South African banks are now all in full swing with their respective loyalty or rewards programs. In a highly competitive banking environment, where the large South African banks are doing whatever they can to attract customers across all LSM’s, rewards programs can be used to ensure that existing customers are not tempted to switch banks. It can also serve as a incentive to attract new customers.
Rewards programs will at the same time drive credit or debit card usage and are likely to over time influence bank customers to offer their card as a payment option, as compared to cash, EFT or debit order, for both once-off and recurring bill payments such as telecommunications, insurance, gym membership, pay TV subscriptions, etc. as customers then gain the benefit of receiving rewards for a higher monthly spend.
An initial comparison of South African bank’s rewards programs is as follows…
FNB’s eBucks reward system is the longest running and arguably the most well-known of the banking rewards programs in South Africa.
The system allows customers to earn points when using their FNB cheque card. According to the customers reward level they can earn between 0.4% and 2.5% back on everything they spend and between 1% and 15% back on airtime and petrol purchases. The reward level is based on the amount of reward level points you collect from FNB over a 12-month rolling period and are collected by utilising FNB products and services.
Exceptions: eBucks cannot be earned on smart transfers, travellers cheques, foreign exchange, EFT’s, cash payments or casino gambling transactions.
There is no fee for eBucks but to earn extra points, credit and cheque accounts can be linked to the same eBucks account for an annual fee of R200. All eBucks earned have to be spent with partners or on the eBucks website.
Standard Bank’s uCount Rewards:
Standard Bank’s uCount Rewards is the latest addition to the banking rewards ring in South Africa. It appears to be closely modelled on FNB’s eBucks with many of the same features.
It works via a tiered structure where utilising different products and services from the bank earn you points which determine which tier you fall into on a month to month basis. According to which tier you fall into, you will earn rewards on all qualifying spend on your debit, cheque or credit card.
Standard Bank has entered into agreements with a large variety of retailers which enable people in the tier 4 classification to earn between 1.5% and 10% back on all purchases and get R1 back per litre of petrol purchased at Caltex garages. Customers on tier 1, 2 and 3 can only earn between 0.25% and 3% back on purchases.
Exceptions: points cannot be earned on gambling, toll gates, cash advances, electronic funds transfers, inter-account transfers and payments, cash withdrawals, foreign exchange purchases, cheques issued, stop and debit orders, fuel purchase and garage card purchases.
There is an annual fee of R240 to participate in the uCount Rewards program. The rewards points can be redeemed at the Participating Rewards Retailers, participating Caltex fuel forecourts, Bidvest Premier Airport Lounges, at the UCount Rewards Online Mall, and UCount Rewards Travel Mall.
Nedbank’s Greenbacks are similar to FNB’s and Standard Bank’s systems, although somewhat more straight forward as they do not have any different reward levels or tiered system. You simply earn ‘Greenbacks’ back on all eligible card spend at the rate of 1 greenback for every R5 spent.
Exceptions: Eligible spend excludes cash withdrawals, casino chip purchases, fuel purchases, finance and other card charges, fees or taxes levied by Nedbank or the government, the purchase of travellers cheques or other negotiable instruments, garage card transactions, budget account instalments and interest, insurance premiums and internet transfers/payments.
You can link up to 10 credit or cheque cards to your Nedbank Greenbacks account, at no additional fee but Greenbacks can only be spent via the Greenbacks online store, and there is an annual fee of R179 to maintain your Nedbank Greenbacks rewards account.
Absa Rewards differentiate themselves form the other bank’s rewards programs by offering their rewards in cash instead of points which can only be redeemed through certain channels. They also work on a tiered system where you can earn between 0.25% and 1% back on all qualifying spend on Absa debit, cheque and credit card purchases. Your tier is determined by how many Absa products and services you utilise. You also receive 5% back on all spend at Sasol Service stations.
Exceptions: Qualifying transactions exclude electronic funds transfers, fees and charges, travellers’ cheques, foreign exchange, cash withdrawals, garage card transactions and all transactions through registered and unregistered (local, international online) casinos and all transactions at Sasol forecourts and convenience stores, bill payments, pre-paid airtime, electricity and lotto purchases. You will only earn Cash Rewards on the first R 3 000 (three thousand rand) that you spend at Sasol during the accrual period.
There are also a number of rewards partners who offer discounts between 3% and 10% on goods and services for Absa Rewards members.
There is an annual fee of R252 to join Absa’s Cash Rewards program and you can redeem your Absa Rewards for cash, airtime, shopping vouchers, travel vouchers, an investment in an Absa MoneyBuilder account or a donation to a charity of your choice.
Over time it will be interesting for the banks to monitor whether in fact the rewards programs are serving their retention and new customer acquisition strategies and if, at the same time, consumer payment behaviour for both once-off purchases and recurring bill payments is influenced towards offering card more frequently as a payment option, after all, many overseas countries don’t have the same emphasis on rewards programs, for example this Australian Bank places more emphasis on security.