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Most banks really don’t want you to use ATMs

Why it’s generally far cheaper to get cash at supermarket till points …
ATMs are expensive to build and operate, and transporting cash is costly as well as risky. Image: Nadine Hutton, Bloomberg

The transformation of bank pricing over the past decade has not just been about the shift from branches to digital channels such as internet banking and mobile apps. There has also been a deliberate shift in pricing to disincentivise the use of cash. 

But over time there has been a not-so-subtle shift towards disincentivising customers from drawing cash at ATMs in favour of withdrawing it at supermarket till points.

The changes in pricing have been stark. A decade ago, drawing cash at a till point cost anything from around R1 to R5.20, depending on the account. Charges were higher for the failed Post Office and bank-collaboration Mzansi accounts (R4.50 or R4.70). These fees were not too far from the cost of ATM withdrawals (in some cases, cash at a till was higher).

But over time, these charges have declined to the point that, for many accounts, the flat rate is R1 per withdrawal (at the higher end, withdrawals at retailers are entirely free, or a reasonable number are). 

A simple comparison between the costs of withdrawing cash at an ATM (even the bank’s own) versus a supermarket till point shows just how expensive the former is.

On entry-level transactional accounts, a withdrawal of R1 000 at an ATM will typically cost upwards of R6, while the same withdrawal at a till will cost between R1 and R2. This is the difference between 0.6% and 0.1% in fees. At lower withdrawal amounts, the R6 (or higher) charge becomes material. 

Entry-level transactional accounts
Bank Account Own ATM Other ATM Cash at till
R100 R1000 R100 R1000
Absa Transact R6 R6 R13.50 R33.50 R1  
African Bank My World N/A N/A R6 R6 R2  
Capitec Global One R6 R6 R8 R8 R1 Boxer, PnP, Shoprite or Checkers
FNB Easy Zero (eWallet eXtra) R6 R6 R10 R10 N/A Up to R1500 per month, thereafter standard rates apply
FNB Easy pay-as-you-use R6 R6 R10 R10 R1  
Nedbank MobiMoney 1 free per month, then R10 N/A N/A N/A    
Nedbank Pay-as-you-use R7 R7 R12 R30 R2  
Old Mutual Money Account R7 R7 R10 R10 R1 Boxer, PnP, Shoprite, Checkers or PEP
Standard Bank MyMo R6.50 R13 R12 R18 R1.40  
TymeBank EveryDay N/A N/A R8 R8 Free at PnP, Boxer, else R2  

* All fees from January 1, 2020

On mid-level and upper-end bank accounts, most banks offer free withdrawals at either till points or their own ATMs up to a certain limit per month (ranging from R2 000 to R10 000, depending on the target segment). Thereafter, withdrawals are generally charged for and getting large amounts of cash from ATMs becomes very expensive because of the pricing structure. The rate for disbursements is charged per R100, meaning that a withdrawal of R1 000 costs R19/R20 at most banks, or 2% of the transaction. Drawing cash at another bank’s ATM is ruinously expensive.

Mid-level and upper-end accounts
Bank Account Own ATM Other ATM Cash at till
R100 R1 000 R100 R1 000  
FNB Easy Smart Free up to R2000 per month R11.40 R28.50 R1
    R1.90 R19      
Nedbank Ke Yona Bundle Free up to R3000 per month R12 R30 R2
    R2 R20      
Absa Gold Value Free up to R4500 per month R13.50 R33.50 R2
    R2 R20      
FNB Gold Unlimited Free up to R4000 per month R11.40 R28.50 R1.60
    R1.90 R19      
Nedbank Savvy Plus Four withdrawals per month R12 R30 Free
    R2 R20      
Standard Bank Elite Banking Free up to R5000 per month R10.90 R28 Free
    R1.90 R19      
Absa Premium Bundle Free up to R6500 per month R13.50 R33.50 R2
    R2 R20      
FNB Premier Bundled Free up to R6000 per month R11.40 R28.50 R1.60
    R1.90 R19      
Nedbank Savvy Bundle Unlimited at participating retailers and Nedbank ATMs R12 R30 Free
    Free Free      
Standard Bank Prestige Banking Free up to R10000 per month R10.90 R28 Free
    R1.90 R19      

* All fees from January 1, 2020

The reasons for these shifts in pricing are simple. Bank executives will admit that the cost of cash is very high. These are direct – chiefly the cost of building and operating an ATM network and the associated security required, as well as the costs of transporting and delivering cash.

Given the risks around cash, these costs have increased substantially over time. But as Mastercard’s Cost of Cash study points out, cash has indirect costs too (“travel costs, time-related costs, foregone interest and theft”), but these are mainly borne by consumers. The study, in partnership with Genesis, quantified the cost of cash in 2016. It found that cash costs “consumers in South Africa about R23 billion, or 0.52% of GDP, and that poorer communities carried a disproportionate share of these costs”. 

Read: Banks cut fees as competition intensifies

This is evident from the pricing comparison above, where only entry-level bank accounts charge for withdrawals (at till points or ATMs). At middle-market and higher income accounts, a certain amount (or number) of withdrawals are bundled into bank charges. 

Still, retailers benefit from disbursing cash, particularly at the scale at which groups like Shoprite and Pick n Pay operate. They are paid a fixed nominal fee (far less than R1) by banks for these transactions. They attract customers to stores who will generally buy something, and the disbursement of cash lowers the amounts of cash they need to process. 

Expect fees for cash withdrawals at bank ATMs to continue increasing, and for those at retailer till points to shift down over time. These will likely never be completely ‘free’ given the inherent costs, but the number of ATMs is not going to grow materially from this point. Already, the shift in behaviour is evident, particularly at the lower end of the market. Soon, the number of ATMs in the country will start to slowly shrink. 

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When using ABSA internet banking they are constantly trying to shove their Mobile APP down my throat.

I don’t want it. I am getting a bit fed up with them now and I am sure I am not the only one.

Just just want to fleece more money out of the customer.

That’s how they run their business…

ABSA is dogsht bad

If you block yourself out of internet banking and you are with ABSA then you will know all about it. It took me 2 hours sitting in a branch to rectify it.
My friend did the same with FNB and it took him 10 min sitting at home to sort it out.

Same here….Nedbank promoting their Money App at every opportunity.

Question is: how safe is Banking Apps really? (compared to online banking done from a tablet or desktop with installed security software/VPN/malware protection)

How easy can a smartphone be compromised? (…compared to tablet or desktop)

ABSA mobile app works like a dream.

Try African Bank. Its making a great comeback and is cheapest bank around with the same if not better functionality.
And there is no chance of default as it is government owned!!!!

If cash costs 0.52% of GDP, what do credit card fees cost? The merchant fees are higher and must be recovered from consumers.

I honestly don’t care about what banks want.

I’m the customer. They must care about what I want.

Particularly since they forced legislation on payment of salaries into bank accounts.

@TheSpark. Then you must also love a bank’s FICA process 😉

The bank says “We will command you when and how YOU WILL COMPLY with our Fica-process”.

I cringe….

African Bank is def not in that mode.
Best rates, cheapest costs and seems to have learnt from its mistakes after the bailout.

End of comments.





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