The recent news from the Central Bank of Iran to oblige charging of transaction fees from 1,000 to 1,500 rials per transaction (pending Money and Credit Council final approval) on ‘Point-of-Sales’ terminal holders as of October 23, has stirred a hot debate and provoked concerns among customers and various reactions against and for it among retailers and shop owners. The decision comes amid the efforts that first started in February 2007 by the CBI, and again in 2011 in the form of directives obliging fees on certain value-added services. The CBI directives have not been enforced yet as the banks were busy competing for new account holders. But this seems to be final call. Up until now, the banks have shouldered the cost of transaction fees on POS terminals; however, the one-way contribution is not “sufficient” to cover the future development costs of electronic payment systems, according to Saman Qotbi, former managing director of Shaparak – the country’s electronic card payment system.
Each POS terminal’s lifespan is five years and the price of each five million rials. The total number of 3,200 million POS terminals in the country has around 20% depreciation costs, or 3,000 to 4,000 billion rials. In addition, electronic payment systems annually require 8,800 billion rials to be maintained, of which only 4,400 billion rials is earned through account balance and bill payment fees, etc. and the subsidies paid by the banks. 4,400 billion rials is still missing to meet the costs incurred by electronic payment providers, according to Naser Hakimi, manager of payment systems of the Central bank of Iran.
The hesitation to enforce the initial CBI directive of 2007 and 2011 may have well helped institutionalize the culture of POS terminal employment among merchants and shopkeepers who traditionally preferred cash transactions. The POS terminals have since ensured security and more quality payment services and have proved to be more economical, according to Qotbi.
Nevertheless, the implications of the new decision may reverse the trend and change the behavioral patterns of customers on the one hand, and the shopkeepers on the other. Qotbi said the new decision has “nothing” to do with the customers or card holders and the rate under review will not be significant for POS terminal holders, but it may also push both groups to migrate to old ways of cash transactions or drive shopkeepers to charge extra on customers to make up for the fees. This would open the doors to abuse and violation though the CBI has already called on the public to report the cases where shopkeepers demand cash instead of POS payment, according to Hakimi.
Some critics argue that the services offered on POS terminals are free of charge in many parts of the world. In fact, in many countries 1.5% to 2% of transacted amount is charged as fees on POS terminal holders. Apart from that, the shopkeepers are charged extra costs for paper and maintenance while in Iran, they are exempted from all such costs.
At the moment, Iranian banks charge customers 5,000 to 9,000 rials as a payment transfer fee on their ATM and internet transactions and 1,000 rials to check account balances while the same service is free of charge on POS terminals; the card holders do not incur a fee for using the service. Instead, their banks pay 1,206 rials as fees to shopkeeper’s bank and SHETAB – Interbank Information Transfer Network.
