Shoprite tackles TymeBank, Capitec head on with no-fee full bank account

TymeBank and Capitec, look out … Shoprite, the country’s largest retailer, is now competing head on. Its Money Market Account is now a fully-fledged bank account and can receive payments from any bank in South Africa.

This means account holders can now have their salary or social grant paid into this account. It is offering a R100 grocery voucher as an incentive for customers to switch their salary or grant (of more than R800) to be paid into their ‘Shoprite bank account’.

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Shoprite says this is the first fully-fledged transactional bank account to be offered by a retailer in the country. It also says the account is the “lowest cost entry-level bank account on the market”. The account has a single fee: R5 for a cash withdrawal at Shoprite/Checkers/U-Save tills.

There is no monthly account fee and depositing cash, sending money, buying airtime and bill payments are free. This is shrewd as it discourages the withdrawal of cash, enabling funds to stay within its ecosystem (and available for purchases at its stores). No interest is paid on balances.

Money transfers can only be accessed by those who have a Money Market Account. Those who don’t yet have an account will have to register an account before they can access their money.

This is similar to how FNB’s eWallet service and other wallet products work. The account works on a regulatory framework designed for wallets, and there is a limit on balances of R25 000.

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The retailer is targeting the lower-income segment of the market – those who earn R10 000 or less per month. This is a market that is highly sensitive to fees. Access to the basic account is via the group’s mobile channels (via the Shoprite app, USSD or WhatsApp).

Until a week ago, the Money Market Account did not interact with the national payments system so could not offer electronic funds transfer (EFT) or debit order functionality. It is telling that the retailer has elected to enable EFTs and not debit orders. In fact, it is using the fact that the account does not allow debit orders as a selling point for the account.

The account uses Grindrod Bank’s licence and technology. Grindrod received the necessary regulatory clearances from the Reserve Bank.

Jean Olivier, general manager: Financial Services for the Shoprite Group says “the development and rollout of the account has been driven entirely by customer needs. They wanted a straightforward account which allows them to be in full control of their money and does not surprise them with any hidden fees.”

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The retailer has steadily added functionality to the account since its launch in 2020. In November last year, it quietly launched the ability to link the account to its Xtra Savings rewards cards. With over 20 million of these cards in issue at both Shoprite and Checkers, this provides the retailer with a substantial base from which to grow the number of active account holders.

In November, Shoprite said the account had more than 530 000 customers. Today, this number has swelled to “almost two million”. The group has not disclosed how many of these are active.

This makes the size of the group’s banking customer base significant when compared to rivals. TymeBank had 4.2 million customers as at December 31, with 1.2 million of those active accounts. TymeBank launched in 2019. As at the end of February, Capitec had 18.1 million active clients.