The extensive ATM network in South Africa could be used more efficiently if Saswitch fees, paid by customers for using ATMS of banks other than their own, were eliminated, First National Bank (FNB) said on Tuesday.
”If adopted by all banks, this will save South Africans R500-million in Saswitch fees annually,” said FNB chief executive Michael Jordaan.
He was presenting the proposal before the Competition Commission Hearings in Pretoria.
Jordaan said eliminating the Saswitch fees would lead to more efficient use of the ATM network and broaden national access to banking services.
Customers could also use any ATM without being penalised, resulting in ATM neutrality, and the pricing by ATMs would be simplified as the customer would only be presented with a single fee.
However, the disadvantage of eliminating the Saswitch fees would lessen price transparency as the fee for using another bank’s ATM would not be directly charged and it might result in inefficient investment in ATM infrastructure, Jordaan said.
A second option proposed by FNB was the Direct Charge Model. This would eliminate the carriage fee (compensation from, for example, FNB to another bank for use of the other bank’s infrastructure) along with Saswitch fees.
This would create competition and increase price transparency.
The downside to this model was that new costs would be incurred by ATM providers and significant customer education would be required.
Commercial and technical difficulties may also be experienced in rolling out this model.
”Our intention with these proposals is to bring about reform for the whole banking industry to the benefit of all customers,” Jordaan said. — Sapa