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Game on as Capitec cuts fees

But charges for many cash transactions soar …

Capitec Bank has cut the monthly pricing of its Global One account by 14% to R5, making it a lot more competitive in the entry-level banking segment. While it has led the way in low-cost banking, in recent years Capitec has been bested by Old Mutual’s Money Account (at R4.50 per month) and new entrant TymeBank, which charges no monthly fee. The strategy is clear: it does not want to give (ultra) price-sensitive customers any reason to shop around.

Read: Two clear winners in low-cost banking battleground

It has also cut the fees for electronic payments made on its mobile app or internet banking by 38% to just R1. Immediate electronic payments to other banks will be 20% cheaper, at R8. Debit order costs are down 6% to R3.50 each. All pricing is effective March 1. Last year, Capitec (like some other banks) passed two price increases: the annual change as well as an adjustment from April 1 to account for the increase in Vat to 15%.

But, while cash withdrawal fees at major supermarkets – Pick n Pay, Boxer, Shoprite and Checkers – are also down by 38% to R1, there are potentially sharp increases in the cost of withdrawing from ATMs. Capitec currently charges a fixed fee for ATM withdrawals: R6.56 at its own network and R8.83 at those of other banks. From March, it will change the structure of its pricing to charge a fee per R1 000 withdrawal.

 

March 1, 2019

April 1, 2018 (adjustment for Vat increase)

Change

Monthly admin fee

R5

R5.80

-14%

Cash withdrawal at till (PnP/ Boxer/Shoprite/Checkers)

R1

R1.61

-38%

Payments on app/internet banking

R1

R1.60

-38%

Debit order

R3.50

R3.73

-6%

Immediate payment (to other bank) on app/internet banking

R8

R10

-20%

Cash withdrawal at Capitec ATM

R6 per R1 000

R6.56

N/A

Cash withdrawal at other bank’s ATM

R8 per R1 000

R8.83

N/A

Cash deposit (ATM)

R1 per R100

96c per R100

4%

Cash deposit (branch)

R2.75 per R100

R2.27 per R100

21%

Credit card monthly admin fee

R35

R35

Replacement card

R65

R60.53

7%

From March, the cost of drawing R1 000 (or less) will drop by 9% to R6 at Capitec ATMs and R8 at other ATMs. But draw over this amount (up to R2 000) and the charge will nearly double. Capitec may argue that the majority of its customers draw R1 000 or less per ATM visit, and this may be true. But there’s no escaping the increased cost for banks to handle cash. It is for this reason that withdrawing cash at tills is significantly cheaper, if not free. Banks would far prefer customers withdraw in that environment. Retailers also prefer this route as it attracts customers to stores and, importantly, helps them offload cash.

There are increases for cash deposits too: a modest 4% for cash-accepting ATMs (R1 per R100) and 21% for branch deposits (R2.75 per R100).

It is doubtful Absa, Nedbank, Old Mutual Bank or Standard Bank will react at all to Capitec’s pricing, considering their changes took effect on January 1. FNB’s annual pricing review is from July each year, and one wonders to what extent this move by Capitec will alter its plans in the entry-level Easy segment. TymeBank’s value proposition – no monthly fee – is a strong selling point, so expect no changes there. Bank Zero is expected to make its debut before mid-year and will compete on fees.

Earlier this month, Capitec Bank said it had experienced its “highest single-month uptake to date, with over 266 000 new clients joining the bank in January 2019”. Its recent run-rate has been an addition of over 100 000 net clients per month (not directly comparable to the January 2019 figure, as that is not net). For the six months to August 31, Capitec reported a 15% increase in active clients to 10.52 million. It will report annual results on March 28.

Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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Game on. Capitec is about to beat the $h!t out of all the low cost banks. Well done Capitec. You have great service, staff that know how to smile, and staff that are helpful beyond basic expectations. Sow discovery that you do not need to have huge buildings worth billions to prove you have a bank that is popular with the people.

Discovery actually do not own their fancy offices, but rents it at R 25 Million a month! Agree on Capitec, Has been a client for many years after a 30 year stint with ABSA starting with Permanent Building Society and the United Bank. Best move ever!!

It’s game over when Discovery Bank enters

Nope.

Discovery is aimed at a certain target market, just like Capitec is.

No chance of that. Discovery is only looking for those who have piles of cash, not the average middle market or lower market client. Lets have a wager on that.

I have been with Capitec for almost 8 years and never looked back! I had to use FNB because of the homeloan but they give you zero – no interest, just gimmicks and constant reward changes (ebucks).

Cannot wait to leave FNB

Terminated account with ABSA last year after 15 years as customer. Opened new account with Capitec. Difference is chalk and cheese. Service is excellent, costs are exceptionally reasonable and now I get monthly interest. ABSA charged for every conceivable item, including fresh air.

Capitec just does not stop getting better and better. What a bank, what leadership and staff and what service-superb. Everything is simple, cheap and works. One can only say a huge well done to them. Shareholders ave been handsomely rewarded .

And now they are starting a business bank too. Innovation and cost effective. A world class entity!

Capitec new high today at R1244.oo. Up from R850.00 during the Viceroy shorting episode, not long ago. What a management team. Spur should take some lessons from them.

fact..all banks make serious mistakes…this one has never….just to good to be true…I still think Viceroy is more or less correct with their research

I would keep a sharp eye on the quality of their loan book if I were you. Remember, Capitec’s business is in lending to lower income households. The very people now being squeezed ever harder by SA’s rapidly deteriorating economy.

If a 47 cents means a lot in your finances, you know you’re broke right?

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