For decades, banks have made money in a fairly predictable way: hold deposits, lend money, earn interest – and charge customers fees for using the system.
Some of those fees are justified. Banking infrastructure, fraud prevention, compliance, customer service and technology all cost money. But not every historical fee still makes sense. One of the clearest examples is instant payments.
Customers increasingly expect money to move immediately. Yet in banking, moving your own money quickly can still attract an additional charge. That is becoming harder to defend.
At GoTyme, we made a deliberate decision to make qualifying instant payments free. It was not because transaction fees suddenly stopped being attractive revenue. It was because we believe the economics of banking need to evolve.
A fee is not the same thing as value
Banks have become very good at monetising activity.
Make a payment. Pay a fee. Move money quickly. Pay a fee. Withdraw cash. Pay a fee.
Add up millions of those transactions and you have a meaningful revenue stream. The problem is that the ability to charge for something is not the same as creating value for the customer.
If digital technology makes banking cheaper and more efficient to provide, customers should benefit too. Otherwise, digital transformation simply improves bank economics without improving customer economics.
At GoTyme Bank, our decision to make qualifying instant payments free means we are consciously giving up revenue we could otherwise collect.
By making instant payments free, we estimate that our customers are saving more than R150 million a year – and this is not a hypothetical comparison with what another bank might charge. It is money we have chosen not to keep collecting. And as our customer base and instant-payment usage grow, we estimate that the future fee income we choose not to take could amount to around R1 billion.
That is a meaningful trade-off. But it also reflects a bigger belief about where banking needs to go.
Banks should earn more because customers choose to do more
Banks need to make money. Profitable, well-capitalised banks are essential to a functioning economy. The question is howthey should make that money.
I believe the next generation of banking economics will rely less on charging for individual transactions and more on earning a greater share of the customer relationship. That means becoming useful across more of a customer’s financial life.
If customers trust their bank enough to save there, transact there, borrow responsibly there and eventually invest there, that relationship creates sustainable economic value for the bank. And importantly, the bank earns that value because the customer chooses to do more with it.
That is very different from relying on a fee every time the customer presses “send”.
The principle is simple: We would rather earn more because customers choose to do more with us than because we charge them more to move their own money.
Free instant payments are good banking economics
At GoTyme Bank, the number of customers using PayShap has grown by more than 250% year on year. Almost 70% of payments made by our customers are now instant and free, and GoTyme accounts originate roughly one in every four of national PayShap cellphone payments. That level of adoption matters.
Payments are one of the most frequent interactions a customer has with a bank. If you make that experience simpler, faster and cheaper, you increase the utility of the account. More utility drives more engagement. More engagement creates more opportunities to deepen the banking relationship.
You may earn less from a transaction in isolation, but you create the conditions for a much stronger customer relationship over time.
I hope our competitors copy us
Usually, businesses try to protect their competitive advantages. On free instant payments, I hope ours disappears.
I would like every bank in South Africa to make every day instant payments free. That would be good for customers, good for the adoption of modern payment rails and good for the broader digitisation of the economy.
This move would also force banks to compete harder on the things that matter more:
Better service.
Better products.
Better savings outcomes.
Responsible credit.
Better customer experiences.
The move away from transaction-fee dependence will not happen overnight, nor should every banking fee disappear. But the economics of banking are changing.
For the next generation of banking the winners will not be the banks that find the most ways to charge customers. They will be the banks that give customers the most reasons to stay.
That is the model worth building.
By Cheslyn Jacobs, CEO, GoTyme Bank