South African banks have to charge a fee for instant electronic fund transfers (EFTs) because these carry a greater risk of fraud and additional operational requirements, major banks have told MyBroadband.
Banking has seen numerous innovations over the last few years, including digital solutions that enable smaller branch footprints, enhanced security, and sign-ups via online platforms.
These factors have helped bring the entry-level cost of a banking account and reduced transaction fees. One area where things have seemingly stagnated is with EFTs, where it can still take days to process a payment between different banks, and you have to pay extra if you want things to go quickly.
Typical EFTs can take up to two days to reflect in the recipient’s bank account. In a world where consumers and businesses demand quicker turnaround times for services, this is not ideal.
Real-time clearing (RTC) payments, or Instant EFTs, let you pay near-instantly, with the recipient bank needing to acknowledge a transaction within 60 seconds. Making an Instant EFT between different banks could cost you as much as R50 unless you use a high-end premium account with an expensive monthly fee.
MyBroadband asked the country’s major banks why this fee was still necessary when many other transaction fees have either been reduced or scrapped.
Absa Retail and Business Bank Managing Executive for Everyday Banking, Cowyk Fox, explained that RTC fees covered the costs of inter-bank clearing and additional fraud measures. The source bank pays an interchange fee to the receiving bank to help cover the costs of instantly clearing the payment.
“In other words, a fee is levied for the benefit of immediacy and because a real-time payment attracts a different risk profile when compared to a normal EFT payment,” Fox said.
He said that only in exceptional circumstances would RTC payments not clear immediately and be subjected to a two-hour hold due to the payment being flagged as high risk. However, FNB’s EFT Product House CEO, Ravi Shunmugam, said the bank was concerned over the operational stability and interbank sustainability of RTC.
Shunmugam believes there were more modern real-time payment solutions to consider, such as CCPI and Rapid Payments.
Given all the real-time options available to FNB customers, RTC constitutes a small portion of real-time options available to FNB Customers in these market segments,” Shunmugam said. If you cannot afford or don’t want to pay the instant EFT fee, you can minimise the wait time for a payment to be processed to another bank account by making the payment early in the day.
Most banks process the payment by the next business day if it is made before 15:00 or 16:00. The table below shows the pricing of Instant EFTs (RTC) payments from South Africa’s major banks.
|Bank||Payment amount or account type||Cost|
|Absa||Up to R1,000||R10|
|Capitec Bank||Up to R100,000||R7.50|
|Platinum, Gold, PAYT||R10|
|FNB||FNB Easy Zero and Easy PayU||R8|
|Nedbank||Up to R2,000||R10|
|Standard Bank||Under R3,000||R10|
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