The Banking Association South Africa (Basa) has announced that from 1 June 2020, banks will no longer absorb the cost of automatic teller machine (ATM) cash withdrawals and Saswitch network charges for their customers.
What this means, in simple terms, is that South Africans who withdraw money from an ATM of another bank will now be charged higher fees than during the level 5 and level 4 lockdown.
In April, Basa announced that banks had scrapped charges for withdrawing money from another bank’s ATM – known as Saswitch fees – during the national lockdown.
The Saswitch network allows people from one bank to use an ATM of another bank to withdraw cash.
This 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 the lockdown was good news for consumers, especially poorer citizens who do not have the means to travel to get to an ATM of their bank.
Basa explained that the decision to absorb the cost of ATM cash withdrawals and Saswitch network charges during the lockdown was aimed at facilitating social distancing at social security payment points and other high traffic areas during the initial lockdown.
This, Basa said, has changed with the new lockdown regulations. “The government has now regulated the wearing of masks in public and other social distancing practices,” it said.
“Prudent business practice now requires that banks recover the cost of maintaining and operating ATMs and point-of-sale (POS) networks to ensure the sustainability of these operations.”
Calls to scrap Saswitch fees permanently
Venture capitalist and former FNB CEO Michael Jordaan said it is a “great pity” that banks will start to charge consumers for Saswitch network usage again.
Jordaan said the Saswitch network fee makes overall ATM usage less efficient and banking customers are often penalised for using the closest ATM or the one with the shortest queue.
The Saswitch network fee hits poor people particularly hard as they rely on cash to buy food and other essential products – which typically means withdrawing money from an ATM.
As they 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.
Jordaan has called on Saswitch fees to be scrapped permanently – a position which he has held since 2006 when he was FNB CEO.
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 doing away with 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.
Michael Jordaan’s comments about Saswitch fees
Seems Saswitch fee will start again on 1 June. It’s a great pity. This fee makes overall ATM usage less efficient. Customers are often penalised for using the closest ATM or the one with the shortest queue. https://t.co/xAwFiSxLl2
— Michael Jordaan (@MichaelJordaan) May 29, 2020