South African banks have scrapped charges when withdrawing money from another bank’s ATM – known as Saswitch fees – during the national lockdown.
The Banking Association of South Africa (Basa) said banks have agreed to subsidise the cost of using the Saswitch network.
The Saswitch network allows people from one bank to use an ATM of another bank to withdraw cash.
This normally comes at a cost to consumers, as there is a fee charged by the bank which owns the ATM to get the money from the other bank.
This Saswitch fee is reflected in the difference in the fee which you pay to withdraw money from your own bank’s ATM and that of another bank.
The decision to waive all Saswitch fees during this period is good news for consumers, but some people feel these fees should never return.
Saswitch fees should be scrapped permanently
MonteGray Capital founder and former FNB CEO Michael Jordaan said the waiving of Saswitch fees should be made permanent.
His comments are not surprising. Jordaan was behind an industry proposal made to the Competition Commission by FNB in 2006 to scrap Saswitch fees.
This proposal was backed by Absa and Nedbank, which said scrapping these fees will make it more affordable for unbanked people to get accounts and use ATMs.
Standard Bank, however, was against the proposal. It said this decision would be prejudiced against the bank because it had a smaller ATM network than FNB and Absa.
The scrapping of Saswitch fees did not happen, and 14 years later, South Africans are still paying high prices when withdrawing money from another bank’s ATM.
This hits poor people particularly hard, many of whom rely on cash to buy food and other essential products – which typically means withdrawing money from an ATM.
As they often do not have the means to travel, they will use an ATM which is closest to them. In many cases, it is from another bank, which costs them additional money to withdraw cash.
Considering their impact on the poor, it is not surprising that Jordaan is calling for the waiving of Saswitch fees to become permanent.