Capitec has introduced a rewards programme and implemented fee increases as it focuses on becoming a fully-fledged bank.

Capitec has always marketed itself as a simple, no-frills bank. In 2009 it repositioned its brand to expand its customer base beyond the lower-income segment that it was lending to. Yet it was still considered an entry-level bank with the focus on having the lowest fees, simple banking, and not trying to compete with other banks on reward programmes.

Yet, four years ago, when Capitec opened a branch in Constantia Village, an affluent suburb in Cape Town, it was clear that the bank was widening its customer base. In 2019, it acquired Mercantile Bank with the intention of entering the business banking space. Last year it introduced a credit card which allows a qualifying customer a credit facility of up to R500 000.

Last month Capitec introduced a rewards programme along with fee increases that no longer make it the “cheapest” bank account.

“What matters is value for money,” says Francois Viviers, executive of Marketing and Communications at Capitec, who adds that the bank is no longer in a “race to zero” when it comes to monthly fees.

The entry-level banking space has been hotly contested, with FNB introducing its Easy Account at just R4.95 a month and TymeBank and African Bank both offering accounts with no monthly fee.

Capitec now has over 17 million customers and is the second-biggest bank in the country by market capitalisation, and it clearly no longer sees itself in the entry-level banking space.

First fee increases for four years

After four years of no fee increases, Capitec raised its monthly account fee from R5 to R6.50, along with other price increases including charging a higher fee for electronic payments by Capitec customers to non-Capitec accounts.

Viviers says the 30% fee increase should be put in the context that the actual amount is R1.50 a month – or R18 a year “which does not even buy you a cup of coffee.”

While no longer the cheapest bank account in the market (see price comparison table at the bottom of this article), it is still one of the cheapest and, according to Viviers, the best value for money.

He argues that the functionality of the Capitec banking app, the higher interest rates paid on transactional accounts and value-add services like access to the EasyEquities platform provide value for money.

The same, however, could be said of the FNB Easy Account which has lower fees but still provides access to the full FNB banking app. Account holders can get rewards in the form of grocery coupons from Shoprite/Checkers/Usave, although the pay-as-you-use plan (PAYU) does not include access to the eBucks reward programme.

Capitec moving to fully-fledged banking

“We are now becoming a fully-fledged bank but keeping fees down,” says Viviers in response to the decision by Capitec to introduce a rewards programme. Although Capitec has historically avoided the complexity of introducing rewards, this is something that customers now expect when it comes to a fully-fledged banking product.

“The market is changing and what they expect is changing. But we are sticking to our promise to make it as simple as possible. Our programme doesn’t discriminate based on income or status, has no points, no tiers, no subscription fee and no complicated hoops to jump through.

“We offer real cash back just for banking better with Capitec. By the end of the first year of Live Better, we intend to reach R1 billion in cash back and savings for our clients.”

Viviers says the reward programme more than compensates for the fee increase, but like all loyalty programmes, there is a catch. In order to be rewarded, there are certain requirements when it comes to banking behaviour. The idea is to encourage people to move more of their financial products to Capitec.

These include:

• have one credit product, funeral plan or fixed savings account of R10 000
• have three debit orders
• do five ‘money out’ transactions on the app, such as payments, scan to pay, or buying prepaid airtime and data

If you meet these requirements, you earn 0.5% cash back on the full value of your purchases for the month. Spend on your credit card, regardless of having reached these goals, and you earn an additional 1% cash back, adding up to 1.5% in total.

In simple terms, if you spend R10 000 per month you can get R50 back on a debit card or R150 back on your credit card. There is no cap on the spend, so someone spending R50 000 a month on their credit card would get back R750. If you only have a credit card with Capitec without a primary Capitec account, you still receive 1% back on your credit card swipes.

To join, customers activate their Live Better savings account for free by signing into the Capitec banking app, tapping on Live Better Savings and clicking ‘Join’.

The cash back you earn gets paid into your account on the 10th day of each month, while other benefit partners will give you upfront discounts at the time of purchase.

This article first appeared in City Press.