The Solidarity Research Institute (SRI) published its latest Banking Charges report for 2024, showing how pricing at South Africa’s biggest banks compares based on user profiles.
Solidarity’s banking fee comparison is based on four different transaction profiles split across four groups.
The report aims to give consumers a look at the transaction account options that the largest banks in South Africa offer them.
The 12 and 17 transaction profiles are commonly associated with basic banking, while the 25 and 30 profiles align with middle-market and premium accounts, respectively.
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.
Solidarity added that Discovery Bank had not been included in this year’s report because many of the transactions in our basket are not indicated on its fees page.
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 are usually free.
Furthermore, this year, it was decided to include one prepaid electricity purchase in the transaction baskets to stay in touch with consumer trends.
Although the report is in no way aimed at awarding prizes, it said Nedbank’s progress regarding both the competitiveness and transparency of its fees must be mentioned.
It is not just the names of its accounts that have changed. In recent years, Nedbank has often been noticeably more expensive than other banks.
This year, the report highlighted that Nedbank is the cheapest in the 30-transaction profile, with an easy-to-understand fees page on its website.
However, FNB and Absa’s fees pages are more challenging to figure out this year than in the past due to a layout that forces one to scroll around between specific fees and included fees, especially in their bundled accounts, the report added.
In this category, FNB’s Easy PAYU account is the clear winner. The most significant factor distinguishing this account from the others is the number of free transactions included in the monthly fee of R5.25.
This is the only account in this category where airtime purchases are free. Cash withdrawals at shop counters are also free at FNB.
Like FNB, Absa Transact also gives one free transfer of money to a cellphone number per month. Cash withdrawals from shop counters are also free from both Absa accounts.
The Absa Transact account ranks second in affordability for both the 12- and 17-transaction profiles.
However, it is worth mentioning that this comparison may not be entirely fair since the Transact account is only available to individuals who earn less than R3,000 per month.
Once a person’s income exceeds this amount, they are upgraded to the more expensive Flexi account, which is significantly more costly than any other in these two categories.
Capitec is the only bank in this category that offers interest on the balance. However, the offered interest rate of 3.5% is outweighed by the charged fees, making Capitec less competitive compared to other banks in this category.
Among the middle-income profiles, SRI looked at the banks’ flagship or mid-market accounts – the accounts they market to the core customer base.
When looking purely at costs, Capitec is the clear winner in this category, especially if we assume that consumers in this category would have a balance that would earn interest in their transaction accounts for at least part of the month.
However, while accounts in this category qualify for the banks’ respective loyalty programmes, Capitec’s programme is not nearly as extensive as the other banks, noted the SRI.
When we look at banks with a proper value proposition, FNB is once again the cheapest. This is again owing to the comprehensive list of costs included in the monthly fee of R99.
Only the purchase of electricity brings an extra cost of R3. In second place is Nedbank, which was in last place last year.
At Nedbank, all transactions on the report’s list, apart from sending cash to a cellphone number, are included in the monthly fee of R99, said SRI.
SRI noted that the accounts in this category focus more 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 be useful to bear this in mind before considering other factors.”
Among these accounts, although Nedbank’s Migoals Premium account appears to be the most expensive, with a monthly amount of R240 compared to R230 per month for the other three banks, it easily wins this category, as all transactions on our list are included in that amount.
Nedbank has greatly simplified its offering and thus also reduced the total cost.
Next to Nedbank, FNB’s Fusion Premier account is the cheapest. SRI said that sending money to a cellphone number and buying electricity are the only services that incur extra costs apart from the monthly fees.
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 primary 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.