Today’s FNB PayPal launch
Today was the official launch of PayPal in South Africa. The launch event was at Turbine Hall in Newtown. I have not been in the Joburg CBD in ages and found that the city (at least in daylight) looks a lot neater/cleaner then I remember it several years back. The venue itself was truly awesome. Organisation of the launch was quite poor as I RSVPed several weeks ago, but was not on the invitee-list as well miscommunication of the start-time. Most people arrived around 10am with the impression that the event will kick off at 10:30am as per invite.
I also don’t understand why all corporates at such events need to bring out the big smoke-machines – pretty much rendered the venue unusable for some time and brought back memories from my “disco-times”.
Bruce Whitfield (from Talk 702) hosted the event with Michael Jordaan (FNB CEO) and Oded Zehavi (head of PayPal Israel/South Africa). The launch was a bit of a disappointment as FNB/PayPal (this was expected) signed up an exclusive agreement preventing any other financial institutions in SA to offer PayPal services. Quite a smart move from FNB as a further requirement for a South African PayPal user is a FNB online banking account.
From the feedback at the venue, this move will certainly attract many new customers, but for me the most significant point is that PayPal will not be offering ZAR as a currency at least not in the forseeable future. PayPal users will be able to pay out funds into their FNB accounts in Rands and will be able to top-up through USD at the current forex-spot rate.
FNB will charge 1,5% transaction fees in addition to what PayPal charges (which is roughly about 3,5%). Further all PayPal payouts will be monitored and submitted to the Reserve Bank for exchange control reasons.
To sum it up:
- The deal between FNB and Paypal is exclusive and neither wanted to disclose duration. This pretty much rules out that any other bank will be able to do the same in the near future.
- In order to payout money locally, a Paypal user needs to have a FNB account. This was predictable and I am actually amazed how many people are in the progress of changing bank accounts?!?
- If you have an international Paypal account you will need to create a SA Paypal account and then link it via FNB Internet banking to your FNB account.
- FNB will charge a 1.5%-fee on payouts/topups (add to this Paypal fees which then comes to roughly 5%). Topups will happen in USD and are based on the spot-rate.
- Money paid out into a FNB account will be converted to Rands.
- Each transaction will be reported to the Reserve Bank for Exchange Control.
While the PayPal launch will certainly be interesting for local merchants and online-stores who seek a different payment mechanism, charges are pretty much the same as credit card transaction fees and the only advantage is that consumers seem to trust the use of PayPal more than using their credit cards.
For the local market not much will change. If I look at BidorBuy, we have been accepting credit cards and EFT payments through our BobEFT/BobPay mechanism and will within the next 4 weeks also offer PayPal, but don’t think that business will improve drastically with the PayPal launch.