Iran Chamber of Guilds has called for changes in the newly-unveiled system for e-payment transactions fees so that cardholders pay a share of the charges.
According to the chamber, starting from July 4, all payment acquirers, except bakeries, supermarkets, and online payment gateways, have been obliged to pay a fee for every transaction. “This has increased the financial burden on merchants under the existing challenging conditions,” a board member of Iran Chamber of Guilds, Mehdi Omidvar, was quoted as saying by Mehr News Agency.
“According to financial experts, this platform is not really usable for calculating business profits from sales and determining income tax. It is obvious that tax should be based on profit, not the amount of sales. These are two reasons why businesses find the use of POS terminals, which has become part of the purchasing process culture, unfeasible,” he said.
“Businesses expect appropriate services in proportion to the costs they pay,” Omidvar said. “We cannot simply copy the tax systems and fee collection from advanced countries and at the same time ignore their service provision. We have not extended these services widely enough for businesses."
Businesses demand banks offer them special and expedited services, he recalled. “For example, in other countries banks have special incentives for businesses, facilitate installment sales, credit cards and other special offers. Banks in our country lack this key criteria."
He continued, "On the one hand, directing the flow of purchases towards e-payment and card reader devices has been the result of years of sociocultural promotion by economic organizations in our country because it has brought benefits, including transparency, better monitoring and control of money transfers, reduction in the cost of printing paper money, time-saving for banks, increased efficiency, customer satisfaction, and other advantages.
It is expected that implementing the new fee collection from card reader devices will be in line with other policies and their convergence."
Sharing the Costs
He called for rethinking the model in a way that it charges card holders a portion of the e-transaction fees. “Banks, acceptors and cardholders must also share the costs and transaction fees.”
The Central Bank of Iran has stressed that cardholders should not pay any fees in the newly-unveiled model for electronic payment transactions.
“Charging customers for transactions via POS terminals is illegal and there is no exception to the rule,” Mehran Mahramian, the CBI deputy for innovative services, said.
“In the new model, retailers, who accept payments via POS terminals must pay a portion of the fees, not customers,” he said.
The new fee system for payment transactions came into effect on Sunday. Henceforth, retailers and shop owners who use POS terminals for e- payments will have to pay a portion of the cost of the service, IBENA reported.
In a press release posted on its website, CBI said despite the fact that retailers will pay a fee for accepting card payments, the banks still cover a significant portion of the cost for e-payments.
It published a list of businesses exempt from paying fees until further notice, including bakeries, groceries, supermarkets, drugstores, hospitals, gas stations, handicraft shops, taxi services, schools, charities, bookstores, newsstands and utilities like electricity, water and natural gas.
In the new model, three parties will bear the cost, namely the merchant, issuing bank and the acquiring bank.
Acquiring banks used to pay 500 to 2,500 rials for each transaction, whereas in the new system, acquiring banks will be charged 0.0005 rials as transaction fee.
CBI research shows the implementation of the new model should reduce bank costs by 48% that will instead be paid by retailers.
Based on the new formula, merchants will pay a fixed fee of 1,200 rials for transactions below 6 million rials and 0.0002 (two-thousandths) of the transaction up to a cap of 40,000 rials for transactions above 6 million rials.
CBI says almost 40% of retailers pay less than 10,000 rials a 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 e-transactions
