South Africa’s banking fees vs the world

 ·10 Apr 2018

One of the biggest complaints in South African banking is that we are charged too much to access our own money – and with the recent VAT hike kicking in at the start of April, these charges have gone up yet again.

Banking fee structures are often complicated and confusing, with many ‘hidden’ costs tucked away among the day-to-day transactions we’re more familiar with.

These structures have given way for disruptors to enter the market: Capitec, with its simplified banking approach, and building on South Africa’s large low-income and unbanked market, has risen to a point where it’s ready to challenge Absa for the title of the second biggest retail bank in the country.

But the SA banking system is once again facing strong competition, with the planned launch of five new banks into the market – two of which are taking an entirely new, digital-only approach.

Global banking fees

While South Africa’s big four (Nedbank, Standard Bank, Absa and FNB) have a reputation of being ‘clunky’ thanks to their age and legacy systems in place, they are not that different to what is being offered by some of the biggest banking groups in international markets.

We looked at how local fee structures in South Africa compares to some of the biggest names in banking from the USA, Europe, Asia and Australia.

For the comparison below, we selected Absa to represent South African banks due to its (until recently) close ties to the Barclays group.

Because the banks operate in different markets, and are part of different regulatory environments, the service names and functions may not match up 100%. For example, in the JPMorgan Chase accounts, overdraft fees are charged for each transaction – while in the Bank Australia account, the bank charges an annual fee.

The fees listed for the various banks are as close to the specified services as can be found across the various international banking groups.

Another caveat is that the fees do not consider purchasing price parity – that is, fees would make up a different proportion of a consumer’s monthly income in different countries.

Thus the comparison is not to show which banking group is the cheapest, but rather to compare how the various banks structure their fees – and how South Africa’s banks may take a different approach. The second table shows the transaction fees converted to rands to assist with this.

Banking fees

Transaction Absa ICBC JPMorgan Chase Bank Australia Barclays UK BNP Paribas
Account fee R45.39 H$50.00 $12.00 A$5.00 Free €2.00
Withdrawal (Native) R11.59* Free Free Free Free Free
Withdrawal (Other) R17.64** H$10.00 $2.50 Free Free €1.00
Withdrawal (Int.) R60.53 H$15.00 $7.50 A$30.00 £2.33*** €1.00
EFT/Wire in Free H$10.00 $15.00 A$10.00 Free Free
EFT/Wire out Free H$50.00 $25.00 A$10.00 Free Free
Stop payment R30.26 H$70.00 $30.00 A$30.00 £20.00 Free
Failed (no funds) R126.10 H$150.00 $34.00 A$20.00 £8.00 €8.00
Statement (older) R60.53 H$50.00 $6.00 A$3.00 £0.30 €1.80
Overdraft fee R100.88 H$120.00 $34.00 A$24.00 (p/a) £1.50 €32.00
Card replacement fee R141.23 H$50.00 $5.00 A$5.00 £6.00 €15.00

*R4.54 + R1.41/ R100 | **R10.59 + R1.41/R100 | ***£1.50 + 2.75%

Wherever possible we looked at the fees for local and internal transactions, favouring electronic or internet banking. The only exception was for bank statements, which we priced for printing at a branch. For structured withdrawal fees, the price is based on a withdrawal of the equivalent of R500.

The relevant pricing brochures are linked in the titles. Here are the fees converted to rands:

Banking fees ZAR

Transaction Absa ICBC JPMorgan Chase Bank Australia Barclays UK BNP Paribas
Account fee R45.39 R77.00 R145.05 R46.30 Free R29.70
Withdrawal (Native) R11.59* Free Free Free Free Free
Withdrawal (Other) R17.64** R15.40 R30.20 Free Free R14.85
Withdrawal (Int.) R60.53 R23.10 R90.65 R277.90 R39.70 R14.85
EFT/Wire in Free R15.40 R181.30 R92.60 Free Free
EFT/Wire out Free R77.00 R302.15 R92.60 Free Free
Stop payment R30.26 R107.75 R362.60 R277.90 R340.95 Free
Failed (no funds/bounce) R126.10 R230.90 R410.95 R185.25 R136.40 R118.80
Statement (older) R60.53 R77.00 R72.50 R27.80 R5.10 R26.75
Overdraft fee R100.88 R184.70 R410.95 R222.30 (p/a) R25.60 (p/d) R475.20
Card replacement fee R141.23 R77.00 R60.45 R46.30 R102.30 R222.75

Conversion rates: USD = 12.09 | GBP = 17.05 | EUR = 14.85 | HKD = 1.54 | AUD = 9.26

What’s different…

The first, and most obvious difference between South Africa’s banks and international banks is that our local groups charge customers to access their own funds from native ATMs.

Every major international bank we looked at waives the withdrawal fees entirely when customers take money out of their accounts using the bank’s own machines. In South Africa, every bank charges customers to do this.

On a more positive front, South African banks have adopted a more digital-friendly approach to electronic transfers and payments, waiving fees )or charging very little) when compared to international banks.

Only European banks show the same approach – so long as the transfers remain within the respective groups. In places like the USA or Hong Kong, the banks charge large fees for each transaction wired in or out of an account.

…and what’s the same

Despite the regional differences, there are a few things that stay the same no matter where you bank.

Because of the charges banks incur to facilitate withdrawals across borders, you will pay high international banking fees across all banks. These will depend on the relationships a bank has with foreign groups.

While France’s BNP Paribas has made arrangements so that its customers are only charged 1 Euro – Bank Australia’s customers will be hit with a AU$30 knock. Here, South Africa’s international fees don’t appear as bad.

Another thing you will always be expected to pay for is stop payments – which area also high fees at all banks (except BNP Paribas which waives the fee) – as well as getting older bank statements, which are charged per page.

Read: These are 10 of the most beautiful bank notes in the world

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