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Standard Bank has got pretty creative as to when they charge a foreign draft fee. I know times are hard, but do banks really need to get this innovative?
As a Google Adsense publisher, I happen to get a cheque from Google every now and then. Google goes to some trouble to make sure I get as many Rands and as little grief as possible. And up until recently things have gone fairly well.
Google converts the USD value to Rands (at a far more favourable rate than my bank ever will), and sends a cheque for me to deposit which looks something like this:
(I took the liberty of blackening out the account number and signature just in case it proved useful to the wrong type of people, but otherwise that's it)
Now I will concede this does not look exactly like a typical South African cheque, but it meets all the requirements to be processed through the South African cheque clearing system without any fuss. The key features are:
Every now and then I would have to remind Standard Bank of these features as the teller tried to steer me to the forex counter, but up until now sanity has prevailed.
Unfortunately, no more. With my June deposit I got charged a foreign draft fee of R155.00. Me being me, I had to ask why. And so the real story begins...
Round 1 - at the forex counter.
I ask for the definition of a foreign draft and battle commences.
Apparently this is something to do with a cheque or other financial instrument, even if it is in Rands, that cannot be processed through the local cheque clearance system. I point out that this cheque can be processed through the local system and could I please have a copy of that notice.
Unfortunately, this being confidential internal bank correspondence I may not be provided a copy of this definition, but I am told they will draft a letter explaining why the fee was raised.
Round 2 - with my bank manager.
After waiting a couple of weeks and no sign of this letter, I took this up with my bank manager, who promptly marches me down to Forex. The letter was indeed sent, but unfortunately to a mis-spelt email address. I can only guess undeliverable email error messages disappear into the digital abyss at Standard Bank.
However, I'm given the printed original copy, and the message is this:
Battle begins once again as I question how they know it's a nonresident Rand account and what difference does that make to them anyway - surely all this complicated conversion stuff is Citibank N.A.'s problem? All Standard Bank has to do is present the cheque for payment just like any other cheque. I suggest this is just another form of xenophobia.
I get long stories about copious forms and the complexities of foreign exchange which are far beyond my understanding and (the coup de grĂ¢ce), they really need to check through my account and raise this fee on all the deposits they have missed so far.
We all wander off in different directions licking our wounds.
Round 3 - the next cheque.
Now I'm faced with the problem of depositing my next Google cheque. So I decide to test Standard Bank's position on this one more time. I'm obviously a sucker for punishment. Happily Ms. BDC Team Leader isn't there so I have to deal with someone else. Maybe this time I stand a chance!
Battle duly follows.
I am informed that they used to accept cheques like these for normal processing, but for some time now Standard Bank policy is that anything remotely foreign attracts the foreign draft fee treatment.
Even more fortunate, my new sparring partner is obliging enough to acknowledge that I might have a point, and refers my query to a higher level of forex management to make absolutely sure. She sends off a copy of my cheque together with my contact details and I am assured a Ms S.B. from forex management will give me a call later in the day.
SIDENOTE: SB has just got to be the best initials ever if you work for Standard Bank.
Round 4 - Ms S B calls
And battle is resumed.
Ms S B proves to be a mine of useful information. During the course of the next twenty minutes I learn that:
When I told Ms S B that I felt duty bound to inform the general South African public about the details of Standard Bank's foreign draft fee policy, (my exact phrase was "I'd like to ensure this fee gets the publicity it deserves"), I was asked to hold on until the following day before doing that so that she could confirm, but I was welcome to check with Citibank in the meantime.
Given that what she told me contradicted virtually every point of the letter from Ms BDC Team Leader, getting some other opinions seemed like a very good idea. And after all, it is a Citibank N.A. cheque, so that should be a good place to start getting more information.
Citibank's opinion.
I called Citibank (which has quite an efficient call centre BTW) and yes, they are aware of the ZAR Google cheques. They are under the impression that the cheque will clear through the local interbank cheque clearing system without any problems as it happens this way all the time.
(I've got the reference number for the call if anyone feels the need to confirm.)
But why stop there? We have other banks in South Africa too!
Another three opinions.
Armed with my Google cheque I go visiting ABSA Bank, First National Bank and Nedbank to see if they would charge a foreign draft fee should I choose to deposit my cheque there and if the cheque posed any particular problems to process. The result of this survery revealed:
In the opinion of all three banks, this was a cheque to be treated just the same as any other regular "South African" cheque. It is a custom cheque, but there would be no deposit fee of any kind.
(I've got the names and branch details of each if anyone feels the need to confirm.)
If there was any difference worth reporting between the three, I'd say that the ABSA lady was the most charming, the First National Bank lady was the most professional, and the Nedbank lady was the most surprised.
As a fan of smaller and emerging businesses, may I quickly say to all the other banks out there, please forgive me for not visiting - but by now a clear pattern was emerging and you really need to get some branches in my area.
Last round.
I got that confirmation call from Ms S B. She confirmed with me that I had been given a written explanation already (that would be the letter she obviously hasn't read with all the stuff she contradicted earlier) and duly informed me that this letter can be relied on as Standard Bank's official position and that is the end of the matter.
What can I say? I know when I'm beaten. If the staff don't have a clear idea of why they are doing what they are doing, what are the prospects of them explaining it to me?
They win. It' not worth pursuing further. Policy has been set and we all must live with it.
I may be too thick to understand why Standard Bank feels compelled to raise this deposit fee on this cheque, but I do know that any company is perfectly entitled to set up their own policies, charge what the heck they like and define things on their own terms.
Customers can take it as presented or go elsewhere. As consumers, all we need to know is the effects of the choices before us so that we can make reasonably informed decisions.
It's the very foundation of healthy competition and I'm delighted to see it thriving in the banking sector.
What I have learnt.
Four things come to mind:
1. The answer you get isn't always going to be the answer you are looking for.
2. Corporates are possibly worse at communicating within themselves than they are at communicating with their customers.
3. It's obviously not very smart to deposit foreign looking cheques at Standard Bank even if they are drawn against a local bank. The bill that goes with it is entirely avoidable and personally I will be depositing these cheques elsewhere in future.
4. This risk of avoidable deposit fees may extend to cheques from Nonresident Rand accounts - which I must warn could be near impossible to detect in advance. My sister-in-law is a non-resident who has thoughtlessly been issued with a standard South African looking cheque book by one of our local banks. And honestly, looking at her cheques, you'd never know!
Help spread the word.
All that remains is to give this foreign draft fee policy the publicity it deserves so that other ordinary SA citizens can make informed choices. I don't think Standard Bank has done a particularly good job on this one. And the problem is as a result I'm struggling to grasp the dividing line myself.
So, the only way I could think of warning everyone else was to tell my story. What you do with it now is up to you.
R155.00 is not that big a deal in my life anymore (although the fact that it makes up 12.3% of the cheque does irk somewhat). Personally I find blind stupidity far more significant.
But there are lots of young webmasters and bloggers out there who are going to be pretty damn upset when they lose R155.00 on their first Adsense cheque one day. And it is entirely avoidadable.
Hopefully they'll read this before they go deposit their cheque.
As a Google Adsense publisher, I happen to get a cheque from Google every now and then. Google goes to some trouble to make sure I get as many Rands and as little grief as possible. And up until recently things have gone fairly well.
Google converts the USD value to Rands (at a far more favourable rate than my bank ever will), and sends a cheque for me to deposit which looks something like this:
(I took the liberty of blackening out the account number and signature just in case it proved useful to the wrong type of people, but otherwise that's it)
Now I will concede this does not look exactly like a typical South African cheque, but it meets all the requirements to be processed through the South African cheque clearing system without any fuss. The key features are:
- it is drawn in Rands (ZAR)
- it is drawn against the Citibank Europe PLC account held at Citibank N.A. Johannesburg
- it has the correct data bar info at the bottom for the local (South African) interbank cheque processing system.
- Citibank N.A. is duly registered and set up to do business locally just as is required of any other bank operating in South Africa.
Every now and then I would have to remind Standard Bank of these features as the teller tried to steer me to the forex counter, but up until now sanity has prevailed.
Unfortunately, no more. With my June deposit I got charged a foreign draft fee of R155.00. Me being me, I had to ask why. And so the real story begins...
Round 1 - at the forex counter.
I ask for the definition of a foreign draft and battle commences.
Apparently this is something to do with a cheque or other financial instrument, even if it is in Rands, that cannot be processed through the local cheque clearance system. I point out that this cheque can be processed through the local system and could I please have a copy of that notice.
Unfortunately, this being confidential internal bank correspondence I may not be provided a copy of this definition, but I am told they will draft a letter explaining why the fee was raised.
Round 2 - with my bank manager.
After waiting a couple of weeks and no sign of this letter, I took this up with my bank manager, who promptly marches me down to Forex. The letter was indeed sent, but unfortunately to a mis-spelt email address. I can only guess undeliverable email error messages disappear into the digital abyss at Standard Bank.
However, I'm given the printed original copy, and the message is this:
Subject: Purchase of Rand Draft.
Dear Mr Alcock
Please be advised that Rand drafts are foreign cheques drawn in our local currency, drawn by a foreign bank. The foreign bank credits Citibank who converts the currency and credit their Nonresident Rand account held in the books of Citibank Johannesburg.
Although the draft is in Rand it attracts a fee of 0.60% with a minimum of R155.00 per cheque.
We hope we have been of assistance in clarifying our charges as per our Standard Bank tariff.
Yours faithfully
*name withheld*
BDC Team Leader
Dear Mr Alcock
Please be advised that Rand drafts are foreign cheques drawn in our local currency, drawn by a foreign bank. The foreign bank credits Citibank who converts the currency and credit their Nonresident Rand account held in the books of Citibank Johannesburg.
Although the draft is in Rand it attracts a fee of 0.60% with a minimum of R155.00 per cheque.
We hope we have been of assistance in clarifying our charges as per our Standard Bank tariff.
Yours faithfully
*name withheld*
BDC Team Leader
I get long stories about copious forms and the complexities of foreign exchange which are far beyond my understanding and (the coup de grĂ¢ce), they really need to check through my account and raise this fee on all the deposits they have missed so far.
We all wander off in different directions licking our wounds.
Round 3 - the next cheque.
Now I'm faced with the problem of depositing my next Google cheque. So I decide to test Standard Bank's position on this one more time. I'm obviously a sucker for punishment. Happily Ms. BDC Team Leader isn't there so I have to deal with someone else. Maybe this time I stand a chance!
Battle duly follows.
I am informed that they used to accept cheques like these for normal processing, but for some time now Standard Bank policy is that anything remotely foreign attracts the foreign draft fee treatment.
Even more fortunate, my new sparring partner is obliging enough to acknowledge that I might have a point, and refers my query to a higher level of forex management to make absolutely sure. She sends off a copy of my cheque together with my contact details and I am assured a Ms S.B. from forex management will give me a call later in the day.
SIDENOTE: SB has just got to be the best initials ever if you work for Standard Bank.
Round 4 - Ms S B calls
And battle is resumed.
Ms S B proves to be a mine of useful information. During the course of the next twenty minutes I learn that:
- I was actually charged a Rand draft fee, not a foreign draft fee, but they're both the same amount so no harm done.
- The new policy on ZAR cheques from foreign companies and banks (even if the account is held at a local bank) was implemented from January this year and I (along with all other Standard Bank clients) should have been charged this fee since then for all our Rand draft deposits.
- Ms S B is as surprised as I am at the inconsistent treatment of my deposits.
- The fee is raised because the cheque has to be processed through the international SWIFT system and not through the local South African interbank cheque clearing system.
- My "cheque" is not actually a cheque; it's a draft from a foreign bank.
- Nonresident Rand accounts held at local banks have nothing to do with the foreign draft fee charge. (Actually she seemed unaware there was such a thing as a Nonresident Rand account).
- The fee is justified because of the extra work involved processing my Rand draft through the SWIFT system.
When I told Ms S B that I felt duty bound to inform the general South African public about the details of Standard Bank's foreign draft fee policy, (my exact phrase was "I'd like to ensure this fee gets the publicity it deserves"), I was asked to hold on until the following day before doing that so that she could confirm, but I was welcome to check with Citibank in the meantime.
Given that what she told me contradicted virtually every point of the letter from Ms BDC Team Leader, getting some other opinions seemed like a very good idea. And after all, it is a Citibank N.A. cheque, so that should be a good place to start getting more information.
Citibank's opinion.
I called Citibank (which has quite an efficient call centre BTW) and yes, they are aware of the ZAR Google cheques. They are under the impression that the cheque will clear through the local interbank cheque clearing system without any problems as it happens this way all the time.
(I've got the reference number for the call if anyone feels the need to confirm.)
But why stop there? We have other banks in South Africa too!
Another three opinions.
Armed with my Google cheque I go visiting ABSA Bank, First National Bank and Nedbank to see if they would charge a foreign draft fee should I choose to deposit my cheque there and if the cheque posed any particular problems to process. The result of this survery revealed:
- All three have a foreign draft fee.
- All three would not charge a foreign draft fee if I deposited this cheque with them.
- All three saw no problem with processing this cheque through the local (South African) interbank clearing system.
In the opinion of all three banks, this was a cheque to be treated just the same as any other regular "South African" cheque. It is a custom cheque, but there would be no deposit fee of any kind.
(I've got the names and branch details of each if anyone feels the need to confirm.)
If there was any difference worth reporting between the three, I'd say that the ABSA lady was the most charming, the First National Bank lady was the most professional, and the Nedbank lady was the most surprised.
As a fan of smaller and emerging businesses, may I quickly say to all the other banks out there, please forgive me for not visiting - but by now a clear pattern was emerging and you really need to get some branches in my area.
Last round.
I got that confirmation call from Ms S B. She confirmed with me that I had been given a written explanation already (that would be the letter she obviously hasn't read with all the stuff she contradicted earlier) and duly informed me that this letter can be relied on as Standard Bank's official position and that is the end of the matter.
What can I say? I know when I'm beaten. If the staff don't have a clear idea of why they are doing what they are doing, what are the prospects of them explaining it to me?
They win. It' not worth pursuing further. Policy has been set and we all must live with it.
I may be too thick to understand why Standard Bank feels compelled to raise this deposit fee on this cheque, but I do know that any company is perfectly entitled to set up their own policies, charge what the heck they like and define things on their own terms.
Customers can take it as presented or go elsewhere. As consumers, all we need to know is the effects of the choices before us so that we can make reasonably informed decisions.
It's the very foundation of healthy competition and I'm delighted to see it thriving in the banking sector.
What I have learnt.
Four things come to mind:
1. The answer you get isn't always going to be the answer you are looking for.
2. Corporates are possibly worse at communicating within themselves than they are at communicating with their customers.
3. It's obviously not very smart to deposit foreign looking cheques at Standard Bank even if they are drawn against a local bank. The bill that goes with it is entirely avoidable and personally I will be depositing these cheques elsewhere in future.
4. This risk of avoidable deposit fees may extend to cheques from Nonresident Rand accounts - which I must warn could be near impossible to detect in advance. My sister-in-law is a non-resident who has thoughtlessly been issued with a standard South African looking cheque book by one of our local banks. And honestly, looking at her cheques, you'd never know!
Help spread the word.
All that remains is to give this foreign draft fee policy the publicity it deserves so that other ordinary SA citizens can make informed choices. I don't think Standard Bank has done a particularly good job on this one. And the problem is as a result I'm struggling to grasp the dividing line myself.
So, the only way I could think of warning everyone else was to tell my story. What you do with it now is up to you.
R155.00 is not that big a deal in my life anymore (although the fact that it makes up 12.3% of the cheque does irk somewhat). Personally I find blind stupidity far more significant.
But there are lots of young webmasters and bloggers out there who are going to be pretty damn upset when they lose R155.00 on their first Adsense cheque one day. And it is entirely avoidadable.
Hopefully they'll read this before they go deposit their cheque.
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