Price hikes for ATM maintenance may be behind the times

Vietcombank, VietinBank, Agribank, and BIDV are increasing service charges to finance their ATM networks. Photo: nhipsongkinhte.vn

Banks increase service fees once again

Four giants, including Vietcombank, VietinBank, Agribank, and BIDV, last week announced hiking ATM transaction fees from VND1,100 ($0.04) to VND1,560 ($0.06) (including VAT) from July 15.

Previously, in early May, the banks also announced increasing banking service fees. However, afterwards, the State Bank of Vietnam (SBV) directed them to halt the price hike to safeguard customers’ benefits.

According to data released by SBV, the four banks hold 63 per cent of all bank cards on the market. If the plan to increase service fees is carried out, 49 million cards will be impacted.

Since early March this year, Vietcombank has been charging accounts VND8,800-11,000 (including VAT) per month for SMS Banking. In addition, transferring money within the bank via Vietcombank’s Mobile banking application now comes at a charge, unlike before.

Currently, people using bank cards are subject to four fees, including SMS, Mobile Banking, Internet Banking, and ATM transaction service charge. At Vietcombank a customer has to pay VND33,000 for banking service fees, not including ATM transaction charges and transfer fees. Thus, with 12.7 million ATM cards, Vietcombank collects about VND419.1 billion ($18.46 million) each month from its customers.

Hiking prices for ATM maintenance is necessary?

As usual, the reason for increasing banking fees is to recover the investment on ATMs. Zing.vn quoted some banks that they pay VND7,000-9,000 ($0.3-0.39) after each ATM transaction.

Previously, vnexpress.net also quoted a leader of Agribank as saying: “The bank is investing in 2,800 ATM machines, the most in the market. Therefore, the cost to maintain the daily operation of the ATM machines, including security, protection, maintenance, and transferring money, is truly huge.”

Similarly, the other banks also have a huge number of ATM machines. Vietcombank has 2,407, VietinBank 1,076, and BIDV 1,800.

However, non-cash payments are becoming popular in Vietnam with the monthly increase of 44 per cent (a survey by Visa) and the government has a policy in place to boost non-cash payments over the past few years.

In addition, the banks have developed non-cash transaction features via Mobile Banking, Internet Banking, even allowing payments via QR code.

Spending huge money on ATM machines, which are mainly used as tools to withdraw cash, seems contrary to the rising trend of non-cash payments and the non-cash transaction features they developed.

Meanwhile, in the UK, to reduce the cost of ATM machines and adapt to non-cash payments, the country’s banks close 300 ATM machines per month. According to British newswire Which?, 1,418 ATM machines were closed in November 2017-March 2018. The number is six times higher than in 2015.