The State Bank of Vietnam (SBV) has many times rejected proposal for charging ATM (automatic teller machine) transaction fees. However, SBV governor Nguyen Van Binh recently has given the green light for the proposal, saying that banks will collect fees on ATM transactions after all ATMs in the country are joined in a common network.
Over 40 million ATM cards have been issued nationwide so far, especially for employees of enterprises and State agencies. Therefore, most ATM cardholders are earners wSTC incomes are not high.
This can be proved at ATM booths during pay days at industrial parks and export processing zones, where many workers withdraw only a part of their wages to spend within a week. For some people, a fee of VND3,300 or VND5,500 each can be disregarded. However, this will be a significant number to needy workers who have to withdraw money for many times while they are still suffering difficulties due to current price hikes.
After the government issued Directive 20 in 2007 on salary payment via bank accounts for State budget beneficiaries, banks rushed to convince State agencies to open salary payment accounts at their networks. Within five years, the Vietnam Bank Card Association (VNBC) has repeatedly lodged a petition to the central bank for a permission to charge ATM transaction fees. In fact, banks have secretly imposed many kinds of fees such as tSTC for transaction outside network, money transfer, goods and service payments besides other charges for card management (annual fees), password provision and checking.
Banks abuse ATM fee collection
On their websites, banks usually post up charges imposed on ATM cardholders such as card issuance fee from VND50,000-90,000, card re-issuance fee from VND25,000-66,000, password from VND10,000-33,000, annual fee from VND39,600-132,000, checking fee from VND10,000-110,000, money transfer from VND1,650 to 0.05 percent of total transferred sum, outside-network money withdrawal fee of VND3,300, transaction checking or balance sheet printing from VND550-1,650 and fee for cards retained at ATMs from VND5,000-20,000. Some banks even charge VND10,000 for lost cards.
However, many banks have bemoaned heavy losses due to ATM services although they have reported big profits after a fiscal year. Are they really incurring losses with ATM services?
Given the 40 million ATM cards announced by the VNBC, it is quite easy to figure out that banks have collected at least VND2 trillion for issuing cards at a lowest rate of VND50,000 each and VND1.5 trillion in annual fees, which is also calculated at the lowest rate of VND39,600.
The above two fee rates are regulated by Vietcombank, the bank with the biggest number of active cards in Vietnam. Banks have earned over VND3.5 trillion with just the two basic fees while it is not difficult to sum up balance of all ATM accounts given current technology. If a bank cannot earn profit from ATM services, why does it still encourage customers of other lenders to open ATM accounts at its network?
Who benefits from ATM fees?
The VNBC is still keen on ATM transaction fee collection. Looking at the transaction fee list via Banknetvn, or Vietnam National Financial Switching Joint Stock Company, on the website banknetvn.com.vn, Banknetvn takes 50 percent of VND3,300 collected on each outside-network money withdrawal while payment organisations take the rest. If only one-fourth of ATM cardholders withdraw money outside network once a month, Banknetvn will collect VND198 billion each year, not to mention profits from transaction checking and balance sheet printing.
If the transaction fees are collected and outside-network fees are increased, 40 million ATM cardholders may pay Banknetvn over VND1 trillion each year but only Banknetvn and audit agencies will be able to know the actual number.
While managing agencies are trying to set up many types of fees, ATM transaction fees will make life more difficult for the poor. Once cornered, poor employees will have to return ATM cards to employers and ask to receive salary in cash again. In addition, fee collection does not ensure better ATM services while there are only 13,000 ATMs for 40 million cards, which means each machine incredibly serves up to over 307,000 cards.
This proves that the most important thing of the banking industry now is transparency.