The Solidarity Research Institute (SRI) has published its latest Banking Charges report for 2023, showing how pricing at South Africa’s biggest banks compares, based on different user profiles.
Solidarity’s banking fee comparison is based on four different transaction profiles, split across four different groups. The 12 and 17 transaction profiles are most commonly associated with low-cost or entry-level banking; the 25 transaction profile aligns with middle-market accounts; and the 30 transaction profile for premium accounts.
As a general rule, the researchers base the transaction profiles on what the major banks recommend to save money – so cash withdrawals are low, there are no physical visits to branches, and where purchases are made they’re done online or via mobile.
The transaction profiles for this year have been adapted from previous profiles so as to reflect the changing consumer trends, Solidarity said.
“The profiles contain fewer cash transactions and more debit orders than in the past, and transactions that have been replaced completely by banks’ online services and applications, such as balance enquiries, have been removed,” the group said.
To reflect the cheapest possible transaction options, messages to beneficiaries have been adapted to reflect email notifications, where available, instead of SMSs, because the former usually are free of charge.
Furthermore, SMS notifications have been switched to transaction notifications because several banks are offering the option to receive notifications free of charge through the bank’s cellphone application.
Among the cheaper accounts, FNB’s Easy pay as you use account emerged as the cheapest account, followed by Absa’s Transact account. However, the SRI did highlight some caveats.
“To qualify for the Absa Transact account, monthly income must be less than R3,000. If this amount is exceeded, the account is upgraded to the Flexi account, which carries a fixed monthly fee of R40 before transactions,” it said.
The Absa Flexi account is also one of the few accounts where fees are charged for card purchases in shops. “This is not indicated in our list of transactions because everywhere else, it is free of charge.”
FNB’s account offered the most free transactions, landing it comfortably in the top spot.
“While Capitec still is the only bank in this category that offers interest on their transaction account, the cost for such an account where a balance of R5,000 is maintained would still be R10 more than for an FNB Easy PAYU account for the same 17 transactions,” the group said.
Among the middle-income profiles, SRI looked at the banks’ flagship or mid-market accounts – the accounts they market to the core customer base.
While Capitec doesn’t offer as many “bells and whistles” as other banks in this category, it is included because it targets the exact same customer base.
Capitec emerged as the cheapest account in this profile, but only barely ahead of FNB’s Fusion account, with only R2 separating the two.
All of the transactions on the SRI mid-level profile are included in the monthly fee of R99 for FNB’s Fusion account.
“In this section, Capitec once again would have been the winner if it was judged purely on costs,” SRI said. “However, if one looks at the larger offering of the various accounts, FNB’s Fusion Aspire account towers above the others.”
SRI noted that the accounts in this category are much more focused on added value and reward programmes than purely on costs.
“The aim of our report, however, is to compare costs, and consumers are encouraged to see if the added value justifies the extra costs,” it said.
“While costs probably are not the main factor for users in this category, it could nevertheless be useful to bear this in mind before considering other factors.”
Among these accounts, FNB’s Fusion Premier account comes out as the most affordable, with Absa’s premium package close by – again, a difference of only R2 separates the two.
“As in the previous section, the decisive factor here is the number of free transactions being offered. For this reason, FNB is the winner in this category,” SRI said.
South Africa has seen an influx of online-only digital banks, which now effectively compete with the legacy banks in a new market segment.
SRI’s researchers looked at a transaction profile that eliminates cash transactions and focuses only on digital transactions and monthly account fees.
“It is assumed that all debit orders and internet bank payments are external to put the new banks on an equal footing with traditional banks,” it said.
SRI said the major factor in determining the winner is the number of cost-free transactions. In this instance, Tymebank is slightly ahead of Bank Zero.
“In the case of both banks, the only transaction on our list that carries a fee is sending cash to a cellphone number. There also are differences, as with other banks, in the fees charged for ATM transactions at other banks, and also the costs for immediate transfers to accounts at other banks,” it said.