The new cheque deposit fee for business accounts at Standard Bank

[Troll]

Standard Bank has introduced a new fee for business current accounts - a cheque deposit fee - effective from 1st January 2011.

I visited my business banker at Standard Bank yesterday and raised the topic of this new fee for cheque deposits into business accounts (and I stress "new"). It was a fairly revealing discussion.

Apparently the managers were gathered together in meetings and informed of this new fee last year. He says when the announcement was made that they were introducing this fee, the room went very quiet. They're aware that it could be trouble.

It also seems Standard Bank is pretty keen to keep the introduction of this new fee as low-profile as possible, which I guess explains why I didn't get the usual annual notification of fee changes with my bank statements as has happened in the past. When I raised the lack of notice, he said they didn't really want to draw attention to the new fee. Apparently we should all be aware that there is an annual increase in fees anyway and Standard Bank believes that publishing the new rates card on their website is enough notice.

I'm sure all tree huggers are delighted, but I suggested that the banking ombudsman might not be quite as satisfied with their approach.

We tossed a few other points around - the cost of processing cheques, security and risk issues... basicly a debate around "justification" for the new charge.

The bottom line is banks would like to see the end of cheques. I agree. They're way too much trouble. Let's get rid of them, but this is not the way to do it.

The extra financial costs of paying by cheque is doing a pretty good job of thinning out cheque usage already. It's only a matter of time before they become scarce enough to simply discontinue as a method of payment.

My parting shot was that I've been a good client of Standard Bank for a long time. The staff are pleasant to deal with and overall the bank has been reliable and trustworthy. When it comes to costs, none of the big 4 really stand out as being much different from the others overall anyway. I have never really seen a good reason to look elsewhere - until now.

I view this sneaky approach as a serious breach of trust and it brings a significant new cost into the mix - at least for me. I still like the frontline people, but I don't trust the attitude of top management anymore. They have become way to arrogant.

Anyway, I don't think businesses should just let the matter lie. Standard Bank is trying to sneak this through and are hoping the other banks will follow.

For those of us banking with Standard Bank, I have a couple of suggestions.

First - go into the bank, see your business manager and let him or her know you strongly object to them introducing this new fee - at all, let alone without proper notice.

Bodies count, people.
Don't leave it to someone else.
Don't leave it to a business body to voice your displeasure for you.
Don't wait.
Queues of people wanting to see their manager and tying up just 15 minutes of his/her time each will not go unnnoticed.

The managers are wondering what might happen. I suggest the sooner they find out, the better.

I also suggest it isn't just Standard Bank clients that are on the line here. If the business world just rolls over and plays dead, I (and I suspect my business manager at Standard Bank) am pretty confident the other big banks will introduce this charge too.

And if that isn't incentive enough for you, my business manager refunded the cheque deposit fees charged to my account so far. Any future ones I'm expected to live with, but I did get something back. If you don't try, you don't get.

Second, I suggest you take a close look at options. At R12.50 per cheque, it doesn't take many cheques to add up to more than minimum charge for a business account elsewhere. Moving a business account is not easy, but if Standard Bank does not drop this charge, I'm opening an account specifically for cheque deposits elsewhere. I'll transfer the money to my Standard account in lump sums - if I need too.

And all my new business will be going elsewhere too. Who knows - if they treat me nicely, they might end up with all my business in the end.

Finally - for any banking types reading this - I face one final dilemma - which bank to choose.

Here's my offer -

The first bank to run an advert in mainstream media that they do not charge their business account holders for cheque deposits gets my business.

I don't know how far this message will reach. You don't know how much that advert might be worth.

Standard Bank wants to play dice? Let's play dice, gentlemen.

[Dave A]

It also seems Standard Bank is pretty keen to keep the introduction of this new fee as low-profile as possible, which I guess explains why I didn't get the usual annual notification of fee changes with my bank statements as has happened in the past.

I've checked - I didn't get the usual annual notice with my bank statements either.

And if that isn't incentive enough for you, my business manager refunded the cheque deposit fees charged to my account so far. Any future ones I'm expected to live with, but I did get something back. If you don't try, you don't get.

I've just got back from bitching to my manager about this new fee. I didn't even have to ask for a refund. He offered it. Very similar drill though - does not apply to future deposits - it's just his way of saying sorry.

I'm opening an account specifically for cheque deposits elsewhere.

I thought of doing just that, but I have a problem. Most of my clients pay directly into my bank account and I have no control over how they are paying.

The whole pricing system has been geared towards encouraging EFTs. It's great - the best way to get paid. No bounced cheques, lowest costs, the funds are cleared immediately - everyone's a winner. But the best way to make it easy for my clients is to make sure my company bank account details are printed on every invoice. Most invoices I receive do much the same.

Even if I add something along the lines of "If paying by cheque, please call me first" it's going to take some time to have any affect. And I'm not convinced it's the sort of message we should be sending out anyway. Overall it could have a negative impact on payments.

And all my new business will be going elsewhere too.

That's pretty much what I'm thinking at the moment. It won't be much use though if all the other banks start charging this fee too.

[Chrisjan B]

Sneaky bastards!

I had something similar a few years ago on my ABSA credit card - a new monthly fee that started at R 8-00 per month and now up to R 12-00 a month. Also there were no cash deposit fee for credit cards - I use to pay in my cash into my credit card and transfer it in bulk to my cheque account for debit orders and electronic payments.

With ABSA there were no fee increase last year, but hey sneak in these type of charges - the give here but take it back in double some other place.

As I have said in a previous post - a licence to steal...

[Justloadit]

I wanna be a bank, I wanna be a bank, oh can I?

I am working on something, when its ready I will communicate.

[Dave A]

I don't know how far this message will reach.

6 hours later... let's see



Seems the onsite SEO is still working well after the upgrade

The bad news is I don't see any mention of this new fee anywhere else

EDIT: OMG - no.1 for "business account cheque deposit fee"

EDIT EDIT: Actually that shouldn't be a surprise. I've done quite a few searches now.

It looks like Standard Bank may have achieved a global first - Could Standard Bank be the first bank in the world to charge business account holders a fee for depositing cheques?

[BusFact]

This one irritates me too. Glad to see I'm not alone.

It is of little use to penalise me with fees when I have limited control over how I get paid. The writer of the cheque already gets whacked with fees. All it does is create more aggravation with the bank system.

They have essentially made their problem ours. They want to eliminate cheques. So instead of saying: by such and such date, we will no longer be processing any cheques .... they rather make it our job to individually contact customers to discourage them from cheque payments. We become the bad guys instead of the banks.

If they don't want to trade in them then don't.

On a side note: It is a good idea to have two bank accounts with different banks anyway. Its useful to be able to play them off against each other and will allow your business to continue if something goes wrong with the other. For eg: relationship sours or even a short term issue such as internet banking down.

[Dave A]

After sleeping on it...

I suggest this represents a quantum leap in attitude by Standard Bank. It's time to draw a line in the sand, really.

If it's a case of they want to get rid of cheques, then this is effectively a penalty fee for receiving cheques. That's as valid an argument as saying invisible policing stops reckless driving.

My manager mentioned nothing about banks wanting to get rid of cheques, although he did say they considered them an insecure method of payment. He says this new fee is as a result of the costs associated with processing a cheque.
Really?

Have costs really climbed so much more than the service fee increases on cheques, they need an additional levy to cover the gap?
Or perhaps they're trying to shift the cost burden across payer and payee, in which case we could expect a reduction in cheque service fees?

If either of these possible reasons were actually true, why the big sneak approach? Why the lack of notice?

Just what is the bank's view of business account holders? A captive cash cow or a valued client that should be treated with some measure of respect?

Even if there's a processing cost issue at stake here, I'm reminded of the Raymond Ackerman quote about loss leaders "An island of loss in a sea of profits." The banking industry must surely be aware of the compound effect of having a business account on their books. Most of my employees bank with Standard because I bank with Standard. Their income gets into their bank account that much faster, and many of them seem to care about that.

Then there's additional services - asset finance, possibly insurance products...

Here's my closing thought on this from me, at least for today.

Even if the other banks follow Standard's lead and this becomes yet another unavoidable cost of banking for the business community in this country, there is one thing that won't go away:

Standard Bank will always have been the first.
They started it, and that's going to sit in the memory banks.

[Justloadit]

I think that cheques will always remain as a form of payment. I look at the trusts which that I am involved in, payment requires two signatures. Whilst this can be done with internet payment, and if you are with Stranded, a dedicated PC with it's own ADSL line, Stranded bank loaded software, which can only be done by Stranded bank, and then set up that one person can setup the payment, and two people can authorize the payment.

Now I am not sure if the authorization can be done on any internet connection, but I do not think so because the business internet package has to be installed by Stranded, means that the authorization has to be done on the local PC.

The inconvenience of authorizing payment then is a major factor. In my case there are maybe 3 or 4 payments a month, so the inconvenience of the Stranded bank is paramount. With a cheque, a driver simply comes past my office and I sign. Yes the cost of the driver is a factor, but it is at my convenience though, and is cheaper than me physically driving over to the PC location and getting onto the internet to authorize payment.

I am sure they did consider this, and probably thought of another way to bring in cash.

[Troll]

Standard Bank will always have been the first.
They started it, and that's going to sit in the memory banks.

That is not going to be worth much if no-one notices.

I am surprised business and financial journalists in mainstream media haven't picked up on this. I haven't seen a single report or comment.

I would have thought it is newsworthy and there isn't much else happening.

[AndyD]

It's not going to be worth much till there's a bank that thinks differently. At the moment you can choose between Kermit, Fozzie and Gonzo, it might look like there's differences at a distance but they're all Muppets when it comes down to it. *definately no smiley*

[Troll]

When I checked this thread this morning I noticed this.



That might not be exactly what I wanted, but I am going to pay them a visit on Monday anyway.

[Dave A]

Considering the top keywords and phrases in this thread so far, that is really interesting.

[Troll]

I have done a cost comparison on FNB vs Standard for our accounts. It turns out in our case the service fee costs at FNB will be nearly half our service fee costs at Standard Bank - and that's without factoring in this new cheque deposit fee.

The down side of an FNB account is you are charged a R41.00 per month service fee just for having the account. Standard Bank has a minimum charge, but it doesn't take much activity to reach that fee so effectively there is no base cost.

Where FNB really starts gaining ground is the way they charge EFTs. It's a flat rate of R7.20 per transaction whereas Standard Bank charges R4.70 + 0.73% with a maximum charge of R18.30. So on an EFT payment of just R1000.00 the fee at FNB is R7.20 and at Standard it's R12.00
The break-even point is a payment of R342.47.

With debit card purchases, FNB charges a flat rate of R2.75 and Standard charges R4.15 + 0.67% with a maximum charge of R16.50.

This has become a very easy decision to make. We're moving.

Thanks Standard Bank for ticking me off with your new fee. You have just saved my companies a lot of money in bank charges.

[Dave A]

Come on - there has to be a catch.

If Standard Bank is pleading poverty and has to invent new charges to cope, how the heck does FNB get the same job done so much cheaper?

[SilverNodashi]

As matter of interest, can one pass those cheque processing fees directly to the client? I.e. can I force them to pay for it, if they insist on paying by cheque?