Sending money to Zimbabwe

Everything you need to know about sending money to Zimbabwe

Sending money across the border to family members still in Zimbabwe, as well as other African countries, is something that many people do. There are a number of ways in which people can send money abroad, some more informal than others.

Banks like Nedbank, Absa, First National Bank (FNB) and Standard Bank all offer money transfer services, however, there are many new online platforms, such as Mama Money and Hello Paisa, that are competing against them.

You don’t need much in the way of documentation if you need to send a small amount of money abroad. If you’re South African you need to present your green barcoded ID book or Smart Card. Alternatively, foreign nationals will need to present a valid passport with a valid work permit.

Unfortunately, South Africa still operates under exchange control laws. Only transfers over R1 million will catch the attention of the banks and the South African Revenue Service (SARS). But amounts under R1 million are easily transferable and require no tax clearance.

Also beware when transferring money to certain African countries. When transferring money to Zimbabwe, for example, Absa highlights there could be tender and currency shortages in the country, which could affect pay-out.

Absa

According to Absa, transfer of the funds doesn’t take long, with the funds being available to the other person “within minutes subject to agent operator times and time difference zones.”

Fees for money transfers are paid per US Dollar bands, Absa pointed out, see below.

*At the time of Western Union money transfer send, the fee will be converted to Rands at the prevailing exchange rate prior to 14% VAT inclusion.

Exchange rates do apply. “Exchange rate is applied at the time of transfer, it is market related and informed by market conditions and trade.”

Nedbank

Sudhesh Gareeb, head of global payments for Corporate and Investment Banking at Nedbank explains that Nedbank offers cross broader transfers, also known as wire transfers or SWIFT transfers, through the SWIFT network. This allows people to send or receive money in a fast and secure system.

Transfers attract two fees, commission and SWIFT communication charges, irrespective of the cross border destination, points out Gareeb.

At Nedbank, commission is currently at 0.52% of the Rand equivalent of the transfer, with a minimum of R129 and a maximum of R687 (inclusive of VAT), as well as a SWIFT communication flat fee of R100. Gareeb notes that these fees are reviewed and adjusted annually.

The transfer takes approximately 48 hours after the receipt of the application form. However, this is if all documentation is in order and there are no issues to completing the transfer, such as insufficient funds in the sender’s Nedbank account.

Standard Bank

Boitumelo Jordan, manager foreign nationals and non-residents at Standard Bank, notes that the fees are standard when sending money out of South Africa, regardless of the destination.

When transferring the money via bank account, it can take approximately two days for it to reflect, while sending money through the transfer platform MoneyGram reflect within 10 minutes.

Fees for Standard Bank transfers are as follows:OTT (Outward telegraphic transfer) - commission based with minimum of R160 and maximum of R740 otherwise the commission is 0.52%. The additional fee is for SWIFT at R110 (external fee).

Example 1: if sending R20, 000 X 0.52% = R104 the minimum fee will apply therefore making the total cost R160 + R110 = R270

Example 2: R40,000 X 0.52% = R208 + R110 =R318

Example 3: R200, 000 X 0.52% = R1040 the maximum fee will apply, making the total cost R740 + 110 = 850

MoneyGram converts the funds to US dollars. Then fees are applied per $100, see below:

Jordan adds: “Funds sent to Zimbabwe first have to be converted to the US dollar and the rate of rand to dollar fluctuates therefore it will impact the amount being sent however the sender will know what the receiver will get on the other side since they have to accept the rate prior to sending.”

FNB

You need an FNB account, and proof of residence if you want to transfer through FNB. In addition, you will need the recipient’s details to register them on the App, cell phone banking or online banking to make the payment.

Once the money is transferred, the recipient will need to take the transfer reference number to a local OK Store for encashment. S/he will also need their ID document, the confirmation message of the transfer, the name of the sender, and know where the money is from.

Maud Gomes from First National Bank says the money is available in real time once the payment is confirmed. The cost of sending money across the border is a fixed rate with FNB:

• R100 – R1000 = R45
• R1001 – R2000 = R75
• R2001 – R3000 = R105         

“Zimbabwe accepts South African Rand but if the recipient wants to exchange for US Dollars, additional charges will apply,” explains Gomes.

Mama Money

According to Raphael Grojnowski, founder and director of fintech startup Mama Money, the cost of a money transfer is small, and therefore service providers shouldn’t charge.

“Established providers such as Western Union, MoneyGram as well as Mukuru charge a minimum of 10% and on top of that, add their own exchange rate margins. They are making huge amounts of money on the backs of poorer people and, their pricing is not transparent,” reveals Grojnowski.

Grojnowski maintains the SWIFT transfers offered by banks are not suited to low-value remittances, as bank costs can be up to 40% of the transfer amount.

Mama Money charges five percent for money transfers, irrespective of the amount, with no margin charged on the exchange rate.

“Right now, cash shortages in Zimbabwe are our key challenge. However, this also represents an opportunity to promote the use of mobile money, mobile banking and mobile payments. After all, cashless electronic payment systems are the future. We will be launching our connection to the Zimbabwean Telecash mobile money wallet in the next few weeks,” explains Grojnowski.

Hello Paisa

To make use of the Hello Paisa platform to send money, you need to provide proof of ID, as well as proof of address. The platform allows you to send money to about 20 countries from South Africa.

The Hello Paisa website does not state the actual fees charged for using the platform to send money. It simply says that it is ‘low cost’.

The website does allow you to select the country you want to send money to, and the amount, but there’s no fee breakdown. Justmoney contacted Hello Paisa for clarification on this, but had not received a response at the time of publication.

Exchange4Free

Exchange4Free is another platform that allows for money to be sent abroad, with over 100 destination countries to choose from. According to the Exchange4Free website, the platform offers:

• One stop-shop solution to all your foreign exchange needs
• Great exchange rates
• Free international transfers (you can be charged up to R700 in transfer fees alone)
• Free SARS tax clearances
• No commissions
• No hidden costs
• No standing in long queues
• Assistance and advice through the entire process
• Full SARS, SARB and exchange control compliance

With regards to cost, Exchange4Free notes: “Once your funds have been authorised to leave South Africa and all paperwork is in place then you are able to either get a quote and fix an exchange rate over the phone (we will need you to transfer the funds immediately to us) or you can wait for your funds to clear into our bank account before your rate is fixed.”

When it comes to sending money - Who is cheaper?

It is clear that the cost of sending money to another country is largely dependent on the amount being sent. However, with regard to the banks, it would appear that overall FNB is the cheapest.

While Mama Money appears to be the cheapest platform to use, this will depend on the amount being sent. The more you send the more you’ll pay, even though the fee remains at five percent. For example, five percent of R100 is R5, whereas five percent of R1, 000 is R50.

As Exchange4Free’s fee is calculated in line with the exchange rate, this is difficult to compare, as the exchange rate fluctuates, and therefore the cost of using Exchange4Free will vary. However, if, as it claims, there are no additional fees and no commission, this would make Exchange4Free the cheapest money transfer platform compared here.

However, while the perception may be that non-bank affiliated money transfer platforms may be cheaper, there appears to be a lack of clarity overall with regards to the actual cost of using the service. Mama Money was the only platform that provided a fee breakdown, *Hello Paisa simply states it is ‘low cost’, while *Exchange4Free references the exchange rate, stating there is no commission.

*Hello Paisa and Exchange4Free and not responded to requests for comment at the time of publication.

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