Banks 'overcharging' on businesses fees

Paul Brown, head of Cape Town-based DigiCash, which manages more than R600m in collections and payments every month, feels that many businesses owners are under the impression that banks are the only places where business transfers can be made.

Paul Brown, head of Cape Town-based DigiCash: "Every time we deal with a new client they are amazed to see just how much they have been paying."

As a result, they are spending money unnecessarily - money that could otherwise be spent on developing the business.

"The problem that I have encountered is that alternative financial outlets are not as well known as the banks, so people automatically go with what they know without properly questioning what is going on," Brown said.

Spending thousands on transfers

"But the fact is that that the charges levied on salary payments, indeed any creditor payment, are ridiculous. Payment solutions companies like ourselves can knock off 75% from what the banks are charging, without a doubt. Every time we deal with a new client they are amazed to see just how much they have been paying."

Brown gave the example of a business owner employing 100 workers and how he might be charged.

"If you have 100 employees and you pay them weekly at the traditional bank charge of R15 per transfer, it amounts to a staggering R6,000 per month," he said.

"Then there is the added problem that if employees do not bank with the same bank as the business owner, they have to wait up to two days for their wages."

However, payment solutions can not only can reduce these costs to a R1,000 or R2,000 a month, not only ensuring all employees are paid at the same time negating any unnecessary hassles, but also achieving a substantial saving over a year; money that, if nothing else, should come in handy for bonuses or a good Christmas party.

"It is tempting to think that these kind of expenses as not being large enough to be eligible for reduction. But it is easy for phone charges, bank charges and paper costs to run rampant if there are no limits."