A few weeks ago FBC slapped customers with annual subscription fees for their prefunded debit cards at US$15 for individuals and US$20 for business customers. The move expectedly met with great contempt from customers and the public alike. Banks in Zimbabwe have garnered a bad reputation for making too much of the income from fees as opposed to interest income. After feeling the sting of kicking the hornet’s nest FBC has backtracked on the fee. The move is good but a few questions emerge from this.
Up until this experience, FBC prepaid card users had no subscription fee and only paid transaction fees. Observers argued that there were costs associated with providing the service that had to be paid in foreign currency and hence they needed the subscription fees and needed them in foreign currency. So while there is much celebration over FBC deciding to scrap the fees one wonders if their service providers have also scrapped fees or how FBC plans to meet the fees. This is, of course, assuming the idea of the fee was the genuine reason, to begin with. FBC may have just identified a profit opportunity and explored it.
While the above is bad enough a bigger question begs an answer; what on earth were they thinking. Launching a product takes a lot of steps as does making changes to a product’s makeup, structure and fees. Did FBC at no point on time make any effort to find out if customers were at all ready to pay a fee let alone a US$15 or US$20 fee? While you might say the idea is silly because clearly customers would never be willing to accept a fee, I think it’s sillier to expect customers to pay a fee without knowing WHY they are paying a fee.
With competitors out there offering the same product with no fees FBC has seriously shot themself in the foot. Twice. Firstly customers could easily switch to another provider as the products are simple to apply for. Secondly, removing fees now may seem like a good thing but a lot of trust and goodwill has been eroded. It effectively reinforces the greedy banks narrative. In addition to that, the jump from zero to $15 dollars was also poorly thought out. At the current parallel market rate (41) US$15 is ZWL$615. That’s a lot of money to a lot of people. At the time of the announcement, it was less but obviously still too much of a jump. Perhaps a gradual fee increase or having a freemium model where users pay for access to premium features might have worked better. I’m not trying to give FBC any ideas here.
The damage has already been done. We are likely to see FBC or perhaps another prepaid card provider attempt another form of this in the near future. We shall see how it goes after this false start.