Flamboyant United Kingdom businessman Sir Richard Branson on Monday launched the Virgin Money credit card in the South Africa, predicting that it would lead to the biggest shake-up ever in the South African credit-card market.
Branson, who launched the card with a record-breaking stunt, vowed to break what he called the country’s “banking beast”, charging that South Africans were being “ripped off” to the tune of R1,5-billion in high banking charges.
“I plan to break through this wall,” he asserted, adding: “I’m afraid the industry down here doesn’t treat their clients very well.”
He said that South African consumers had long been made to feel grateful just to be offered a credit card by their bank and it was high time customers were given a better deal.
“South African banks are ripping off credit-card holders to the tune of R1,5-billion a year through inexplicably high charges and complex fee structures,” said Branson. “The Virgin Money Credit Card now represents the best value in the market and it signals the beginning of the end of the great South African banking rip-off.
“It seems absurd to me that South African banks are still charging customers annual fees just to carry around their particular brand of credit card. That the big, established banks have somehow managed to cling onto over 66% of the credit-card market, after years of giving customers such poor value and service, is even more extraordinary.
“For too long, the attitude of South African banks has been that you are lucky to be their customer. The ultimate expression of this approach is the frankly ludicrous practice of charging fees for cardholders to be loyal to them or to ‘reward’ them!”
The Virgin Money credit card — a 50-50 joint venture with South Africa’s Absa Bank — is the first in South Africa to combine no annual fees, no loyalty fees and an interest rate of 0% for the first three months with a competitive interest rate from then onwards of 15,75%. The card is also the first to offer a flat 5% interest rate on any positive balance — no matter how big or small.
John Maxwell, managing director at Virgin Money South Africa, explained that the new credit-card offering was designed to provide absolute transparency in fees.
“The average South African credit card has up to 25 different charges, Virgin Money has eight and we’ve made it even simpler — we have only five fee numbers,” he said. “We have no Platinum, Gold or Silver cards. Everyone gets our best rates, our lowest charges, no hidden nasties and the best service — no matter what their credit limit.”
Virgin Money is expecting to spend in the region of R40-million to R50-million in their first year in South Africa, Maxwell said.
He disclosed that the company is also planning to roll out a mortgage product by the end of the year. The company is also looking at other financial-service offerings.
Branson said the South African economy was obviously going through “a bit of a dip at the moment”.
“But one way of bringing a country out of a dip is by bringing competition into the country.”
In his usual inimitable style, Branson launched the new credit card with a daredevil stunt ‒ zip-lining 450m (equivalent to a height of 25 storeys) from the roof of the Sandton Sun Hotel into the parking lot of Virgin Money’s headquarters in the plush Johannesburg northern suburb of Sandton to establish a new South African record for the longest and steepest foefie slide (sliding down a rope by means of a pulley system).
“I’m going to save Africans millions. So if it means my stomach churning a little bit before I jump off a building, then so be it,” Branson quipped.
Virgin recently launched its cellular telephone service — Virgin Mobile — in South Africa. — I-Net Bridge