Belinda Beresford
Banks want to train you to use virtual cash – electronic payments and cards – rather than banknotes and cheques. The carrots waved under customers’ noses include greater security and theoretical ease of use. The sticks include higher charges for those who insist on using the more traditional ways of paying.
Cash-based transactions cost banks more. They require added manpower to monitor and enter the transactions, there are costs in terms of sheer bulk needing to be transported and stored, and of course cash has enormous security risks and expenses.
But while there is a logic to moving away from cash, using transaction charges as a punitive measure affects most directly those people least able to afford it. Poorer customers are likely to use small sums in a cash-based world, and are unlikely to be able to build enough of a balance in their bank accounts to benefit from special deals.
The poorest customers are also least likely to understand a bank’s system of charges, and, in many cases, may have problems using ATM machines at all.
Standard Bank’s decision to move from a flat fee for ATM withdrawals to a pro-rata system is designed to encourage people to use cash only for small transactions. Customers now pay R1,50 for the first R100 and 50c for each successive R100 withdrawn. The bank blames general inflation as well as the higher costs incurred in handling cash for its decisions to raise withdrawal fees.
Nedcor, whose fees increase in March, also has a pro-rata fee structure. Withdrawing R250 from the bank’s network would cost a Nedcor customer R2,28 plus a 68c processing fee for each R100. Taking the same amount from a foreign machine would mean a cash processing fee of R2,28 plus R2,74 in interbank charges and then 68c for each part R100.
First National Bank and Absa customers pay a flat R1,60 for cash withdrawals at their banks’ own machines. ATM charges tend to be higher for savings accounts to deter customers from frequent transactions.
But customers are really hit when they withdraw money from foreign ATMs – those that don’t belong to their own bank. Saswitch fees have also risen. For example, Standard Bank customers withdrawing R100 from a Nedcor machine would pay R5 to get hold of their money.
A Saswitch representative says the company’s fees are designed simply to cover costs, without making a profit, and are independent of the amount the banks charge each other for processing withdrawals.
Absa assistant general manager for electronic banking Walter Volker said the bank charges a flat fee of R6 for any foreign withdrawal because of the interbank handling fees it incurs.
Volker said Absa is charged R3 for the first R100 and another 60c for each following R100. So a client paying R6 for withdrawing R1 000 from a foreign ATM would cost the bank R10. Absa loses money if customers take out more than R300 from a foreign machine. Before raising its charges the bank lost money if such withdrawals were more than R100.
He said Absa would prefer to move towards a series of bilateral agreements on fees between the banks, rather than the present situation where the banking industry standardises its interbank charges.