In a recent announcement, South Africa’s largest retail bank by customers, Capitec Bank said it would restrict customers from sending funds to crypto exchanges.
“Capitec is committed to protecting our clients from fraud, which is why we made the decision to block EFT [electronic funds transfer] and immediate (Real Time Clearing) payments to crypto exchanges on our app and business web interface.
We recognise the increasing interest in cryptocurrencies and encourage users to utilise Capitec Pay as a secure alternative for transactions.
Additionally, we are actively working with crypto exchanges that have not yet integrated Capitec Pay to expedite this process.
Ensuring the safety and security of our clients’ financial transactions remains our top priority.”
According to Capitec, the reason for this is to protect clients from fraud, and it urged customers to use Capitec Pay as an alternative for crypto transactions.
However, members of the local crypto community have pointed out that it could be significantly more expensive – up to 1% of the transaction value – compared to the much cheaper electronic funds transfer (EFT).
The cost could climb to 1.4% when factoring in integration with a payment services provider, as noted by Farzam Ehsani, CEO of crypto exchange, VALR, in a post on X.
The move is also concerning given the fact that crypto companies have spent a lot of time and resources making sure they are licensed as crypto asset service providers, only to have a blanket restriction placed on the crypto community at a time when they believe restrictions should be easing rather than tightening.
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According to Ehsani, the restriction applies only to Capitec, while other banks still permit customers to fund their crypto asset accounts. He adds that although Capitec Pay doesn’t eliminate fraud, it does introduce an additional hurdle for fraudsters, ‘which is good.’
“A very tiny percentage of all funding into crypto exchanges is fraudulent – so to restrict funding to crypto exchanges is not a proportionate response,” he wrote on X.
“Capitec Pay is extremely expensive compared to EFT.
It’s much better to educate Capitec customers by showing pop-ups and warnings than to infringe upon the basic rights of customers to legitimately do with their money as they please,” adds Ehsani.
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