The new system for e-payment transaction fees has been well received by academia and experts who say it can help banks grow and develop much-needed modern infrastructure.
Albert Boghazian, an economic expert and university instructor, spoke of need to reform the banking fee mechanism and its impact, including fixing bank imbalances, in an interview with IBENA reporter.
“The measure may not have a great impact on improving years of bank imbalances because they are largely due to loans that banks have paid but are unable recover on time. However, the positive feature of reforming the fee system should be seen in other areas, such as network infrastructure development and improving e-services,” Boghazian said.
Recalling that banks, as financial intermediary institutions, should steer clear of areas other than banking services, he said: "Banks should not become real estate companies due to various difficulties. Buying property and leaping into other non-banking businesses” must be avoided.”
The essence of their operations is and must be banking services (lending) and collecting fees to grow and propser, he added.
Regarding the role of a robust fee system in developing the operational banking network, the economist said, "Needless to say, it will lead to the establishment and development of a secure and efficient network that benefits both banks and customers. Moreover, lenders can update their systems as per international standards minimizing potential errors in transactions, enhancing network security and speed."
The CBI recently unveiled a long-awaited fee model for transactions per which payment acquirers, shops and retailers will be charged for transactions via POS terminals.
Before the implementation of the new system, 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.
Now three parties will bear the cost, namely the merchant, the card 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 payment transaction. Henceforth acquiring banks will pay 0.0005 worth of each payment transaction as fee.
