FIRST National Bank (FNB) has extended cash withdrawals to retailers Pick n Pay and Shoprite as part of efforts by South Africa's third-largest retail bank to reduce foot traffic in its branches and cut transactions costs for customers.

"FNB cheque cards now enable cash back at both Pick n Pay and Shoprite Checkers," said Michael Jordaan, CEO of FNB, on his Twitter account.

South Africa's big banks are leading their global peers in innovating with new delivery channels and have been quicker to take advantage of the growing convergence between mobile and banking technology.

With pressure mounting from the government to lower transaction and banking fees, the big banks have created teams to work on innovations such as money transfers and bill payments via cellphones.

The banks are partnering with retailers to allow their customers to withdraw from till points at a fraction of the cost charged at automated teller machines (ATM) or over the counter at branches.

Mr Jordaan said the FNB facility was free to cheque-account customers on the bank's unlimited pricing option. He said customers could also make an unlimited number of cash-back withdrawals at the retail point of sale.

"For holders of FNB gold and platinum cheque accounts on a pay-as-you-use pricing option, the charge (for withdrawing cash from a point-of-sale device) is 90c compared with an ATM cash withdrawal fee of R6 per R500 (up) to a maximum of R24," he said.

While FNB does not envisage the ATM becoming obsolete as a cash-withdrawal facility, it believes that over time it could become a less attractive option because of the costs involved.

"ATMs will continue as a key delivery channel for customers drawing cash outside shopping hours and for customers who do not want to make a purchase at a retailer," said spokesman Steve Higgins.

Absa recently said it was introducing a new generation of ATMs as part of a major roll-out of its digital banking strategy. The machines will have wider applications such as electronic bill payment and making cash deposits.

The Barclays-owned banking group is also trying to migrate its customers to digital channels, including mobile banking.