South African banks to charge more for instant payments

Tuesday 11 May 2021 12:45 CET | News

South African banks have little choice but to charge extra for processing immediate electronic payments between clients of different banks, according to Business Insider.

Now, in South Africa there are two prominent types of online interbank payment systems, which can take money up to two business days to reflect in another bank account, and immediate or real-time clearing (RTC), payments, which transfer funds into any bank account within 60 seconds.

On the surface, there's very little difference in the complexity or technology required to process each type of electronic payment; however, banks claim that this is not the case. Instead, banks cite an increased risk of fraud associated with immediate payments, and in some cases legacy costs for developing the service, as the reasons that these bear a higher fee.

Quite how much more these payments should cost differs greatly, however. Some banks charge less than R10 (USD 0.71) for the privilege of immediate payment, while others still charge up to R50 (USD 4) for the same service.

According to a Capitec spokesperson, South Africa’s largest digital bank, the need to charge more arises from the increased risk of an electronic payment that clears instantly - and the inability to process these in large batches, as with regular EFTs. Capitec says it has decided to keep these fees low to reduce the risk of carrying and paying with cash, particularly when making large purchases, the online publication adds.

All in all, developments in the rapid payments system and industry-wide solutions will continuously enhance the relevance and benefits of instant payments, including cost.

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Keywords: real-time payments, banks, payments infrastructure, instant payments, money transfer
Categories: Banking & Fintech | Payments General
Countries: South Africa
This article is part of category

Banking & Fintech