Bank Zero freezes fees, opens to all

No more waiting list as latest market entrant ramps up operations …
The bank says it only needs 100 000 customers to break even. Image: Supplied

Bank Zero account and transaction fees will remain exactly the same next year, meaning they have been unchanged since the mutual bank went into beta last year.

The bank famously has zero monthly fees and also charges no fees for electronic payments, debit orders, card swipes and the purchasing of prepaid airtime, data or electricity.

It was the first bank in the country to not charge for EFTs (electronic funds transfers) and debit orders.

The bank has also announced that it is now fully open for business.

Chair Michael Jordaan says its start has been “incredibly smooth” – it required potential customers to join a waiting list to ensure it could deliver a quality onboarding experience.

This was necessitated by it having had to launch the bank with a team all working from home. Development of features on the iOS app also lagged that of the Android version slightly, with both apps available to customers on an invite-only basis. The app is now available in the App Store and in the Google Play Store.

Digital financial connectedness

CEO of Bank Zero Yatin Narsai says: “What is new for customers from now onwards is the adding of relationships [like friends, business associates and authorisers] where they can then immediately download the app, register and be part of that specific community – be it a business, sport club, project or a savings club. This brings digital financial connectedness to all.” These users need not be customers.

One of the central propositions of the bank is that the functionality and fee structure are the same for consumers and businesses. It is clearly targeting the small business space and believes it to be a “huge” opportunity.

Narsai is “pleasantly surprised by the higher-than-expected number of businesses registering during the closed roll-out”, mostly private companies (Pty Ltds), followed by CCs and then sole proprietors.

Jordaan says: “We’ve already seen significant deposits flowing into Bank Zero so early in its life cycle.” He adds that since its public debut in August, the bank has experienced excellent take-up and growth in card transactions. Most popular is e-commerce, suggesting it has attracted a number of younger, tech-savvy customers.

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The bank says the purchasing of prepaid items is increasing at a fast pace, exceeding all of its forecasts. The fact that these transactions attract no fees certainly helps.

Bank Zero’s fees for where it is not in control of the entire transaction, such as withdrawing cash at Shoprite or Checkers tills, at ATMs or sending money to non-Bank Zero customers are described by the bank as “third party costs [which] are passed on to you”.

These compare favourably with other low-cost propositions at other banks, however an obvious comparison is with Capitec which only charges R1.60 when withdrawing cash at a Shoprite/Checkers/Pick n Pay/Boxer till.

That Capitec has managed to drive this cost lower is testament to the size and purchasing power of its base of customers who would typically get cash at a till point.

Charge
Monthly account fee Free
Transfer between accounts Free
Pay recipient Free
Pay by card Free
Prepaid airtime, data, electricity Free
Withdraw cash at ATM R9 per R1 000
Withdraw cash at POS (PnP, Boxer, Checkers, Shoprite) R2
SendMoney (to self or non-Bank Zero customer) R8.50
Proof of payment via SMS (e-mail is free) R1.50

Bank Zero charges a so-called ‘nuisance fee’ of R2 when a transaction is declined for insufficient funds, or exceeding card limits, for three incorrect PINs, or if a new card is used before activating it (or old deactivated card is used).

The bank says it only needs 100 000 customers to break even, but that its expectation is that it “will end up bringing relief to millions”.

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Beware, you likely pay with your data.

You already pay with your data for all the other banks.
It’s specifically included in the agreement you sign when you open your account that you consent to marketing.

Interesting. Is this for internal marketing or 3rd party marketing; i.e. data sold to different vendors?

@2Cents

Both internal and 3rd party.
It was couple of years ago but I used my debit card to purchase clothes at Markham. Next month I got a letter from Markham telling me to sign up for their credit account.

Another time I got a call from a marketing company for some product, I asked them who they were an where they got my information from. It was some company in Cape Town and they told me FNB provided them with a database.

Unless you call or visit your bank and specifically ask them to remove you from marketing, they will continually do funny stuff with your data.

Bitcoin fixes this /s

@Henry Peters

I guess it comes down to consent (https://popia.co.za/category/consent/) and as users we waive it too easily because we don’t spend the time reading the T&Cs

One assumes at least part of the income comes from debit card issuer interchange fees which is the model for low cost banking most places. Let’s hope they have a slick process for the retailers to support withdrawals. Pick ‘n Pay is as much a bank today as it is a retailer and this is the source of considerable friction at the tills that affects the shopping experience.

Ah the future! Glad to leave dinosaurs like ABSA behind 🙂

Is it wishful thinking to hope that this might force other banks to follow suit to remain relevant?

Tymebank says I was here before with my 3m customers. They are taking food from the table of the big 5. I was one of the people who said the same thing about capitec and look where it is now.

It’s about Tyme!

The app is so ugly and looks dated! I’ll stick to Discovery Bank. Getting a lot of money back in rewards.

I love it – Discovery vs Bank Zero! Both products of ex FirstRand affiliates. Let’s see…

End of comments.

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