More and more people are taking to services that enable them to transfer money to people who do not have a bank account.
Account-free services introduced by the big four banks – Absa, First National Bank (FNB), Nedbank and Standard Bank – over the past three years reduce the risk of theft and fraud, as well as the cost and inconvenience of handling cash.
However, for the person who sends money, these services can be far more expensive than transferring money electronically directly into a recipient’s bank account. You might be better off persuading the recipient to open a low-cost Mzansi bank account.
Mzansi accounts are available at the four major banks and have lower charges than other bank accounts. For example, at FNB an Mzansi accountholder does not pay a monthly account fee and pays a flat fee of R5 for a withdrawal.
Although fees on Mzansi accounts are lower than those on other accounts, the fees differ from bank to bank, so you should shop around for the lowest fees.
Absa recently disclosed that the total value of transactions performed via its account-free transfer service, CashSend, which it introduced three years ago, has exceeded half-a-billion rand. CashSend transactions have surged to about 100 000 a month, Absa says.
eWallet, which FNB launched in October 2009, has been used by over 600 000 people and more than R800 million has been transferred to date, FNB says. More than R2 million is transferred daily using eWallet, the bank says.
CashSend was initially aimed at entry-level clients, but it has been taken up by consumers of all income groups, Gavin Opperman, the chief executive of Absa retail bank, says. “CashSend Plus allows small businesses and corporate clients to make bulk payments to many recipients, such as casual or temporary workers,” he says.
Using a service such as CashSend means that employers do not have to keep large sums of cash on their premises, and beneficiaries can withdraw cash whenever they need it, Opperman says.
Over the past two-and-a-half years, the service has become hugely popular for urban-to-rural money transfers, he says.
Absa has also found that some of the most-used ATMs for withdrawing CashSend funds are located at tertiary institutions. This indicates that parent-to-student money transfers are also very popular, he says.
About 42 percent of CashSend money is sent from ATMs, 36 percent from cellphone banking and 23 percent from internet banking, Opperman says.
Both Nedbank and Standard Bank declined to comment on the extent to which consumers have made use of their respective M-Pesa and Send Money products, saying this information could be used by their competitors.
HOW THE ACCOUNT-LESS SERVICES WORK
Absa
You can use CashSend to send money from an ATM, or cellphone or internet banking to anyone in South Africa. The recipient does not need an ATM card or a bank account to withdraw the money.
To withdraw the cash at an Absa ATM, the recipient must enter a personal identification number (PIN) and a code, both of which the bank will SMS to his or her cellphone.
The recipient must press the “CashSend” button on the screen of an Absa ATM to withdraw the cash.
The recipient has to withdraw the full amount that he or she has been sent. For example, if you send your teenage daughter R500, she has to withdraw the full R500 and not R250.
Costs: Each CashSend transaction costs the sender R6.90 plus R1.05 per R100 transferred.
First National Bank (FNB)
FNB clients can use eWallet to send money to anyone who has a cellphone but does not have a bank account.
You can send money from an ATM, a cellphone or internet banking by selecting the “Send money” option. Enter the cellphone number of the recipient and the amount of money you want to send. The eWallet is created automatically when the sender initiates the transaction.
The recipient will receive an SMS from FNB. He or she must dial *120*277# to access his or her eWallet and must set a five-digit PIN for the eWallet. While in the eWallet, the recipient must select “Withdraw cash” and then “Get ATM PIN”.
He or she will then receive an SMS with a PIN that the recipient can use to withdraw the money at an FNB ATM by selecting “Wallet services”.
Costs: It costs R8 to send amounts up to R1 000. Recipients are allowed one free withdrawal each time they are sent money. For every additional withdrawal, they will be charged R5 per R500 withdrawn, up to R15.
Nedbank
Nedbank’s M-Pesa enables you to “convert” real money into electronic money or vice versa at any authorised M-Pesa store.
Only Vodacom subscribers can send money using M-Pesa, but you can transfer money to people who use any cellphone network.
Before you can send money, you will have to register at an M-Pesa authorised store using your cellphone and your identity document.
Once you have registered, you will receive an SMS with your start-up PIN. Dial *130*7372#, press the “Call” button to get the M-Pesa start-up screen and activate your M-Pesa account. Replace the start-up PIN with your own four-digit PIN.
You will also receive an SMS with a password, which you will need if you have to contact the M-Pesa customer care centre.
Once your account is activated, you can make a deposit into your account at any M-Pesa outlet, send money to a cellphone on any network, buy prepaid airtime for yourself and others, and withdraw money at an M-Pesa outlet or a Nedbank ATM.
Costs: You pay a flat fee of R2.45 per transaction if you send money to another M-Pesa user and R10 if you send money to someone who is not registered for M-Pesa.
Standard Bank
People who want to send money via Send Money must be registered for Standard Bank internet banking, and recipients may make withdrawals only from Spar outlets.
If you are registered, go to www.standardbank.co.za. Near the top right of the screen is a drop-down menu labelled “Internet banking”. Open the menu and go to “Send money”. On the “Send money” webpage, select “Send money now” and then click on the Spar icon.
You must enter your identity number, the recipient’s cellphone number and the amount of money you want to send.
After you press “Next” you will be told the total cost of the transaction – the amount of money you are sending plus the transaction fee.
You must then create a four-digit release code. Then click on the “Autopay” button, and enter the card number and password you use to access internet banking. Log in to internet banking, select the account from which you want to make the payment and confirm the transaction. You will receive a confirmation message on your computer that the payment has been successful. Then click on “Return to merchant”.
You must provide the recipient with the four-digit release code you created.
Standard Bank will send an SMS to the recipient advising him or her to collect the money at the “Money services” counter of the nearest participating Spar. The SMS will contain an 18-digit voucher and a four-digit release code that the recipient must use to collect the money.
Costs: Each transaction costs R9.95, regardless of how much money you send.