A new service from FNB allows South African PayPal customers to withdraw their PayPal funds in US dollars into an FNB Customer Foreign Currency (CFC) account, rather than converting their income into South African Rands. Merchants in effect get the ability to accept and settle PayPal and card payments in US dollars.
This means local companies can pay their foreign suppliers and service providers in US dollars, without the cost and hassle of converting US dollar income to Rands and back again. The service aids to insulate South African companies from exchange rate fluctuations, making their cash flow more predictable and easier to manage.
This is an extension to the existing FNB Withdraw Service with PayPal, which was launched in March 2010.
For example, long-time PayPal merchant, Singita Safari Lodges and Luxury Accommodation now pays its lodges in Tanzania and Zimbabwe in US dollars from the reservation payments it receives via PayPal, without first converting the money to Rands and then back to US dollars.
Geoff Johnstone, Singita CFO, said: “We rely on PayPal to make the online payments from our customers visiting Africa from around the world as safe, easy and frictionless as possible. And, thanks to the ability to withdraw our US dollar PayPal funds into an FNB foreign currency account, our internal processes and payments to suppliers are also now faster, cheaper and more predictable.”
“PayPal has made it safer, quicker and more convenient for South African companies to get paid by customers located around the world. This new foreign currency withdraw capability from FNB will support the growth of ecommerce in South Africa by giving entrepreneurs and established businesses the opportunity to cater to an international customer base, without having to worry about currency exchange rate risks, and the admin and costs around converting funds unnecessarily,” said Erna Vakis, product head for FNB PayPal Foreign Exchange. “With cross-border shopping set to more than double in the next five years to reach $424 billion by 2021, according to Forrester, there is a massive opportunity for local companies to grow their businesses internationally and we are keen to support this.”
“From our research around the world, we are seeing people shopping online, cross-border in much the same way wherever they are,” said Efi Dahan, PayPal’s general manager for Africa and Israel. “From Johannesburg to Lagos, Tel Aviv, New York, Beijing and Sydney, shoppers are buying similar things for similar reasons. When it comes to online shopping, we really are a global, borderless community. With the launch of this foreign currency withdraw service by our partner FNB, South African merchants have even more opportunity to tap into this growing, global market.”
PayPal allows merchants to accept payments from 188 million active customer accounts in more than 200 countries and markets around the world, using a single payment service that is widely known and trusted. Anti-fraud capabilities, sophisticated customer financial data protection and value-added services such as Refunded Returns service *help merchants drive online sales by keeping their customers comfortable and confident about their purchases.
To take advantage of the foreign currency PayPal withdraw capability, merchants need a PayPal account linked to an FNB online profile. Plus, they need an FNB transactional account and an FNB CFC account to keep their funds in US dollars. There is a minimum withdrawal amount of $5,000 and the service currently only supports US dollar withdrawals, one of the most widely used currencies for trading throughout the world. If merchants choose to convert their PayPal funds to Rands, they can continue to withdraw funds to any South African bank account. As with rand withdrawals, the transactions are fully compliant with South Africa Reserve Bank regulations.
Alan Straton
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Hi Alan – Thanks for a great article into e-commerce transactions for SA folks. Just a question: does one have to have a FNB account to utilise this process, or can one have a CFC account with another bank? Much appreciate your insight. Thanks Allistair.
As I understand it you have to have a FNB CFC account – “Plus, they need an FNB transactional account and an FNB CFC account to keep their funds in US dollars.”
Yes it appears so, and it may be that FNB has the edge over other banks, due to their special relationship to Paypal here. Thank you again.