Actively trading businesses are on the rise in Australia, increasing by 3.1% since 2015-16 to over 2.2 million in 2016-17, according to the Australian Bureau of Statistics. With more businesses actively operating, business transactions are a vital component of the Australian economy, but what makes a good value savings and transaction account for business owners? Canstar investigates.

The fees business owners can expect to pay for a transaction account can be determined by factors including business type, transactional behaviour and required account features. After analysing 79 business savings and transaction accounts, Canstar Research crunched the numbers on the average overall costs.

Some business transaction accounts charged fees for services like ATM withdrawals, cheque deposit or withdrawals, EFTPOS transactions and internet transfer. Combining all the fees that could apply to your business, the maximum account keeping fee on the market could have set you back $22 per month, or $264 per year. That compared to the minimum market fees of $0 per month with the same transactional behaviour.

According to Canstar data, some business transaction accounts also set limits around the number of free transactions each month, being on average 34. This is an important consideration for businesses as the fees charged once the free transactions are used can add up quickly. This can be avoided with some accounts that offer unlimited free transactions or do not charge for many common types of transactions.

Considering the variations in fee structures and transaction costs, business owners could benefit from comparing their options to understand the accounts that best meet their needs.

Costs compared:  A cafe, a coffee cart and a coffee supplier

In terms of transaction and account keeping fees as well as the interest rate earned, Canstar found the difference between a 5-Star business transaction account and the market average could make a big difference in the net cost to a business.

To demonstrate the potential difference in costs for a business transaction account currently on the market, we can look at some case studies for businesses with varying transactional needs.

  Coffee cart (low transactor) Cafe (high transactor) Coffee roaster (electronic transactor)
Average 5-Star Average Average 5-Star Average Average 5-Star Average
Number of Transactions (p/m) 40 100 100
Fees Charged (p/m) $13.06 $0.08 $20.24 $4.00 $17.67 $1.67
Interest Earned (p/m) $0.51 $0.07 $0.51 $0.00 $0.76 $0.07
Net Cost over 12 Months $150.60 $0.12 $236.76 $48.00 $202.92 $19.20
Source: www.canstar.com.au
The above scenarios are calculated with transactional behaviour assumptions as outlined in Canstar’s Business Savings and Transaction Accounts Star Rating Methodology. The above calculation also assumes an average monthly balance of $10,000 and an average monthly deposit of $100,000 for High transactor and Electronic transactor while the Low transactor uses an average monthly deposit of $20,000. Fees Charged included transaction fees and account keeping fees with any relevant rebates and fee waivers applied. Interest earned is calculated from the average base rate from the 6-months previous to 1/6/2018.

For a ‘low transactor’ business (making 40 transactions per month), such as a coffee cart, you could end up paying $150.48 more over 12 months on average if you went for an average business transaction account rather than a 5-Star account.

A ’high transactor’ business (making 100 transactions per month including manual transactions), such as a café, would generally have slightly higher net costs than that of a low transactor business like the coffee cart due to the number of transactions per month. The cafe’s business transaction account on average would have an annual net cost of $236.76, compared to an average $48 with a 5-Star account.

An ‘electronic transactor’ is generally a business that relies more on electronic payments (making 100 transactions per month), such as a coffee roaster who buys/sells stock and equipment online or with EFTPOS. The average annual net cost for the coffee roaster using a 5-Star transaction account would on average be $19.20 – over $180 less than with an average account in this profile.

The results from this case study show the importance of taking both fees and interest into consideration when choosing an account. While the average interest earned per month in this example was on average lower with the 5-Star accounts, the fees charged are the main consideration for a business transaction account.

2018 Business Savings and Transaction Accounts Star Ratings

After analysing 79 products from 36 providers, Canstar has announced the winners of the 2018 Business Savings and Transaction Accounts Star Ratings. These Star Ratings involve a sophisticated rating methodology, unique to Canstar, which compares business deposit accounts in Australia. Adapting to the changing needs of the industry, this year the methodology used was refreshed to consider additional information around smart ATMs, coin deposit and counting machines, payroll functionality, self-service and security functionality specific to businesses.

Even though features available for business transaction accounts were found to be relatively consistent across the market, Canstar’s Group Manager of Research and Ratings Mitch Watson said different features were required by different types of businesses.

“A business, for example, that only receives and sends electronic payments would not utilise the benefits of branch access and 24-hour deposit boxes, whereas these features could be important for a cash-reliant business,” Mr Watson said.

“Some stand-out features among the 5-Star accounts include online application availability, overdrawn account notifications, free small overdraft, sweep facility, secondary authentication, 24-hour help, online management of additional users and the availability of 24/7 deposit boxes, smart ATMs and coin counting machines.”

As for business saving accounts considered in these Star Ratings, the Canstar Research team compared minimum and maximum interest rates and saw a decrease in rates compared to 2017.

Business Saver – Base Rates
Year Minimum Maximum Average 5-Star Average
2017 0.50% 2.05% 1.10% 1.82%
2018 0.50% 1.80% 1.03% 1.75%
source: www.canstar.com.au
The minimum, maximum and average base rates displayed above are current as at 1/06/2017 and 1/06/2018 respectively and are calculated based on a balance of $50,000 for eligible business savings accounts as defined in Canstar’s Saving and Transaction Accounts Star Rating Methodology.

The results showed despite this decrease, there were opportunities for a business to earn additional wealth in a savings account. With a 72 basis point difference between the average 5-Star and market average business savings account (1.75% compared to 1.03% p.a.), Canstar Research showed it was important for business owners to compare products to get the best deal for them.

5-Star Business Savings and Transaction Accounts

The five profiles assessed for Canstar’s Business Savings and Transaction Accounts Star Ratings were:

  1. Business Saver
  2. Business Cash Manager
  3. Business High Transactor
  4. Business Low Transactor
  5. Business Electronic Transactor

Listed in the tables below are the 5-Star rated products for each category:

1.      Business Saver

The following Business Saver savings accounts received a 5-Star rating in July 2018:

Company Name Product Name
AMP Bank Business Saver Account
Arab Bank Australia Online Savings Business
Community First CU FirstBiz Online Savings
ME Business Online Savings Account
People’s Choice Credit Union Business Online Account
Source: Canstar Business Savings and Transaction Accounts Star Ratings 2018

Compare Business Saver accounts with Canstar

2.      Business Cash Manager

The following Business Cash Manager accounts received a 5-Star rating in July 2018:

Company Name Product Name
BOQ Business Management Account
Citi Ultimate Business Saver
IMB Business CMA
Source: Canstar Business Savings and Transaction Accounts Star Ratings 2018

Compare Business Cash Manager accounts with Canstar

3.      Business High Transactor

The following Business High Transactor accounts received a 5-Star rating in July 2018:

Company Name Product Name
ANZ Business Advantage
Bankwest Business Zero Transaction Account
Citi Ultimate Business Saver
NAB Business Everyday Acc ($10/m fee)
People’s Choice Credit Union Business Access
Source: Canstar Business Savings and Transaction Accounts Star Ratings 2018

Compare Business High Transactor accounts with Canstar

4.      Business Low Transactor

The following Business Low Transactor accounts received a 5-Star rating in July 2018:

Company Name Product Name
Bankwest Business Zero Transaction Account
BOQ Everyday Business Account
Citi Ultimate Business Saver
Greater Bank Business Optimiser Account
Heritage Bank Business Cheque Facility
People’s Choice Credit Union Business Access
People’s Choice Credit Union Business and Community Acc
Source: Canstar Business Savings and Transaction Accounts Star Ratings 2018

 

Compare Business Low Transactor accounts with Canstar

5.      Business Electronic Transactor

The following Business Electronic Transactor accounts received a 5-Star rating in July 2018:

Company Name Product Name
Bankwest Business Zero Transaction Account
Citi Ultimate Business Saver
Commonwealth Bank Business Transaction Account
NAB Business Everyday Acc ($0/m fee)
People’s Choice Credit Union Business Access
People’s Choice Credit Union Business and Community Acc
Source: Canstar Business Savings and Transaction Accounts Star Ratings 2018

Compare Business Electronic Transactor accounts

View Research Methodology

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