The debate about South Africa’s high bank charges so far has been characterised by the following:
Consistent conspiracy theories that the banks have for years colluded over pricing. Nearly every South African consumer seems to know someone who knew someone who once worked at one of the banks and regularly attended meetings between officials from different banks where price levels were agreed.
A strange lack of serious research into the issue of bank charges. As far as could be established, none of South Africa’s more than twenty universities have ever properly researched the issue. This is an indictment against tax-subsidised research institutions, and suggests that South African consumers are not getting their money’s worth from their universities. Accusations against our banks for: being almost the only ones in the world who charge a fee for deposits; for charging absurdly high fees for nearly all services; and for hiding their real charges in a confusing mix of options, sliding scales and ostensibly negotiable fees.
The banks’ argument that:
South Africans are actually paying for state-of-the-art ATM (automatic teller machine) and computer technology, invested into a market with relatively few consumers;
it is unfair to compare bank charges in developing countries with those of developed countries;
and high crime levels make the handling of cash very expensive.
The closest that anyone has come to seriously researching bank charges was a project by a small, independent newspaper for business owners called BigNews, based in Cape Town. The story of our efforts is quite enlightening. Even though we looked only at bank charges for business owners, one can safely assume that the same broad pattern applies to the ordinary consumer.
The newspaper’s interest was sparked by an informal report sent out by an official of the Micro Finance Regulatory Authority, Rashid Ahmed. He had visited New Zealand, and was struck by the fact that banks there charged virtually no service fees; their pricing structures were also very simple and easy to understand.