Pick n Pay stands by food credit plan
WHEN Pick n Pay began refining the idea of offering groceries on credit, a process it began three years ago, it decided to partner with a foreign bank due to high local bank charges, said chief executive Richard Brasher.
Local banks passed on high costs to their clients, especially on credit cards; and there was the history of the obstacles that millions of South Africans had faced in getting access to banking services, he said.
Brasher denied that local banks were not interested in their credit offering. Instead he said: “I met with the CEO of the Commonwealth Bank of Australia and we agreed we would be good partners,” Brasher said.
“They are a very conservative bank, they created their platform based on being a savings bank, and they wanted to have a partnership with a company that had wider reach, from the least affluent in society to the most affluent. Between Boxer and Pick n Pay I think we achieved that,” he said.
Pick n Pay already offers financial services to 200 000 customers.
Now with the partnership with Commonwealth Bank of Australia and its South African subsidiary TymeDigital, which is 10% owned by Patrice Motsepe’s African Rainbow Capital, a credit card will be available.
TymeDigital, which was recently awarded a banking licence by the South African Reserve Bank, the first new banking licence in 18 years, will have no brick-and-mortar branches. Customers will instead use its services online.
Commonwealth Bank of Australia will not “be hamstrung by the legacy of 20 to 30 years of the past”, Brasher said, adding that the bank would also not have the overheads that some local banks have due to their large infrastructure.
“We want to bring good-value financial services to a broad section of society at prices they can afford and they can clearly understand, without the overheads and restrictions that some of the other banks may have because of the legacies,” said Brasher.
The retailer has been criticised for adding to South Africa’s debt burden, a claim that Brasher denies. “Our whole purpose is to make sure that we give access to interest-free credit. Not credit at an interest rate, we make no money out of this store card, so there is no motivation or possibility that I would in any way jeopardise our brand if I thought that we would be lending irresponsibly.” — BDLive