LETTER | Unfair bank charges have been highlighted by Fomca for a very long time since charges were imposed for ATM cards against bank passbooks which were provided free of charge. Though the often claimed automation and computerisation are to reduce costs for consumers but it was the opposite for many of the financial services.We all should embrace and promote a cashless mode of payment for safety, efficiency and convenience. However, such efforts to encourage adoption of a cashless mode should not burden any segment of the consumers. With the consolidation of banks and cost rationalisation, most small towns are not serviced by all banks.Consumers are bound to have and operate their bank accounts in certain banks due to certain obligations such as loan facilities or for crediting of salaries and so on. As such, many consumers are not free to choose their banks.Informal sectors low-income earners are paid daily and bank-in their incomes and may make frequent withdrawals for expenses. Banks charge a 50 sen withdrawal fee for withdrawals more than five times in a month. Cash withdrawals from ATMs of different bank incur a RM1 charge.Is it fair to impose a 50 sen or RM1 fee for a withdrawal of RM50? The ATMs of foreign banks (licensed and operating locally) impose a much higher charge for withdrawals. Many would also would have encountered situations where one’s bank ATM is offline or not located in certain localities when the need for cash arises.
In developed economies, many banks provide unlimited cash withdrawals at ATMs free of charge as cash withdrawals have become very low due to the cashless adoption.Locally most merchants and small traders are not adopting a cashless mode of payment and instead there are merchants and even department stores imposing a minimum purchase value before accepting debit/credit cards. Often, many merchants claim that their terminals are offline and cannot accept debit/credit card payment.This low adoption of a cashless mode by merchants is mainly due to high transaction charges imposed by the banks and card issuers. Since April 2015, the European Parliament and its council had adopted the Interchange Fee Regulation which from December 2015 capped interchange fees for cards issued and used in Europe at a maximum of 0.2 percent for debit cards and 0.3 percent for credit cards. Fomca has been highlighting this to Bank Negara in order to facilitate more merchants to adopt a cashless mode.Card issuers are minting money with the explosion of online businesses. Current transaction charges are based on a percentage of the purchase (up to more than two percent) and are grossly unfair and burden the merchants and the consumers.
We cannot expect market competition to provide fair play to consumers. Bank Negara as the regulator should play its part as evidenced by the EU in ensuring effective consumer protection.The writer is secretary-general, Malaysian Digital Consumers Association and supreme council member, Fomca.The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.