SA bank fees vs other countries

South Africa’s banking fees have come under fire from politicians who say that the costs remain high.

Nedbank, one of the country’s largest banks said in a results presentation on Monday (23 February) that the industry’s focus remains on banking fees, and interchange – the fee paid between banks for the acceptance of card based transactions.

According to a report by the Sunday Times, the ANC and the SACP may be set to apply pressure on SA banks which could see them forced to lower their fees.

A main point of contention – highlighted even by the DA, which is opposed to any political interference by the ANC with the bank fees – is that local banking fees are far higher than institutions overseas.

The local banks maintain, however, that their fee structures are fair.

BusinessTech looked at the transactions and facilities of several mid-level transactional bank accounts from international banks including HSBC, the Bank of China, Barclays and the Commonwealth Bank of Australia.

BusinessTech selected Absa to represent South Africa, as it currently has the highest withdrawal fees for the middle-market banks according to a 2015 fee comparison report.

Note: Banking fees were looked at as published by the respective banks; the comparison is not exhaustive and does not take purchasing power parity into account.

International fee structure (local currency)

Fee Absa  HSBC Bank of China Barclays Citi Bank Commonwealth bank of Australia
Account fee (mid-level) R33.00 $15.00 A$5.00 Free $12.00 A$4.00
Native Withdrawal R3.95 + R1.30 / R100 Free Free Free Free Free
Other Withdrawal R9.95 + R1.30 / R100 $2.50 A$1.50 Free* $2.50 A$2.00
EFT (internal) Free $15.00 A$10.00 -A$15.00 £25.00 $15.00 Free
EFT (external) Free A$15.00 – A$20.00 £25.00 $25.00 Free
Overdraft Excess R57.00 $35.00 A$20.00 £35.00+ $34.00 A$10.00
Failed/Returned Payment R60.00 $10.00 A$20.00 £8.00 per day $34.00 A$5.00

* The bank notes that other ATMs may carry a service charge.

All major banks in SA charge an ATM withdrawal fee, while it is not uncommon to find international banks giving customers free access to their funds at native ATMs.

However, while global banks may not charge clients to access their money directly, they do punish customers who go into overdraft. The international banks also slap on big fees for transferring or wiring funds to other accounts.

Here is what it looks like when fees are converted to ZAR.

International fees (ZAR)

Fee Absa HSBC Bank of China Barclays Citi Bank Commonwealth bank of Australia
Account fee (mid-level) R33.00 R174.50 R45.40 Free R139.65 R36.30
Native Withdrawal (R1,000) R16.95 Free Free Free Free Free
Other Withdrawal (R1,000) R22.95 R29.00 R13.60 Free* R29.00 R18.15
EFT (internal) Free R174.50 R90.80 – R136.20 R446.60 R174.50 Free
EFT (external) Free Varies R136.20 – R181.60 R446.60 R290.90 Free
Overdraft Excess R57.00 R407.30 R181.60 R625.25+ R395.65 R90.80
Failed/Returned Payment R60.00 R116.40 R181.60 R142.90 per day R395.65 R45.40

Conversions done at: 1 USD = 11.63 ZAR | 1 A$ = 9.08 ZAR | 1 GBP = 17.86 ZAR

The tables highlight how differently local bank fees are structured to make customers pay where they’re most active.

In a cash-based society like South Africa, it makes more sense for banks to charge varied and conditional withdrawal fees, than massive overdraft and EFT fees which make up a relatively smaller portion of transactions.

According to the Sunday Times report, SA bank structures allowed for the big four banks to pull in close to R40 billion in non-interest revenue in the past financial year – a figure which does not sit well with the politicians.

Non-interest revenue is income derived primarily from fees.

ANC spokesperson Zizi Kodwa told the paper that “drastic action” was needed to remedy this, and that the banks would have no choice in the matter.

On Monday, Nedbank said that on-interest revenue (NIR) increased 4.9% to R20 312 million, for the period ended December 2014, “and reflects the impact of our strategic interventions of keeping fees at or below 2013 levels and slowing personal-loan growth.

“In June, our non-interest revenue was negative and the reason was because we didn’t have any price increases and slowed the growth rate on personal loans, but in the second half NIR was up over 10%, which is quite strong,” CEO Mike Brown told Bloomberg.

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SA bank fees vs other countries