TymeBank beats digital and traditional bank competitors in transaction fees battle

Fit-for-purpose digital banks are taking the fight to traditional banks in South Africa, pushing the envelope of what’s possible without branches and bringing down banking costs in the process.

Digital-first banks don’t have to maintain extensive branch footprints, allowing them to employ a smaller workforce than the big established players.

Theoretically, that means they should be able to charge lower fees while maintaining a healthy profit margin.

We decided to see if this were the case in South Africa by comparing the rates charged by digital-focused banks like Bank Zero, Discovery Bank, and TymeBank, with those of the more traditional banks.

Our primary metric for distinguishing between the two categories was whether they had walk-in branches for physical visits or not.

For our analysis, we used a basket of transactions that a typical customer might conduct during a month, consisting of the following:

• 5 payments
• 2 cash deposits of R1,000 at point-of-sale
• 3 cash withdrawals of R500 at point-of-sale
• 3 prepaid airtime purchases
• 1 instant payment of R1,000
• 3 debit orders
• 1 debit order dispute
• 1 emailed statement
• 1 international online transaction of R159 (value of Netflix subscription)
• Monthly fee

Firstly, we looked at the banking fees of digital banks.

Using our transaction basket, TymeBank was the cheapest by a significant margin — at a total cost of R36.18.

That was substantially lower than the second most affordable option — Bank Zero — with a transaction basket cost of R63.99.

Discovery Bank’s entry-level Gold pay-as-you-transact account was the most expensive, with a R99.65 basket cost.

Unlike Bank Zero and TymeBank, it charges for electronic payments and external debit orders while also levying a fixed monthly fee.

The table below compares the costs of our transaction basket on Bank Zero, Discovery Bank, and TymeBank.