Shoprite has big plans for its new ‘bank’ accounts – but no debit orders will be allowed
- Shoprite recently launched Money Market accounts, which allow users to receive and send money, and also pay bills and buy airtime and data.
- You should be able to withdraw cash from the accounts by next year - but debit orders won't be allowed.
- Shoprite wants companies and government to pay salaries into these accounts, and think it would be ideal for welfare grants.
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Shoprite is making a strong push into financial services with its recently-launched Money Market accounts.
The accounts don’t charge monthly fees, load fees or transaction fees – and to open it, you don’t have to be Fica’ed.
No debit orders are allowed to be deducted from the accounts – which Shoprite is selling as a virtue. “Customers are in full control of their money,” the company says.
You can send and receive money from the accounts and pay utility bills, buy airtime and data. The accounts can be used to make payments for any transactions in a Shoprite, Checkers or Usave store.
Shoprite wants businesses to use the Money Market accounts for salary payments, which can also include bulk payments of grocery vouchers. Recipients only need a cell phone to access their funds.
Shoprite itself is planning to pay 130,000 employees through Money Market accounts in future, and is preparing to allow public employers to pay salaries into these accounts. It also thinks the accounts could be a good vehicle for government’s welfare payments.
The Money Market Account, which replaces the basic Shoprite Money product launched in May 2018, will grow to have most of the transactional capabilities of a full banking account, Shoprite says.
The supermarket giant is in the process of partnering with a local bank – which it declined to name – in order to meet Financial Intelligence Centre Act (FICA) requirements and allow customers to make in-store cash withdrawals from their Money Market accounts by early next year.
“We need to be able to FICA clients before they can withdraw cash directly from their Shoprite Money Market accounts,” says Olivier. “But that will be available from early next year.”
But the company says it doesn’t want to compete with the big banks.
“Our core market, for the Money Market Account, is the mass market customer who typically earns less than R8,000 and typically has less than R500 average balance in their account,” says Jean Olivier, general manager of financial services at Shoprite. “We don’t want to compete with the banks by targeting what I would call their golden segment, people earning at least R8,000 to R20,000 a month which allows them to take out loans, credit cards and debit orders. We’re targeting the group below that level, many of whom are unbanked or financially distressed and just looking for basic transactional banking."
A fifth of SA’s population still don’t have bank accounts.
Olivier says Shoprite will stick to basic transactional banking that incurs no monthly, deposit or transaction fees. The ability to access the Money Market accounts either via the new Shoprite app or USSD will also allow many of the services available at Shoprite’s in-store Money Market counters - such as paying utility bills, traffic fines and buying airtime or data - to be accessible via mobile phone.
“As the market place evolves and our customers become more tech-savvy there is an increasing expectation, especially from the younger generation, that financial services solutions also be offered on your mobile phone and online,” says Olivier.
Shoprite is in the process of adding further functionality to the bulk payment disbursement capabilities of its Money Market account, which will soon offer a wage portal that will allow any public or private sector employer to use the system to pay workers.
Olivier says the service is particularly suitable for small to medium-sized businesses, NGOs, farmers and other entities whose wage payments often incorporate a mix of cash payments and food parcels.
“Small and medium-sized businesses, NGOs and farmers often pay their workers weekly or bi-weekly wages and incorporate food vouchers into the payment,” he says. “They don’t want sit with huge amounts of cash on their premises so this is an ideal solution for them.”
It could also make Shoprite’s Money Market account a suitable means of disbursing social grant payments and food vouchers from the South African Social Security Agency (Sassa).
“We believe we can offer a good alternative to food vouchers, as the Money Market Account is not a single use voucher and it is more secure than a voucher code or cash,” says Olivier, adding that bulk payments typically costs between R7 and R20.
Olivier says that in time Shoprite itself plans to pay all of its roughly 130,000 non-corporate office staff through its Money Market account.
Future plans include expanding online shopping capabilities beyond the Shoprite group of stores which include the likes of Computicket, MediRite Pharmacy, Checkers, OK Furniture and House & Home.
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