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Banks to review ATM fees

Saturday, March 14, 2020

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by New Vision

Financial institutions have embarked on a process to ease the charges levied on customers accessing money using the automated teller machines (ATM), the Uganda Bankers Association (UBA), has said.

UBA is an umbrella body that brings together about 35 financial institutions in Uganda. The revelation follows a report by New Vision early this year, showing that towards the close of the year, some top commercial banks slapped fresh fees on customers seeking to access their money using ATMs.

The report showed that during the last 12 months, the average charge to withdraw money from an ATM increased by about 3% to sh870, from sh844, compared to the fees customers were charged in January 2019.

“As an industry, we clearly acknowledge that the tariffs are high. In August last year, Bank of Uganda (BOU) issued a circular to all financial institutions to review ATM tariffs with a possibility of revising it downwards,” Wilbrod Owor, the UBA executive director, said.

The convenience that comes with using services such as VisaCard or MasterCard has seen customers dig deeper into their pockets if they want to access money using the ATMs.

For instance, one could fork out between sh7,000 to sh15,000 for a single transaction carried out via an ATM that does not belong to his or her bank. Cost drivers Owor blamed the high fees on international switch service providers such as Visa, China Union pay and MasterCard that enable customers to use an ATM that is not of their bank to get cash.

“We are looking at ways of making it not only lower, but fairly uniform across the board. There are various cost drivers such as international switch costs which have certain elements. We needed to review these aspects,” Owor said.

“One of the options which we have considered is for many local banks to migrate into a local switch such as Interswitch so that we avoid the international costs that are associated with switching transactions,” he added.

Managing cash (transportation) and security costs have been the other cost drivers for the banks.

There are new regulations that will require banks to have two security guards per ATM, according to Stanbic Bank outgoing chief executive officer Patrick Mweheire.

Paul Kawumi, the Interswitch Uganda chief executive officer, said the costs on ATM transactions should be able to come down if financial institutions consider some of their recommendations.

“Interswitch has already contributed tremendously to some of the conversations that are currently going on regarding ATM tariffs,” Kawumi said.

ATM fees

Data from the central bank indicates that dfcu Bank increased ATM withdraw charges from sh800 as at  January 2019 to sh1,000 by close of October.

Stanbic Bank, which previously charged customers sh1,000, now charges sh1,200 per transaction over the ATM. Diamond Trust increased its fees from sh660 to sh1,000. The ATM fees charged by other commercial banks range from sh500 to sh15,000. However, it is not just the ATM withdrawals fees that are increasing.

Withdrawing cash over the counter is costing customers more in 2020 in some commercial banks.

dfcu Bank increased its charges from sh6,000 at the beginning of 2019 to sh8,000 for transactions below sh2m.

Meanwhile, Stanbic Bank increased its fees from sh10,000 to sh12,000 (for below sh2m and 0.5% above sh5m). For anything more than that one pays sh35,000 at Stanbic Bank. Meanwhile, UBA Bank has advised customers to take advantage of innovations such as agent banking, which they say, is quite affordable.

*Original article published from New Vision: https://www.newvision.co.ug/new_vision/news/1516356/banks-review-atm-fees

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