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Now's the time to say goodbye to cash in hand
Penalties for drawing cash are such that plastic payment is looking like the way to go, writes LUCIENNE FILD
The recent hikes in ATM fees show banks are serious about discouraging you from withdrawing cash, especially from other banks' ATMs. Depending on your bank, you now pay between 20% and 60% more in Saswitch fees (in addition to the normal ATM fees) if you use a foreign ATM. The current spate of bank robberies and cash-in-transit heists is costing the banks a fortune. They are being pushed into the attitude of "no cash, no robberies". Banks also spend a great deal on ATM maintenance and security to prevent fraud and theft. In all, it costs the banking industry R1-billion a year to process cash. Small wonder, then, that banks are promoting the use of non-cash mechanisms of payment.s definetely on plastic. Your non-cash alternatives range from debit and smart cards, to old favourites like credit cards, cheque books and electronic transfers. The charges for using each option differ markedly. Your cheapest bet is paying by credit card - that is if you fall within the 10% of South Africans who qualify for credit cards. But if you're inclined to be a spendthrift, a credit card can be the most expensive option - especially if you don't pay your card balance in full each month and thus incur high interest on the debt.
Your next cheapest option is a debit card. The concept is still very new in SA and some banks have only recently started introducing "plastic cash". Standard Bank and ABSA have teamed up with international payment service provider MasterCard, adding a debit card function to their existing ATM cards. About 9-million cardholders are now able to conduct transactions without using cash, at merchants who display the Maestro logo (one of MasterCard's global brands). This is how it works. You present your card for payment at the cashier, swipe it through the pay-point and then enter your pin number. The amount you owe is then deducted from your account. At the same time you can withdraw cash - if you really have to - by entering a higher amount and collecting the change from the cashier. Soon FNB and Nedcor customers will also be able to go cashless when these banks, in partnership with international payment service provider Visa International, launch smart cards. A smart card looks like an ordinary credit card, but stores information on a microchip embedded in the card. It can also serve as a debit card. Currently, as a Nedbank customer, you can link your cheque account to a debit card. You can use it wherever MasterCard or Visa cards are accepted and your purchases are debited to your cheque account. The difference between a credit card and a debit card is that you must have sufficient funds in your debit card account to use it. You are charged a fee for every debit card transaction (between R1.50 and R1.60), but the fee is set irrespective of the amount you spend or draw. This is why the debit card is the cheapest payment option after the credit card. If you draw cash, pay by cheque or make use of the electronic payment option, your charges increase with the amount paid.
Debit and credit cards are an easy method of payment, but electronic payments remain one of the most convenient options of paying regular expenses like the telephone account. The charges are also relatively low, compared with drawing cash, paying by cheque or by monthly stop order.
Stop orders are very expensive. Depending on your bank, it could cost around R6 to establish or amend the stop order and R4.50 per transaction thereafter. The charges you pay for a stop order are almost double the cost of a debit order.
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