The Central Bank of Iran says it will revise banking fees starting from the beginning of the calendar year in March.
Mehran Mahramian, the CBI's deputy for innovative technologies, in a talk with the Electronic Banking website, said the regulator is in the process of reviewing its policies and "The next step will be revising bank service fees." He did not elaborate.
Last year, the CBI instructed banks to charge higher fees for banking operations in rial and electronic banking services.
Based on CBI rules, transfers through ATMs and mobile applications cost 6,000 rials for transactions up to 10 million rials. Customers are charged an extra 2,400 rials for transferring every 10 million rials over and above the initial 10 million rials. ATM services are the most popular in Iran.
Transferring money using PAYA, Iran’s electronic clearing house, and SATNA, internationally known as Real Time Gross Settlement, will cost 0.02% of the transfer amount as of Nov. 22.
Fee for checking account balance will be 200 rials, double the current rate. Customers should also pay 1,500 rials, if they need to check details of the 10 last transactions of their account(s). The fee for issuing new bank cards has been increased to 30,000 rials.
Government plans to revise upwards bank charges has been in the making for years but was put on hold apparently due to the perceived negative response of the public, particularly at a time when most households at the lower end of the economic ladder are already saddled with high and rising living costs.
At present, banks receiving and making payments bear the bulk of payment 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 on top of the amount banks pay as rent and support fees for each POS device to payment service providers.
Saturated Market
Lenders can charge customers proportionate to the total cost of the services they provide. However, they have largely waived the fee over the past decades to compete in the market saturated with banks.
Last year, Shaparak Company, the supervisory body of the domestic payment network, said that the CBI would take the plunge to reset the payment fees system by July 2022. Observers say hesitation in reforming the current system could result in extra pressure on the payment services sector.
This is while, experts are pessimistic about any change in the current model, saying that it benefits almost stakeholders in the market except for banks and payment service providers.
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 show acquiring banks pay 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 incur 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. Qarzol Hassanah 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 had 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.
Bank Portfolio
A recent study published by the Persian-language economic newspaper Donya-e-Eqtesad shows that fees on services accounts for nearly 12% of listed banks' revenue, whereas it is 32% for European banks. The report said that lenders' income from fees jumped 80% in the fiscal year to March 2022, compared to the same period last year.
Tejarat Bank topped the list generating the highest net income from charging customers for banking operations during the last fiscal year. Bank Saderat Iran and Bank Mellat ranked after.
Resalat Qarz Al-Hassanah Bank was in the lead in terms of the role of fees to the total annual income, with 24%. EnBank was next with 23% followed by Tejarat bank 16%.
