The Shoprite Group, the country’s largest retailer has launched a basic transactional bank account which can be linked to its Xtra Savings rewards cards. With more than 20 million of these in issue across the Checkers and Shoprite brands, customers need only register for the Money Market Account to enable banking on their existing cards.
The Money Market Account, which was launched in August last year, has over 530 000 customers, which the group says indicates that “customers see its value”.
Access to the basic, no-frills account is via the group’s mobile channels (via the Shoprite app, USSD or WhatsApp).
Prior to last month, the account only enabled customers to deposit funds to buy groceries and pay utility bills.
Now, through a partnership with Grindrod Bank, customers are able to send money to others and withdraw cash at the retailer’s stores.
Registering for an account is simple: an SA ID or passport and cellphone number is all that is required.
This account is effectively operating on a regulatory framework designed for ‘wallets’.
This has less stringent requirements when it comes to the Financial Intelligence Centre Act (Fica) – the Money Market Account does not require Fica registration.
There are however limits in place to prevent these kinds of accounts being used for money laundering: account balances cannot exceed R25 000 at any time and there is a daily limit of R5 000 each for cash withdrawals, cash deposits and transfers.
FNB has used a similar approach to enhance its eWallet proposition, extending it to the Easy Zero account (which basically operates on the eWallet platform, but also comes with a card).These limited accounts have one key difference from a normal bank account – they are linked directly to the account holder’s cellphone number.
This means they do not interact with the national payments system, so do not offer debit orders or electronic funds transfer (EFT) functionality.
Shoprite positions this as a positive on the account website, saying: “Your money is your money … no debit orders or deductions.”
The group has a hard-hitting launch offer which gives customers R10 back for every R100 they spend in-store.
The single fee
The account has only a single fee: R5 for withdrawing cash at the retailer’s till points. This is smart as it disincentivises withdrawals, keeping more cash in its account ecosystem (and available to spend in-store).
Best of both
The group added the linked card functionality following feedback from customers. It says “customers like transacting with their phones, but also with a card, and some raised concerns about how to access their Money Market Account if their phone battery went dead or they forgot their phones”.
Adding this functionality to the accounts has the potential to meaningfully disrupt the market, particularly at the lower end. It could see economically-active customers who currently rely on normal basic bank accounts (like Capitec, new entrants and those from larger rivals) shift some of their purchasing activity onto this account.
Simple transactions like airtime purchases often attract a fee (50c or R1) on many of the ‘normal’ bank accounts. Shifting those transactions to the Money Market Account will have a material impact for lower-income earners.