available' at all times. This is a tough task as more and more households struggle with the cost of day to day living.

It is almost impossible for the average family to stockpile additional cash when food, fuel and administered prices increase at rates well in excess of official inflation. And low income earners will find six months' wages wholly inadequate to cover the financial emergencies they typically face.

A sensible alternative to stockpiling cash is to view insurance products as a form of 'forced' saving. There is no better way to illustrate the benefit of insurance than to consider the most popular form of cover sold in South Africa.

Funeral cover is popular because of the massive cost to low-income households of holding a funeral. A family getting by on social grants or a minimum wage cannot conjure up the R5 000 or R10 000 for even the most basic service.

There are a number of financial services providers issuing funeral policies in the domestic market. Although the costs and benefits vary from provider to provider, most low-income funeral covers are comparable. Depending on the insured's requirements, these covers can be purchased from as little as R29 per month.

An individual saving R30 per month in a savings account that pays 6% per annum interest needs 10-years to save R5 000. The funeral policy will pay the R5 000 even if the policyholder has paid only one or two premiums. In 2007 the Association of Savings and Investments South Africa (Asisa), in collaboration with its member life insurers, announced a set of standards for low-income insurance products.

Known as Zimele, these standards guide how insurers design, market and administer funeral insurance (whether member only, family or parent cover products), credit life policies, life cover and physical impairment cover. The overarching goal is to provide fair charges, easy access and decent terms. Entry-level funeral products are designed for the difficult financial realities facing consumers. Low premiums are just the beginning.

Zimele products now offer premium holidays which see the cover remain intact despite missed premiums (subject to conditions). And companies offer a range of 'add on' benefits too.

Transport to funeral homes, trauma assistance, treatment in the event of assault, HIV treatment, legal support, health advice and emergency medical response are just some examples. As we move up the income ladder the mix of risk insurance changes. Because higher wage earners can cover smaller expenses using bank accounts or credit facilities, their life insurance purchases centre on life and disability covers.

The mix of life products varies significantly at different life stages. "Managing your life portfolio is a dynamic process and you should be meeting with your financial intermediary annually, or at the very least every second year," says Craig Harding, managing director of Altrisk.

Lifechanging events such as marriage, the birth of a child, property ownership, a career change, divorce, serious illness and retirement all have an impact on your risk profile. The insurance consumer has to balance their available budget against personal factors such as lifestyle, dependents, outstanding debts, health conditions, employment and heredity factors.

A young graduate professional who has just started working, rents a townhouse and has no dependents will not be purchasing the same risk covers as a married man with two children and a mortgaged home. "Life cover is not an absolute requisite for the graduate professional," says Rafieq Saville of Professional Financial Solutions. "This person has no dependents and no major outstanding debt in the form of a bond."

The priority cover in this case will be disability cover, including a lump sum to cover immediate expenses and an income replacement benefit to cover salaries should the insured take ill or be involved in an accident resulting in being off work for an extended period of time, or even permanently.

"Life cover becomes an absolute must for the family man," continues Saville. "The bank would most likely have required such cover as security at bond application stage." If both husband and wife work then it makes sense for each to take life cover to pay off any outstanding debts as well as provide financial support for their family should either of them die prematurely.

In terms of critical illness, disability and income protection covers, the couple must make sure their benefit amounts are adjusted for higher family cost of living. "When it comes to your financial planning, there are three indisputable realities you must consider: You are either going to live too long, die too soon or get sick in between, quips Harding. He concludes by urging savers to consult experienced, professional brokers to assist them in assessing their risk portfolios.

Purchasing insurance for your personal assets is another important form of saving. Because it is extremely difficult to save up enough funds to cover the expense associated with a motor vehicle accident, house fire or other disaster, some form of personal lines cover (short-term insurance) is essential.

A sensible personal lines policy includes your moveable assets (car and household contents) and immovable assets (your house). Short-term insurance statistics confirm that motor vehicle claims account for the bulk of insurance companies' annual payouts.

In a country with 10 000 fatal car accidents and approximately 80 000 vehicle thefts each year, 'protecting' your motor vehicle is critical, even more so when there is money owing on the vehicle. No amount of saving will compensate for losing your motor vehicle to accident or theft and still having to honour the hire purchase agreement.

July 2011 National Savings month serves as a reminder to us all to review our financial plans and afford savings the priority it deserves. Whether we save through traditional bank savings products or via the insurance route, each rand we tuck away not only benefits us, but the economy too.

http://mg.co.za/article/2011-07-29-saving--with-insurance/

MTN MobileMoney debuts new e-commerce payments system

2011-07-29T10:37:00.000+02:00

MTN MobileMoney is introducing an e-commerce payment mechanism called payD that allows SA consumers to buy products and services online using their debit cards. Budget airline 1time is the first company to offer the new online payment technology.

Dave Parratt, head of new business development at MTN MobileMoney, says only 3% of SA’s population has credit cards and “this is generally the only way to transact online” in SA.

For the seller, transaction costs for credit cards cut deep into margins. Parratt says this reduces the range of products electronic retailers are able to offer.

1time CEO Rodney James says the airline has been looking for “secure and convenient alternatives to the cumbersome electronic funds transfer or bank deposit payment options”.

Standard Bank and Nedbank Pin-based debit card users on the MTN and Vodacom networks can use payD, with more banks expected to offer the service within a year. “As a payment mechanism, payD is completely partner-neutral. Standard Bank and Nedbank are the first banks operational on the system but will soon be joined by other major institutions,” says Parratt.

PayD uses the “authenticated mobile transaction” technology developed by MTN MobileMoney and uses Sim and Pin technology to turn any mobile phone into a secure, encrypted point-of-sale terminal.

“A critical element to payD’s security, apart from the high levels of hardware-based encryption, is that the service will work only for the registered user via their personal mobile phone,” says Parratt. “So, there need to be three elements simultaneously in place for the service to work: the debit card, the registered phone and the ATM Pin. It is as secure as walking into your nearest shopping centre, but it works online.”

The greatest challenge to getting debit card holders online was recreating the security of a traditional point of sale (POS) in the mobile world. “Cellphones have many of the things POS units have. Networks have encryption, and Sims work like the chips in debit cards. We can secure the network and replicated the Pin pad at a POS,” he says.

“We can’t even see the card number, but we can see the cellphone number,” says Parratt. “Once users have linked a debit card to their cellphone number, they need only quote their cellphone number, then they’ll be sent an SMS requesting their Pin — so Pin and card details aren’t kept together.

The SMS users receive is what Parratt calls a “pervasive message”, which means it doesn’t remain on the phone once the transaction is complete. “You carry all of the necessary security on your phone, in your pocket. But if you lose your phone, no one will be able to transact with it without having your debit card Pin, too”.

He says debit card transactions are priced at almost same rate as POS ones, at “around 1%”. He says that as credit card transactions carry a higher premium, payD will also allow small retailers to boost their profits.

Craig Wilson, TechCentral

http://www.techcentral.co.za/

In-store banking - Solutions for retailers

2011-07-29T10:33:00.000+02:00

Retail co-operation
Stafford Thomas Thursday, 28 Jul 2011

SA banks have long delivered payments services that would satisfy the needs of any First-World customer. But now they are being called on to provide services to consumers with needs typical of an emerging market. Many of these services are solutions they are supplying in co-operation with retailers.

“I have never seen so much co-operation between banks and retailers,” says Herman Singh, CEO of Standard Bank’s payments innovation unit, Beyond Payments.

One of Standard’s initiatives, says Singh, is ease of person-to-person money transfers through payments processor eCentric in which it has an 80% stake. “Standard Bank is by far the biggest player in the [retailer-based] money transfer market,” says Singh.

Users of eCentric’s platform include Shoprite, which offers a money transfer service through its Money Market kiosks, and Spar, which offers a similar in-store service called Instant Money. The thinking behind both is that though about only 18m out of 49m South Africans have a bank account, 35m have a cellphone.

To use the service, consumers hand cash to a cashier and select a PIN which they SMS together with a reference number to the recipient, who then uses these to collect the cash at any of the retailer’s stores. Up to R5000 can be transferred daily at a cost of just under R10/transaction.

“We have processed R250m in transfers so far this year for Spar alone,” says Singh. Spar Instant Money expected an annual volume of R100m by the end of this year . Small retailers are also climbing onto the eCentric platform, which now covers 8000 retail outlets, including spaza shops, says Singh.

The money transfer service is part of Standard Bank’s broader drive to use spazas and other small retailers to reach communities where bank branches are uneconomic. Under the initiative small shop owners are appointed as the bank’s agents. They are able to facilitate the opening of basic debit card-based accounts and provide services such as money transfers, cash deposits, payment of utility bills and buying of airtime. The bank’s target is to have 5m customers on this platform.

For SA banks, the next big advance in the retail payments space is contactless payments, an innovation with the potential to benefit consumers in all levels of society. The solution enables low- value payments to be made by card without physical contact with a point of sales (POS) device. Contactless payments require cards equipped with a chip and antenna that transmits data to a POS device at a range of up to about 4cm.

Says Absa Card managing executive Arrie Rautenbach: “We intend to roll out contactless payments extensively.” The catalyst, he says , will be adoption of the solution by metropolitan transport systems, including buses , trains and taxis, with a phased introduction in the retail environment.

Rautenbach says Absa is working with Barclaycard, which has extensive experience in contactless payments that it helped pioneer in the UK in 2007. As an example of the solution’s application, he says that by the end of 2011 all of McDonald’s 1200 stores in the UK will be equipped to accept contactless payments.

Singh says Standard is also going the contactless route, focusing on transit and closed-loop payment environments such as events and entertainment complexes. As an example, he says the bank is working with Ster-Kinekor to incorporate a contactless payment capability in its movie club cards.

How fast contactless payments will evolve in the broad retail market remains to be seen.

http://www.fm.co.za