Letters to the Editor

Those ugly bank practices

Friday, October 05, 2012    

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Dear Editor,

Early yesterday morning, I went out to the gas station, where I was handed a note saying that my Mastercard, and Visa card, would no longer be accepted for future purchases of fuel.

Apparently, only Keycards, Advance cards, and other debit cards would be accepted. I recall this was an issue some months ago where an additional fee was added to your bill, to address card payment purchases.

I recall a recent Jamaica Observer story which outlined criticisms by the Consumer Affairs Commission (CAC) of discriminatory practices of foreign-owned banks against Jamaican customers.

Some weeks ago in a letter to the Gleaner, I brought up the fact that the Jamaican dollar Interest on credit cards was twice that of US credit cards, and to this date I have not seen, nor have I been contacted about that matter, which indicates the possible contempt the banks have for their clients.

When I enquired from the gas station owner I was told that the service charge paid by the merchant to his bank is now prohibitive. So, I tried to calculate that the interest plus the bank fees, plus the card membership fee, would be close to ten per cent. I discussed this with a friend who pointed out that there was extra profit in dual currency cards that varied among banks in Jamaica. Apparently, it is only Royal Bank that insists that you repay US$ for US$ spent, and J$ for J$ spent, and this does not earn extra profit to the bank.

He pointed out that there is a purchase price paid for the US dollar, and a selling price, which is a differential of $1.00 to $2.00 J$ in exchange rate. This means if you owe USD$1000 on your credit card, you might pay in US$1000 cash, but you will come up short by about J$1000, which is another 1.1 per cent which would make a grand total of 11 per cent. Think about that, in a worst case scenario, if you have a dual currency Visa or MasterCard, and you purchase gas, you get 11 per cent less fuel for your money.

In retrospect, this is too large a price to pay. It would be more suitable to pay cash in Jamaican dollars for a Jamaican dollar purchase of gas. This means however, that you go to the nearest ATM to obtain cash for your card, which would entail ATM charges, hoping the machine gives you a $5000 note.

There are a variety of banks which make a variety of charges, but I notice that this is around 6-7 per cent of the amount cashed, which goes into charges at the ATMs.

Banks in Jamaica have in the past had more branches. But they all took the misguided view that with fewer branches, there would be fewer employees: Therefore whether or not the public was inconvenienced was of no concern, and they would pull in the extra business at the ATM's. I do have a problem with this, for the teller services are not fast; and the banks are so crowded, and unless you are prepared to spend time waiting, there few options.

Perhaps banking authorities could assist by giving cambios permission to issue manager's cheques, and foreign drafts on a commercial bank, and deal with commercial banks overseas by taking deposits sent by bonded courier. (Incidentally, banks do charge 1.25 per cent of the value of a foreign exchange draft to prepare one.)

In summary, I tend to agree with the officers of CAC. Service is slow and generally poor, the value is poor, and the banks need to consider some efficiency factors if they plan to charge more for services. What is the point paying high charges for bad service?

Ramesh Sujanana






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