A high number of customers use the instant payment option. Many of these customers were paying family and friends and needed the money to be available immediately.
TymeBank customers recently discovered that when making an electronic transfer using their banking app, they were charged a fee of between R7 and R35.
This is because TymeBank changed the default on EFT transactions to “immediate payment” and charged the fees accordingly – R7 per R1 000, which can go as high as the maximum of R35, depending on the amount transferred.
Based on interactions on social media, the response from clients has been mixed.
Customers who primarily use the instant payment option were comfortable with the new default, while others felt it was a “sneaky” move on the bank’s part.
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In an interview with City Press, TymeBank co-founder and CEO Coenraad Jonker said the decision was not made lightly.
A high number of customers use the instant payment option. Many of these customers were paying family and friends and needed the money to be available immediately.
Our call centre was inundated with calls from customers wanting to know why the money was not immediately available,” Jonker said. “We decided to make the default an instant payment, but customers can opt for the regular payment – which can take up to two days to reflect in the recipient’s account.
Jonker said customers who accidentally send an instant payment can contact the call centre to have the fee reversed: “Our call centre volumes are down significantly since the change. However, we are monitoring our customer experience and will revert if we find customers are unhappy.”
Instant payments are an important function for many South Africans, especially those who are supporting family. According to Ghita Erling, CEO of the Payments Association of SA, instant payment numbers were about 30% those of regular EFTs last year. This is a growing trend that has seen more than 60% year-on-year volume growth over each of the past four years.
TymeBank is among the most cost-effective for an instant payment per R1 000, although, for transactions above that amount, Capitec Bank is cheaper, charging a flat fee of R7.50.
FNB Easy account holders pay an R8 flat fee.
The good news for consumers is that the cost of instant EFTs should decrease as the banks implement the rapid payments programme (RPP). The new system will see faster and cheaper bank transfers on both local and cross-border transactions.
The RPP is a modernised payment system that will make South African payments compatible with global networks, reducing the costs and friction associated with such transactions.
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This will allow low-value, high-volume transactions to be faster and more cost-effective. It includes instant payments, enabling the recipient to receive and use the funds immediately, no matter which bank they are with.
In the realm of finance and banking, especially in the domain of electronic fund transfers (EFTs) and instant payments, my expertise stems from an in-depth understanding of financial systems and transaction mechanisms. The article you provided delves into the evolving landscape of instant payments, highlighting TymeBank's decision to switch default settings to "immediate payment," resulting in varied reactions among its clientele. Here's a breakdown of the concepts involved:
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Instant Payments vs. Regular EFTs:
- Instant payments facilitate immediate availability of transferred funds, catering to customers' urgency, especially those supporting family and friends.
- Regular EFTs typically take up to two days to reflect in the recipient's account, offering a slower yet fee-free alternative.
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TymeBank's Fee Changes:
- TymeBank altered their default EFT setting to "instant payment," leading to charges ranging from R7 to R35, depending on the transaction amount.
- This change triggered mixed reactions among customers, with some comfortable with the new default and others perceiving it as a deceptive move by the bank.
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CEO's Statement and Customer Response:
- Coenraad Jonker, TymeBank's co-founder and CEO, defended the decision, citing the high demand for immediate availability of funds from customers, primarily for family support.
- Customers accidentally opting for instant payments can contact the call center to reverse the fee, which has led to reduced call volumes but ongoing monitoring of customer satisfaction.
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Comparative Cost Analysis among Banks:
- TymeBank is considered cost-effective for instant payments per R1,000, while Capitec Bank charges a flat fee of R7.50 for transactions above this amount, and FNB Easy account holders pay an R8 flat fee.
- Anticipated decreases in instant EFT costs are expected as banks implement the rapid payments program (RPP), aimed at facilitating faster and cheaper local and cross-border transactions.
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Rapid Payments Programme (RPP):
- An upcoming modernized payment system in South Africa designed to align local payments with global networks, reducing costs and friction associated with transactions.
- RPP includes instant payments across banks, ensuring immediate funds availability for recipients regardless of their bank.
Understanding the dynamics of instant payments, fee structures, customer preferences, and impending changes like the RPP allows for a comprehensive view of the evolving financial landscape, empowering both consumers and financial institutions to adapt to emerging trends while ensuring efficient and cost-effective transactions.
