Economy, Business And Markets

Transaction Fees: Fair or Unfair?

Transaction Fees: Fair or Unfair?
Transaction Fees: Fair or Unfair?

The Central Bank of Iran is reportedly planning to charge citizens for transactions that are done via card machines installed in stores at the beginning of the next Iranian month, starting October 23.

Mohsen Ghaderi, CEO of Shaparak Company – a firm that aims to integrate electronic payments in the country –earlier said the central bank had so far financed transaction fees from its own resources. The bank, he said, did so to encourage people to use point of sale (POS) services instead of paying in cash.

Now people have got highly accustomed to making most of their purchases using ATM cards instead of paying in cash. The cards are extremely prevalent in Iran and most of the people have more than one of them. People do most of their daily retail purchases with ATM cards and rarely carry too much cash with them.

Experts appear to have totally differing opinions on the matter, though. Some of them believe that the fees are necessary, simply because you can never use a service for free. It is a bad habit that has been developed among people in Iran, so that now they still expect other organizations to pay the charges, the argue.

All around the world people pay charges whenever they want to use card machines to pay. For example in Britain, shop owners pay an average of 7% of the total amount of the transaction. Besides, if you want to use POS machines, your purchase must exceed a minimum amount, between 10 or 15 British pound and sometimes even more.

On the other hand, some experts believe that the fees are unfair.  Kazem Ayatollahi, Head of Iranian ICT Guild Organization, has seriously reacted to the central bank’s recent move, arguing that the bank has taken the decision without taking into account the opinion of his organization – an entity established in 2005 upon the integration of Iranian informatics companies in conformity with Article 12 of the law to protect the intellectual rights of computer software developers, approved in 2000 by the parliament.

He described the action as a punishment for citizens that have recently turned to electronic services for conducting their banking operations, saying that once the central bank starts taking the transaction fees, people will go back to traditional cash purchases.

Although the amount of these fees is said to be negligible – about 300 rials for sending messages to customers – given the high transaction numbers done each day, banks can make a huge amount of profit.

Decisions like this could raise concerns among the public, as they have already started circulating messages on social networks as to warn each other about what is happening.   

On Monday, Mehr news agency reported that most of commercial banks charge their customers for sending them text messages, most of who do not even aware of it.

The central bank has highly been criticized by businessmen and the media for supporting such an action in recent days. The bank is yet to react to rising criticisms.

However, officials had recently announced that CBI is about to introduce a new instrument, called e-wallet, for managing retail purchases of the citizens, under a system called “Sepas” to lower transaction costs. The project has been favored by a few commercial banks, which have already invested in it.