Mercantile Review

INTRODUCTION TO MERCANTILE

Mercantile Bank Limited is a South African commercial bank that was founded in 1965. It was previously known as the Bank of Lisbon International. Mercantile Bank Limited is headquartered in Sandton, South Africa, and provides products and services in retail banking, corporate finance, asset management, equity brokerage, and security.

Capitec Bank bought Mercantile Bank South Africa in 2019. The South African Minister of Finance and other regulatory authorities formally approved Capitec’s purchase and acquisition of Mercantile Business Bank in October 2019, and as of November 2019, Capitec Bank bought all the shares of Mercantile Bank Ltd from CGD and serves as its business banking branch.

Mercantile Bank Limited’s core focus is on Business and Commercial Banking. The bank provides a wide range of international and local banking services to professionals. Its Alliance Banking division offers credit card, debit card, and payment services to businesses in the financial service industry, while its Treasury division provides customers with a full suite of foreign exchange products.

With Mercantile Bank Limited becoming part of Capitec, an exciting opportunity for the company to expand and diversify was created. Mercantile Bank Limited offers a comprehensive range of products that cater to the banking needs of businesses, positioning them as a nimble and dynamic full-service bank.

The Mercantile Bank Limited product range includes transactional banking, lending, foreign exchange, deposits, payment or services, and private banking exclusively for entrepreneurs.

The purpose and goal of Mercantile Bank Limited as a business is to financially partner with its customers on its journey to creating a successful business, and its vision – what they do as a business for the benefit of its clients and stakeholders is to grow entrepreneurs through successful partnerships.

The bank subscribes to a sustainable future and aims to ensure maintainable practices across the complete scope of its business activities and the activities of its stakeholders, both external and internal. As a member of the Banking Association of South Africa, it subscribes to the Association’s Code of Conduct for Managing Environmental and Social Risk.

HISTORY AND HEADQUARTERS OF MERCANTILE BANK

The Head Office of Mercantile Bank is in Sandown, Johannesburg.

Mercantile Bank Limited was founded in South Africa in 1965 and obtained a banking license in 1989 to become a fully owned subsidiary of Mercantile Bank Holdings Limited, a bank holding company incorporated in January of the same year.

Capitec Bank Holdings Limited is listed on the JSE and owns the operating subsidiary Capitec Bank Limited which acquired Mercantile Bank Holdings Limited in 2019. Capitec Bank is the largest digital bank and the largest bank by active banking clients in South Africa.

SERVICES AND FEATURES OF MERCANTILE BANK LIMITED

Mercantile Bank Limited provides products and services in retail banking, corporate finance, asset management, equity brokerage, and security. The following services and features can be enjoyed by its clients.

Debit order collection

This service allows a person and a business to collect funds owed via the EFT payment stream. You can easily integrate these collection solutions to minimize human intervention, improve accuracy and boost productivity and management by using its automatic account reconciliation tools for EFT items, generated by its systems against your bank account.

You can select payment periods that suit your needs, for example, same-day or next-day collections, and process bulk credit card collections through a preferred credit card acquiring service provider.

You can track a debtor’s account for up to 32 days and process your debit orders when funds become available in the account. This tracking is non-invasive and will not attract a fee to the account being tracked.

DebiCheck services are also available. Its main feature is that the account holder must electronically confirm the debit order request on a once-off basis at the start of a contract before a DebiCheck debit order can be processed against their account.

INVESTMENT POSSIBILITIES WITH MERCANTILE BANK

A customer can enjoy a full suite of Mercantile Bank investment products and services to cater to all his investment needs and deliver a solid return on their investments. The possible account types include Call Accounts, Notice Accounts, and others.

Call Accounts

You can earn an attractive return on any surplus cash, while it is readily accessible whenever you need it, with no notice period applying. The minimum investment is R1 000, and tiered interest rates are applicable.

Notice Deposit accounts

You can earn attractive interest rates on funds with a variety of maturity periods (between 32 and 367 days) to suit your needs and avoid early withdrawal penalties. You need to invest a minimum of R100 000 on the 367-day notice deposit but can earn attractive interest rates.

Tax Exempt Savings Account (TESA)

You can enjoy a TAX-FREE investment account with a great interest rate when you invest up to R36 000 a year or any amount from R1 000 monthly with a lifetime limit of R500 000. Funds are available after a 7-day notice period and accounts may also be opened in a minor’s name, accompanied by a guardian or parent.

Any withdrawals of accumulated savings from your Tax-Exempt Savings Account cannot be replaced and all contributions are subject to the annual and lifetime limits.

There is a withdrawal penalty of R300 applicable if no notice is given. This account can be opened online in minutes.

Mercantile Online Invest

You can experience maximum fund management with Mercantile Online Invest (MOI) which enables third-party fund administrators to manage clients’ accounts online, quickly, securely, and efficiently. This type of investment is ideal for attorneys, accountants, trust administrators, financial intermediaries, and Accountable Financially Institutions or their agents. MOI offers a range of transactional banking tools, which are all aimed at optimizing fund management.

MOI is an Internet-based product delivered through Mercantile Bank’s electronic banking system. It offers seamless and paperless processing of third-party funds and offers administrators excellent functionality.

SAFETY OF MERCANTILE

Mercantile Bank operates compliantly to The Foreign Account Tax Compliance Act (FATCA) or Common Reporting Standards (CRS). It also adheres to all rules applicable via the following:

• Access to Information Act
• Anti-Money Laundering
• Anti-Money Laundering Questionnaire
• Code of Banking Practice
• Electronic Security Update
• Language Requirements Policy
• Mercantile Bank USA Patriot Certificate

ADVANTAGES OF MERCHANT BANKING

Merchant Banking holds some definite advantages for business owners, including the following:

• You will receive corporate counseling

Merchant banks usually provide corporate counseling as part of their service package to corporate units to evaluate the overall financial performance of a company.

• You will receive honest project feedback

Merchant banks will work with a company to develop an idea for a project or review a project profile already created to determine an estimated cost for the project, find financing solutions, and create the action needed to get it off the ground.

• You may be able to restructure your capital

A merchant bank can offer relevant advice to companies about mergers and acquisitions by examining the current capital structure of a company and deciding on the current extent of capitalization as well as recommend alternative capital structures to ensure regulatory and legal compliance in foreign markets.

• You receive portfolio management

Most clients of a merchant bank are institutional investors, looking to create a secure portfolio that will help to build their wealth therefore they may need services required to provide them with an investment mix that fits their needs, considering any tax bracket issues, objects, and the overall return they want to achieve.

• You will receive issue management assistance

Some merchant banks act as a sponsor for bond issues and other forms of financing that a business may require. They will also advise on the type of debentures that are to be issued, such as being redeemable or non-redeemable, convertible, or if they should be linked with equity.

• You can receive immediate debt funding through a merchant bank

Businesses can apply for and receive traditional lending products. An application process for lending will usually require a business plan that looks at total costs, expected returns, and the overall credit profile of the company to determine final eligibility.

• You receive lease financing services

Merchant banks provide finance facilities and leasing to customers which enable them to have use and control over certain assets you may require without the need to take full ownership over them.

• You can protect your IP

Working with a merchant bank means you are working with a partner that creates success for themselves by helping you to be successful. They are invested in making sure your intellectual property, patents, and other tangible assets are properly protected and any information you supply during the merchant banking process will be kept confidential.

• You can have currency exchanges managed for your company

Merchant banks provide funds by issuing a letter of credit which could be received by sellers as payment for a purchase you are making if you look to expand internationally. A merchant bank will also help you manage currency exchanges.

DISADVANTAGES OF MERCHANT BANKING

• Your account will be more expensive than a traditional bank account

Merchant banks usually charge higher fees for their services compared to traditional banking services and products and you may be required to have a minimum net worth to work with the bank.

• Certain size considerations must be met

There are usually size considerations that must be met, which may include revenue minimums, business structure, and more.

• You will always have the risk of a mixed chance for success

Assets are often required for the underwriting process, especially when a business is new to an industry, or entering its first international market. Those assets might need to come from personal assets.

• You are not going to receive start-up funding

You are not necessarily going to receive is start-up funding. Your business must have an established record of success to take advantage of its services.

• You have no control over your interest rates or returns

Most merchant banks will not provide a guaranteed return if you have them managing your investment portfolio. If a company is seen as high-risk, you are going to pay more for the services.

• You may not have access to every potential product

Traditional banks may be willing to lend money to you when a merchant bank does not.

• You will be investigated as part of the funding process

A merchant bank will look at your financial structure, evaluate the security of your assets, and even judge your sureties.

• You do not have a guarantee of a renewal or extension

When funds are made available through merchant banking, they are generally accessible for a brief period only, and receiving an extension of the agreement, or renewal may be uncertain.

• You may have added reporting requirements to meet

A merchant bank will help you make sure that you meet regulatory requirements but will not create the reports for you. There are almost always additional costs associated with added reporting and compliance requirements.

CUSTOMER SUPPORT

You can reach Mercantile Bank by filling out a form on its webpage, making an appointment with them, or contacting them via telephone, fax, or email.  The professional team is available 24/7.

SUMMARY

Mercantile Bank Limited is a commercial bank founded in 1965. It is headquartered in Sandton, South Africa, and provides products and services in retail banking, corporate finance, asset management, equity brokerage, and security.

Mercantile Bank Limited’s focus is on business and commercial banking, and it provides a wide range of international and local banking services to professionals. Its Alliance Banking division offers credit card, debit card, and payment services to businesses in the financial service industry, while its Treasury division provides customers with a full suite of foreign exchange products.

FAQ

What features must be considered when evaluating a payment gateway for your needs?

• Easy integration
• Detailed reporting
• Good invoicing options
• Multiple payment options
• Fast processing speed

What is a payment service provider?

Payment service providers connect merchants, consumers, card brand networks, and financial institutions to deliver a simple payment experience for merchants and their customers by processing payments quickly and efficiently.

Is Mercantile Bank secure?

Mercantile Bank a division of Capitec Bank Limited registration number: 1980/003695/06. An authorized financial services provider (fsp46669) and registered credit provider (ncrcp13).

What products and services does Mercantile Bank offer?

• Business Banking
• Private Bank
• Professionals
• Investment
• Treasury
• Payment and Collections
• Rental Finance
• Business Internet Banking