A review of the average fees acquiring banks must pay for transactions shows that small payment transactions add to their costs.
Data released by Shaparak, the company in charge of the nation’s e-payment network, show that acquiring banks paid 98 rials per every 100,000 rials of transactions.
A precise review of the average value of transactions acquired by banks shows that banks with higher number of small transactions obviously have higher costs.
Bank Sepah, the largest government-owned bank, paid 145 rials for every 100,000 rials worth of transactions during the month to August 22. Qarzolhasaneh Mehr Iran Bank, also a government lender, was next with 127 rials, followed by Noor Credit Institution and Parsian Bank with 126 and 125 rials, respectively.
Karafarin Bank recorded the best performance among commercial banks, paying 62 rials for 100,000 rials in transactions. Sina Bank followed with 63 rials and Ayandeh Bank and Bank Tejarat with 69 rials.
Shaparak said lenders need to be cost-effective and efficient in marketing POS devices if they want to cut costs. Almost one-third of the transactions made via POS terminals were each barely worth 50,001 to 250,000 rials. An estimated 52.4% of the total POS transactions were above 250,000 rials.
Shaparak data shows that 81.65% of the transactions made by POS terminals were worth 1 million rials or less. It said some 3.7 billion retail transactions were processed in the fifth month of the calendar year to August 22 worth 6,762 trillion rials ($22.46 billion).
The cost of payment transactions is a long pending e-payment issue. The Central Bank of Iran has tried time and again but failed to rewrite the procedure acceptable to all sides.
Unlike in most countries, debit card holders in Iran are not charged for e-payments when buying goods or services. The decision (not to pay) was made years ago, when the CBI started promoting debit cards.
Banks receiving and making payments now pay the bulk of fees because when a payment is made with a bank card, the bank receiving the payment has to pay a fee to the bank whose card has been used.
This is over and above the amount banks pay as rent and support fees for each POS device to PSPs. Besides, a portion of the fee, 500 rials, goes to companies in charge of maintaining the payment network.
Top Acquiring Banks
Shaparak reported that Bank Mellat handled 18% of the e- transactions in the month to August 22. Bank Sepah and Bank Melli, both owned by the government, ranked next with 15% and 14.2% share from the total transactions.
Acquiring banks are financial institutions offering merchant accounts to businesses. The special accounts are necessary for merchants to receive debit and credit card payments directly. Acquiring banks are also be referred to as merchant banks or acquirers.
Bank Saderat, Bank Keshavarzi and Tejarat Bank were the other major names in the list. Mellat topped the list in terms of the total value of acquired transactions, with 18.61%. Bank Melli and Bank Saderat ranked after with 13% and 10.9%, respectively.
New Measures
To alleviate the high costs, the regulator has come up with new measures to help lenders cut costs for POS transactions.
According to Kazem Dehghan, the CEO of Shaparak , the network processes an estimated 40 billion transactions a year, 90% via POS terminals. Printing the transaction receipts costs nearly 7 trillion rials ($23.2 million), the company website quoted him as saying this week.
“Printing POS receipts was optional for transactions worth 500,000 rials or less accounting for almost 40% of the total transactions,” he said. “As per the new move, the cap has been raised to 2 million rials or less, accounting for 80% of transactions.”
As per law, banks send an electronic version of the receipt to cardholders via SMS. Therefore cardholders have been urged not to ask for a print of the receipt, expect when it is important, he added. Offering a printed receipt is a must on cardholders’ demand.
