After rejecting the proposal by commercial banks to collect fees from cash withdrawal transactions from ATMs, the State Bank has turned the green light on the fee collection, despite the strong opposition from the public.
Governor of the State Bank of Vietnam Nguyen Van Binh stated at Agribank’s 2012 business conference recently--that banks would be able to collect ATM fees after reaching all the ATMs throughout the country on a common focal.
Different kinds of ATM fees
Different kinds of ATM fees have been set up by commercial banks, including the first card issuance fee (50,000-90,000 dong), the card replacement fee (25,000-66,000 dong), the PIN re-issue fee (10,000-33,000 dong), the annual fee (account management fee) 39,000-132,000 dong, complaint fee (10,000-110,000 dong), money transfer fee (1650 dong, up to 0.05 percent of the transferred sums of money), inter-network cash withdrawal (3300 dong).
Especially, ATM card users also have to pay the statement copy fee of 550-1650 dong, pay 5000-20,000 dong to get the cards seized by ATMs, and pay 10,000 dong for the lost card fee.
Banks don’t take loss with ATM transactions
Commercial banks, while reporting big profits after fiscal years, always complain that they still incur losses with ATM services. However, analysts have pointed out that it is not true that the services cannot bring profits.
The card association has reported that 40 million cards have been issued so far, and if noting that the minimum card issue fee is 50,000 dong, one could see that the total fee has reached 2 trillion dong. With the minimum annual fee of 39,600 dong per annum, banks can earn 1500 billion dong.
As such, banks can collect 3500 billion dong from the two kinds of fee alone. Besides, they can also benefit from the low-cost capital, which is the minimum balance card users keep on their accounts.
Who will pocket the ATM fees?
The Vietnam Card Association has been insisting on charging fees for the transactions with ATMs, even though the plan to collect fees has been delayed many times since it did not get the approval from the State Bank.
banknetvn.com.vn, the official website of the Vietnam Finance Switching Company shows that when commercial banks collect 3300 dong for every inter-network ATM transactions, Banknetvn would get 50 percent, while the remaining would be pocketed by the banks. Supposed that ¼ of the existing 40,000 cards have inter-network cash withdrawal transactions, once a month, Banknetvn would get 198 billion dong a year.
As for the information query fee, statement copy fee or transfer fee of 1650 dong, Banknetvn would get 550 dong, while the card payment institutions get 1100 dong.
In the future, if the inner-network transaction fee is applied, while the inter-network transaction fee increases, this means that all the 40 million card holders have to pay fee for every cash withdrawal, the sum of money Banknetvn can pocket would reach 1 trillion dong a year.
It is understandable why the attempt by commercial banks to collect fees from card users has been facing the strong opposition from the public. Analysts believe that ATM cards have been issued mostly to workers at enterprises and officers of agencies, which means that the majority of card holders are the people who do not have high income. Therefore, the charge of 3300 dong or 5500 dong for every transaction proves to be a burden on workers.
Analysts have warned that “everything has its breaking point”. If the fees workers have to pay put a burden on them, they may stop using cards and ask salary payment in cash.
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