Business

Consumers charged over $2b for swiping debit cards last year

Sunday, January 19, 2014    

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Jamaican consumers handed more than $2 billion over to banks by swiping their debit cards last year, according to Sunday Finance calculations.

What's more, while the average number of transations at automated banking machines (ABMs) and point of sale (POS) each month have grown by 29 per cent and 36 per cent, respectively, since 2010, e-banking fees have climbed considerably in many instances.

Richard Powell, Victoria Mutual Building Society (VMBS) president and CEO, said that "some debit card users may be paying upwards of $2,000 of their hard earned money in ATM and point of sale fees each month".

"This is money that could be going towards their children's education or saving for the deposit on a house," he said in a press release last week.

An interim report on fees and charges of deposit-taking institutions (DTIs) submitted to parliament by the Bank of Jamaica (BOJ) last week confirmed public suspicion that bank fees were rising and becoming more important to financial institutions.

The central bank estimated that commercial banks made 23.5 per cent of their revenue, or $18.6 billion from fees in 2013, compared to $13.5 billion, or 18.3 per cent of revenue in 2010.

Building societies saw their fee income climb from $362 million to $1.2 billion over the three-year period, or from 2.2 per cent of revenue in 2010 to 7.1 per cent last year.

At an average of 4.2 million transactions a month in 2013, ABM charges are possibly the most common among bank fees, followed closely by the number of times consumers swiped their debit cards at the cash register -- POS transactions averaged 2.3 million a month last year.

E-banking fees likely did not boost building societies fee income, given that VMBS doesn't charge any fees for using its debit card, and Jamaica National Building Society (JNBS) kept its $50 charge for transactions on other networks unchanged over the last three years.

Scotia Jamaica Building Society charges the same fees as its sister company Bank of Nova Scotia, and while the commercial bank hasn't changed its $33 withdrawal charge at its own ABMs, the fee remained the highest among banks and building societies, even though the other DTIs mostly have been playing catch up.

The BOJ report showed that on-network withdrawal fees charged by First Global Bank and RBC Royal Bank increased to $30 last year, while National Commercial Bank (NCB)'s fee has been at $30 for some time.

Like VMBS and JNBS, Sagicor Bank Jamaica still doesn't charge its customers for using its own ABM, while CIBC FirstCaribbean International Bank actually lowered its rate slightly to $19.83 per transaction.

Nevertheless, consumers wanting to avoid paying too much in fees might be better off financially if they only used ABMs operated by their banks. Since 2011, fees charged for making withdrawals on another network increased by a range of 18 per cent to 55 per cent across DTIs, excluding VMBS, which charges no fees, and JNBS, which left its fee unchanged.

What's more, off-network withdrawal fees are close to double the on-network charges.

Keeping the number of withdrawals down to a minimum by making larger encashments might be difficult for consumers given the possible risk of theft.

But the fees on cashless POS transactions have climbed by a range of 10 per cent to 49 per cent across DTIs from 2011 to 2013. NCB increased its POS fee from $12.10 in 2012 to $14.10 last year, but it was still lower than the $15.10 it used to charge back in 2011, and it was also the lowest among the fees charged by other banks.

First Global Bank was reported to charged the highest POS fee at $17.50 followed by Sagicor Bank Jamaica at $17.10.

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