/ 30 July 2008

Absa delivers to the unbanked

People with irregular incomes can now access an inexpensive debit card for a one-off fee of just R30 and no ongoing management fees.

This innovative move in addressing the issue of the more than 10-million unbanked people in South Africa comes from a joint venture between Absa and Visa, which have launched the Absa prepaid debit card.

The new card does not require cardholders to comply with the full Fica requirements and provides a safe and convenient payment mechanism for employers to pay part-time workers. It is also an ideal card for parents to provide pocket money to learners.

It is not a fully fledged banking account and therefore debit orders, for example, cannot be applied to the account as the card provides only for card-based transactions. The card, which is valid for three years, carries a once-off upfront fee of R30, free transactions at till points, no charges for prepaid airtime top-ups done at an Absa ATM and allows one free balance inquiry at an Absa ATM a month.

There is also no minimum balance required to keep the card active. As this product is aimed at the unbanked, it qualifies for Fica exemption 17, so the only Fica requirements are a green bar-coded ID book; no proof of residence is required.

Transactions are secured through PIN-based verification as with any debit card and can be topped up by transferring funds through mobile or online banking or from any ATM.

An employer can easily top up the account using online banking. There are, however, costs to withdrawing or depositing cash. If the card is topped up with cash deposited at a branch, the prevailing cash deposit fee will apply. If the cardholder makes a cash withdrawal from an ATM, the prevailing fees will also apply and unlike the Mzansi card additional Saswitch fees will apply if the cardholder draws from a non-Absa ATM.

The cardholder can draw cash from a till point as part of the cash-back system and these fees tend to be lower than a normal ATM withdrawal. The idea of a prepaid debit card, without the hassle of a full bank account, should be well accepted by this segment of the market, which already uses prepaid services such as cellphones, fixed-line telephony and electricity.

For companies and employers this offers a solution to the high risks of paying part-time workers in cash. Michael Swart, general manager of Absa Debit Card Issuing, says this product will be marketed to its corporate clients as a safer way of paying staff. He says microlenders can use the card to pay out loans, reducing the risks of carrying large quantities of cash.