The Central Bank of Iran has told banks to raise fees for banking services in rial and electronic modes. It also unveiled a long-awaited fee model for transactions per which payment acquirers, shops and retailers will be charged for transactions via POS terminals.
New banking fees were implemented on May 7, the bank said allowing lenders to offer up to 30% discount on banking charges to promote competition between banks. Moreover, lenders are allowed to offer up to 40% discount on charges related to knowledge-based companies.
Bank fees have remained unchanged since 2020.
Per the CBI announcement, transferring money through ATMs and mobile applications (via Shetab interbank transaction system) costs 7,200 rials for transactions up to 10 million rials. Customers will be charged an extra 2,800 rial for transferring every 10 million rials over and above the initial amount.
Transferring money using PAYA, the domestic electronic clearing house, costs 0.01% of the transfer amount as of Sunday. According to the CBI, the cap on fees for transactions via PAYA is 30,000 rials.
Transactions made using SATNA, Iran's domestic Real Time Gross Settlement system, costs 0.02% of the transactions' value.
Fee for checking account balance is 1,440 rials, double the current rate. Customers should also pay 1,800 rials, if they need to check details of the 10 last transactions of their account(s). The fee for issuing new bank cards has been raided to 72,000 rials.
Charging Retailers
Services such as providing cards, issuing guarantee letters, cash transfers, interest-free loans and LCs are among the main sources of bank income. However, customers were not charged so far for transactions within Shaparak Network, the domestic e-payment network.
Up until the weekend, banks receiving and making payments had to bear the bulk of payment fees because when a payment was made with a bank card, the bank receiving the payment has to pay a fee to the bank whose card has been used. This was on top of the amount banks pay as rent and support fees for each POS device to payment service providers.
Unlike the past the new system requires shops, where POS terminals are used, to pay a fee for each transaction they process.
In the new model three parties will bear the cost, namely the merchant, issuing bank and the acquiring bank even though banks are still responsible for the big portion of the costs.
Acquiring banks used to pay between 500 to 2,500 rials for each transaction. Whereas, in the new system acquiring banks will pay 0.0005 rials as transaction fee.
CBI research indicates implementation of the new model should reduce bank costs by 48% that will instead be paid by retailers.
Based on the new formula, merchants pay a fixed fee of 1,200 rials for transactions below 6 million rials and 0.0002 (two-thousandths) of the transaction amount up to a cap of 40,000 rials for transactions above 6 million rials.
The current transaction ceiling is 1 billion rials; therefore, under the new plan, a merchant will have to pay a maximum fee of 40,000 rials for a 1-billion-rial transaction while (debit card) issuing banks will pay a fixed amount of 240 rials for each transaction.
CBI expects more than 41% of retailers pay less than 10,000 rials per day in fees. The average daily fee for nearly 62% of the shops will not exceed 20,000 rials simply because such retailers have a high number of small transactions
However, acquirers with larger payment transactions, such as currency exchange shops, gold shops and financial service providers are charged higher.
According to the regulator, the new model will be implemented in phases and some businesses such as supermarkets and bakeries will exempt from the fees in the initial stages.
Per rules, lenders can charge customers proportionate to the total cost of the services they provide. However, banks have largely waived the fee over the past decades to compete in the market saturated with banks.
Talk of rewriting bank service fees has been around for years but was in limbo apparently due to the perceived negative response of the public, particularly at a time when most households at the lower end of the economic ladder are already saddled with high and rising living costs.
The latest measure follows calls from market players for reforming the fee system. In late 2022, Mehran Mahramian, CBI's deputy for innovative technology, said reforming the commission system was a priority.
