Iran Chamber of Guilds has voiced support for moves by the Central Bank of Iran in introducing a new model for e-payment transaction fees obliging retailers to pay fees for every transaction they make by POS terminals.
"Retailers and businesses are aware of the benefits of using card readers. Therefore, since transaction fees can and will help strengthen banking services and expand the payment network, they will certainly support and endorse it," Ghasem Nodeh Farhani, head of the Iran Chamber of Guilds, told ISNA.
Nodeh Farhani admitted that the financial status of businesses today is simply not comparable to the past. "In the past businesses faced much difficulties in transferring money. Now with card readers people have no need for cash. This indeed has had a positive impact in terms of time-saving."
According to him, tradespeople should know the real cost of services they get and be willing to pay for it. "Transparency is necessary and fees should not be arbitrary. Furthermore, it is essential to raise public awareness regarding the need and importance of paying fees."
Elaborating the point, he said, "Actually they are paying for the services they receive. To sustain such a trend cultural harmony and education and information dissemination is a must.”
"When a POS terminal is used money is transferred directly to the retailer’s account, which is instrumental for any business."
Nodeh Farhani's remarks come amid the ongoing debate over reforming the fee system for bank services and electronic payment. The aim is to create a fair and transparent framework that accurately reflects the value of the services provided and promote a culture of fee payment.
The reform seeks to address concerns related to excessive or arbitrary fees and ensure that traders fully comprehend the benefits they get for the fees they pay.
Use of POS terminals and e-payment systems has seen significant growth in recent years in Iran. These have not only facilitated financial transactions but also reduced reliance on cash, leading to greater efficiency and convenience for businesses and consumers alike.
To successfully implement the fee reform, it is crucial to foster a comprehensive understanding among traders, businesses and the public at large about the necessity of paying fees for services. Improving cultural outlooks and effective communication campaigns can play a key role in promoting this understanding and create a positive environment for reform.
New Model
The Central Bank of Iran unveiled a long-awaited fee model for transactions per which payment acquirers, shops and retailers will be charged for transactions via POS terminals.
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.
The CBI says almost 40% of retailers pay less than 10,000 rials per day in fees. The average daily fee for nearly 62% of the shops in the new system should 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 will be 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.
