The best bank account for a new business in South Africa?

Image Source: Unsplash
Image Source: Unsplash

As a new entrepreneur or startup, you’ll be tempted to use your personal bank account for business purposes when starting out. Try your best not to! If you’re serious about building a growing business, and have some early traction/sales to prove that your business can work, then getting a formal business bank account will not only lend your business financial credibility, it’ll save you an enormous tax headache, and make tracking your business performance a breeze. What’s more, choosing the best bank account right off the bat, means building a fruitful relationship that can cement better investment, credit, and lending opportunities from your bank in future.

 

But, with so many options in South Africa to choose from (and so much fine print to go through) it can feel impossible to narrow down your final choice. To make your life easier, we’ll be walking you through the most important considerations (and questions to ask) on your hunt for the best bank account for your new business.

What to look for?

  • Fees: No two businesses (or bank accounts) are exactly the same – the trick is to align your anticipated banking activity with the package that charges the least for the things that you do the most. For example, some businesses run almost “cashlessly”, so won’t need the ability to make deposits; other businesses have multiple employees with complex payroll needs; or have several debit order contracts in place. So, identify your most pressing priorities first, then pair down eligible account options according to competitive rates. Bear in mind that minimizing less crucial activities can add up to significant savings too. Key charges to take note of: cash withdrawal and deposit fees (ATM vs in-branch, and number of free deposits per month); debit order fees (internal vs external); electronic account transfers (internal vs external); sending proof of payment; card swipe fees.
  • Bundle vs Pay-as-You-Transact (PAYT): Bundle pricing offers a package deal of transaction options – usually at a cheaper “per transaction” rate, after which PAYT pricing kicks in. Bundles make great financial sense for larger transaction volumes. Count your monthly transactions, or tally up some of these common small businesses payments to get a rough idea of your needs:
  1. Rent/Bond payments
  2. Debit Orders
  3. Services: Electricity, Water, Refuse & Sewerage, Hygiene & Pest Control, Internet, Phone etc.  
  4. SARS: Rates & Taxes, PAYE & UIF  
  5. How many employee wages, including yourself? 
  6. How many suppliers on 30-day accounts?
  7. What about the odd plumber or electrician? Make room for unforeseen bills. 
  • Credit /Overdraft facility: Most banks charge around R70 per month for merely having the option of their overdraft facility, and may also impose minimum balance requirements to unlock different tiers of credit allowances. Depending on your cash flow strategy, a credit facility could serve as a very important safety net to fall back on in hard times, and it’s worth investigating the terms of this arrangement (e.g. what kind of interest you’ll be charged) should you need to go into the red for a while. 

 

  • Extra features and benefits: Most accounts come with a mix of extra features – but not all extras are equal! Select features add so much value, that you can justify spending a little more on bank charges in order to use them. Others are just marketing gimmicks or will pack little punch, depending on how your business operates, or how you choose to manage your accounts. 
  • Online and App banking are a mainstay in today’s age, where digital payments are at the forefront of our transactional behaviour. For apps, look at their respective Apple/Google Play scores to see what you’ll be getting in terms of interface and overall experience.
  • Rewards or loyalty programs can make for significant savings, but check if they incur an annual membership or subscription fee, and whether you would benefit from the specific points allocations – e.g. points for buying petrol don’t really  add value if you don’t have large KM’s, delivery or other business vehicle needs. Remember, very few things in life are entirely for free.
  • Software add-ons and compatibility options will allow you to benefit from having payroll, SARS and invoicing integrated with your online banking/app. This can be a huge time-saver, freeing you from a lot of repetitive admin, and boosting overall business efficiency. 
  • Earning interest: certain bank accounts offer connected savings facilities, whilst others offer the opportunity to earn interest when maintaining a positive balance. These are widely available so it shouldn’t outweigh other more practical considerations, but it’s a pretty decent perk. 

 

  • Relationship Manager and Customer Service: A relationship manager should spend some time getting to know your business and how you like to bank, so they can make your journey as comfortable and smooth as possible. Businesses tend to make banks a whole lot of money over many years, so in return, your bank should be friendly, well-informed and quick to take necessary actions in supporting your business. The bank should do more than hold your money, they should add value. If they don’t, switch! And if you would like a more personal, human interaction with your banker – take note of the bank’s conveniently located brick-and-mortar branches too. 

 

  • Extra: Top tips for cutting your banking costs:
  1. Avoid using urgent or same-day payment facilities wherever possible.
  2. In general, external debit orders are more expensive than EFTs – why not keep a list of monthly payments to be done manually?
  3. Try your best to setup 30-day accounts with your suppliers, so you pay each beneficiary only once each month.
  4. Performing any activity with the help of a consultant over the phone, or in person at a branch is expensive – try figuring things out online first, or use electronic help facilities. 
  5. Wherever practical, use secure ATMs for cash deposits of less than R50 000.
  6. For ATM withdrawals and/or deposits, the cheapest option is to exclusively use your own bank’s ATMs.
  7. Most banks charge extra for printed balance enquiries and statements at ATMs, or in the branch – always use your portal or app, it’s free. 
Image Source: Unsplash
Image Source: Unsplash

Time to compare the various providers:

The best entry-level business bank accounts in SA:

BANK: ABSA FNB STD BANK NEDBANK MERCANTILE SASFIN
Acc Name:

Business Evolve PAYT

Gold Business Account: PAYT or Bundle

Business Current Account PAYT

Business Accounts: PAYT or Bundle

Business Transact Account PAYT

Business Banking Account: PAYT or Bundle

Year Launched

1991

1838

1862

1888
1965

1951

Branches (country- wide)

632

619

525

100

15

26

Monthly Fee

PAYT: R85

PAYT: R80

Bundle: R265 

PAYT: R85 for small enterprises, R100 for businesses 

PAYT: R60

Bundle: R259 

PAYT: R65 + R40 if you choose to get a Business Credit card

PAYT: R100

Bundle: R199 

Transaction Fees

Tiered pricing on EFTs - starting at R10 per transaction (p.t.) for the first 30 transactions; free in-Absa transfers/debit orders.

More info.

Free card swipes, in-FNB EFTs, and prepaid purchases; PAYT: Max R9.80 p.t.; Bundle: Free 30 EFTs, then R19 p.t.

More info.

R4 per card purchase; free in-Std Bank transfers;EFTs at R7 p.t.

More info.

PAYT: R8.35 per EFT, free SMS and phone banking transactions; card swipes at R4.30 p.t.; Bundle: first 35 EFTs free, then R21.50 p.t.

More info

R5 per EFT; free account transfers, in-Mercantile transfers R5, Credit card payments R5 p.t.

More info

Bundle: 30 free EFTs/card swipes, then R6.90 p.t. and R4.90 per card swipe PAYT: R5.50 per EFT and R3.90 per card swipe. Free in-SASFIN EFT’s.

More info.

Bank Card

Visa Debit card

Gold Credit and Virtual cards

Mastercard Cheque card

Cheque card

Business Credit card

Visa Business card

Extras

Free Liquidity Plus investment account; Online banking and App, and Cash flow manager.

Free Online and App banking; Use Paypal; Earn Ebucks (no membership fee); Key person insurance; eWallet Pro; Business Law on Call, and 24/7 help desk.

Free Online and App banking; UCount rewards (R365 p.a. To join); BizDirect support team and WhatsApp/ Facebook Chat; Cash Flow management solutions available.

24/7 self service help channels and a dedicated banker; Cash flow and investment management; Free access to NetBank Business, the Nedbank Money App and Online banking. 

Free online banking; Integration with SARS and payroll software; Dedicated business bank manager; Competitive tiered interest rates according to positive bank balance.

Easy cash management services in real-time; Payroll and invoicing integrated to your account; annual interest rates on bank balance; Digital banking with free services; 24/7 client relationship manager. 

Hello Peter (out of 5)**

2.7

3

2.8

2

4.1

2.7

*Data sourced January/February 2021

** HelloPeter ratings are generally skewed downward, as customers use this platform primarily to lodge complaints. This makes the platform useful to understand what people are complaining about, but is not always an accurate reflection of service. 

*** It’s important to note that certain banks do offer more affordable account options than those listed above, but these are only for sole proprietors. At getlion™️, we strongly encourage our users to register their businesses for an array of practical, taxation, and legal reasons – find out why and how HERE. For this reason, we’ve considered the best accounts for a registered company.

And the Winners are…

Overall, Mercantile and Sasfin have the lowest EFT rates, and offer comprehensive extra features and impressive perks (like earning interest). Sasfin even comes with an integrated payroll and accounting software – an absolute necessity for your business. However, as we’ve not tried this, it may not be the easiest or best. However, both banks have smaller branch networks around the country, as well as higher PAYT monthly account fees.

On the other hand, FNB is the established player in the small business banking space, with stellar service ratings, a wide selection of structured account choices, giving you more room to tailor the account solution to your needs. FNB also offers an huge package of extras and rewards – and their app is similarly comprehensive and easy to use. In 2020, FNB was announced as the SME Bank of the Year at the Global SME Finance Forum. With so many small businesses using FNB, and with free EFTs between FNB accounts, you could save plenty when paying month-end accounts. The most important thing to remember is that you can change banks if you end up outgrowing your first choice – nowadays it’s quick and pain-free to switch (often without even having to change your account number). Don’t be afraid to do so if your bank isn’t adding direct value to your business any longer.

About getlion™️

At getlion, it’s our mission to see entrepreneurs succeed. We start by helping them make the best decisions for their business, and sort through the clutter of offerings out there! Beyond that, we’ve set out to build South Africa’s leading one-stop mobile app for entrepreneurs, boasting Education, Rewards, Funding, an online Marketplace and more. We’ve also partnered with the country’s leading companies to ensure that our users have access to the best (and often discounted) solutions. Visit getlion.co.za and download the getlion™️ mobile app to enjoy offers from over 35 industry-leading parters and get your business ROARING!