Why South African banks still charge for instant payments

For Cheslyn Jacobs, CEO of GoTyme Bank South Africa, the issue of instant payments is not about the technology behind it, but rather about why consumers are still being charged for moving their own money. This is a question that resonates with many South Africans who have grown accustomed to the convenience of instant bank transfers, but are still paying hefty fees for the privilege. As the country's digital banking landscape continues to evolve, the debate over instant payment fees has become a pressing concern for consumers and banks alike.

The launch of PayShap, South Africa's real-time payment system, three years ago marked a significant shift in the country's banking sector. With instant payments now widely available, banks are increasingly competing on price and customer experience. While every major bank now supports real-time payments, customers pay very different fees depending on their bank, raising questions about whether those charges are still justified. According to publicly available pricing, GoTyme Bank offers PayShap transfers free across all supported transaction values, while other banks charge between R1 ($0.061) and R10 ($0.61).

Banks maintain that instant payments carry real costs, including investment in payment infrastructure, fraud prevention, cybersecurity, compliance, and settlement systems. Transaction fees, they argue, help recover part of those costs while contributing to non-interest income. However, this narrative may be more complex than it seems. GoTyme's Jacobs suggests that as technology evolves and payment infrastructure matures, customers should not have to think twice about moving their own money because of transaction fees., can banks truly justify the costs of instant payments, or are they simply passing on the costs to consumers?

GoTyme's decision to offer free PayShap transfers reflects a broader philosophy of making banking simpler, more rewarding, and more accessible. For Jacobs, this is not just about offering a premium service, but about delivering a modern banking experience that puts customers first. While this approach may be innovative, it also raises questions about the sustainability of such a model. Can GoTyme's business model support the costs of free instant payments, or will it have to compromise on other areas, such as interest rates or customer service?

The debate over instant payment fees is not unique to South Africa. Brazil's Pix, launched in 2020, became the country's dominant payment method by allowing consumers to send money instantly at little or no cost. Similarly, India's Unifi Pay has also disrupted the traditional banking landscape by offering free instant payments. These examples suggest that South African banks may need to rethink their pricing strategies and consider offering free instant payments to stay competitive.

As the banking landscape continues to evolve, I predict that instant payment fees will become a thing of the past. With the rise of digital banking and the increasing demand for convenience, banks will be forced to adapt and offer free instant payments to stay ahead of the competition. While this may be a challenging shift for banks, it will ultimately benefit consumers and cement South Africa's position as a leader in digital banking innovation.