stoke
09-05-2006, 09:16 AM
Source : http://www.fin24.co.za/articles/business/display_article.asp?Nav=ns&lvl2=buss&ArticleID=1518-1786_1929594
09/05/2006 08:15 AM
By: Lizel Steenkamp
Johannesburg - Every year South Africans pay billions of rands for transactions for which banks charge exorbitant fees that have little or no bearing on what it costs to do the deal.
The Competition Commission suspects that banks join forces in fleecing clients, especially in transactions where more than one bank is involved. Now the banks are going to be forced to explain in public why bank charges are so high.
The planned hearings are the result of an investigation by the commission into SA's national payment system (NPS) in order to determine what affect it has on bank charges.
The NPS is an essential infrastructure that handles the payment of money between individuals and businesses when different banks make payments. For example, such payments occur when you use a credit card, debit card or debit order or when you write a cheque or draw cash from another bank's ATM.
Though the NPS is partly owned and controlled by the SA Reserve Bank, SA's Big Four banks have 93% control over the system - Bankserv - that handles the majority of transfer transactions (payments) in the NPS.
Pure profit
Transaction fees are charged on every payment between individuals and dealers from different banks. However, only 2% of the transaction fee goes to Bankserv - the banks involved gobble up the rest.
A report compiled for the commission revealed that banks - including Absa, FNB, Nedbank and Standard Bank - earn R29bn (that's 38% of their total income) from such transaction fees annually. It's estimated that as much as R10bn of that is "pure profit".
Penny Hawkins, of FEASibility - the contractor that conducted the research - says in her report that there's little relationship between the actual cost of these transactions and the exorbitant amounts clients have to pay for them.
A simple example is when you draw cash from another bank's ATM. The report says you pay an average of R10 for every R100 you draw at the other bank: R3.90 of that goes to the other bank that provides the infrastructure (the ATM), R5.97 goes to your bank (the bank that issued the card) and a mere 13c - or 1% - goes to Bankserv for operating costs.
What's shocking is that an ATM withdrawal of R100 at your own bank costs an average of just R3.89. That's considerably less than the amount your bank earns when you draw money at another bank's ATM.
"Our NPS is a sophisticated system and very efficient. That's why you'd expect transaction costs to be significantly lower," says Andreas Bertoldi, joint writer of the report.
.... the article continues
Holy Guacamole !
09/05/2006 08:15 AM
By: Lizel Steenkamp
Johannesburg - Every year South Africans pay billions of rands for transactions for which banks charge exorbitant fees that have little or no bearing on what it costs to do the deal.
The Competition Commission suspects that banks join forces in fleecing clients, especially in transactions where more than one bank is involved. Now the banks are going to be forced to explain in public why bank charges are so high.
The planned hearings are the result of an investigation by the commission into SA's national payment system (NPS) in order to determine what affect it has on bank charges.
The NPS is an essential infrastructure that handles the payment of money between individuals and businesses when different banks make payments. For example, such payments occur when you use a credit card, debit card or debit order or when you write a cheque or draw cash from another bank's ATM.
Though the NPS is partly owned and controlled by the SA Reserve Bank, SA's Big Four banks have 93% control over the system - Bankserv - that handles the majority of transfer transactions (payments) in the NPS.
Pure profit
Transaction fees are charged on every payment between individuals and dealers from different banks. However, only 2% of the transaction fee goes to Bankserv - the banks involved gobble up the rest.
A report compiled for the commission revealed that banks - including Absa, FNB, Nedbank and Standard Bank - earn R29bn (that's 38% of their total income) from such transaction fees annually. It's estimated that as much as R10bn of that is "pure profit".
Penny Hawkins, of FEASibility - the contractor that conducted the research - says in her report that there's little relationship between the actual cost of these transactions and the exorbitant amounts clients have to pay for them.
A simple example is when you draw cash from another bank's ATM. The report says you pay an average of R10 for every R100 you draw at the other bank: R3.90 of that goes to the other bank that provides the infrastructure (the ATM), R5.97 goes to your bank (the bank that issued the card) and a mere 13c - or 1% - goes to Bankserv for operating costs.
What's shocking is that an ATM withdrawal of R100 at your own bank costs an average of just R3.89. That's considerably less than the amount your bank earns when you draw money at another bank's ATM.
"Our NPS is a sophisticated system and very efficient. That's why you'd expect transaction costs to be significantly lower," says Andreas Bertoldi, joint writer of the report.
.... the article continues
Holy Guacamole !