The implementation of the new fee model is not enough for the development and stability of the payment network
“Mohammedreza Jamali” in an interview with Iran is an economist Regarding the damages of the previous model of the payment system to the country’s banking ecosystem, he stated: First, we should pay attention to the philosophy of fees. The three main factors in the interest rate include the composition of the portfolios, the cost of operations and the losses due to various risks. The world has moved towards reducing the cost of operations for banks by charging fees, which are known as non-recurring revenues.
He added: The most important problem in the country’s banking is that despite the use of technology and its heavy costs, 89% of the cost of banking services and electronic payment is paid by banks and 11% by the people. In purchase transactions, the entire fee is paid by the banks, and withdrawal, purchase and charging transactions are the most toxic transactions in the country’s payment systems, where the card holder and acceptor do not pay a fee.
According to him, there is no common income that should exist, and when the customer does not pay or pays little, we see the waste of many resources, of course, this waste is imposed on all people in the form of interest rates and inflation.
Jamali stated: Payment of bank transaction fees by banks would cause two serious damages to the ecosystem; First, it caused an increase in the interest rate and inflation, and secondly, due to the fixed fee coefficients and the country’s inflationary conditions, after a short period of time, these fees did not cover the costs of the network and caused the cost of the bank to rise, which, of course, in the new model, unfortunately, banks still pay fees. and due to the lack of proper use of other tools, the fees still do not cover the expenses on the side of the payment companies.
He stated that these costs will actually affect everyone’s life with the increase in interest rates and inflation, and he pointed out: Until our banking model changes and the non-shared income of banks from the fees received does not make them profitable, the interest rate in the country will be high. Was.
A member of the Digital Economy Commission of the Chamber of Commerce stated: In the previous model, banks used to pay fixed amounts from 70 to 275 Tomans for purchase transactions, which according to the distribution of transactions, the average fee paid was 236 Tomans. This number will decrease to an average of 199 Tomans in the new model. Of course, if certain guilds are exempted, this plan will also be ineffective and the average amount paid by the banks will increase to 311 Tomans for each transaction, and we will have a worse situation than the previous model. Considering that the amount is also in the new model, the situation will worsen in the coming years.
He continued: In both the previous model and the current model, banks pay fees while they should earn from this place. In the previous model, the entire commission was paid by the banks in the purchase transactions, and in the current model, if there are no exceptions in the guilds, the share of the banks will be 46%, and if there is an exception, the share of the banks will increase to 70%.
Jamali considered the electronicization of all services and the overdoing of this issue, as well as the weakening of coins and banknotes, as the reason for the expensive administration of the entire payment network, and clarified: the cost of electronic payments in retail payments is between 15 and 750 times higher than traditional instruments such as coins and banknotes. Of course, according to the new model, an opportunity will be created for the development of electronic wallets, which will reduce the pressure on banks in terms of the number of transactions. Currently, a standard card reader costs at least 10 million Tomans at the current price of the currency, and I believe that it is necessary to seriously reconsider the strengthening of traditional tools for small payments.
This banking and payment expert emphasized: In the previous model, the fee for small payments severely harmed the network, and because the customer and acceptor did not pay, these transactions were imposed on the network at a very high cost, and the fee of 120 tomans reduced the number of small transactions. it leads
Criticizing those who claim that banks benefit from the deposits of money in transactions, he stated: Currently, the amount of more than 50% of transactions is less than 45 thousand tomans, and in the best case, with the deposit of money, the fee will be less than 275 tomans. From 20 Tomans, daily deposits are created for banks with 18% profit, not including infrastructure costs, which, of course, are not sustainable for the accounts of the recipients. In other words, if it is assumed that these transactions provide the bank with a fee of 275 Tomans from a one-day deposit, the minimum amount of each transaction should be 550 thousand Tomans. Add the cost of infrastructure to this figure.
Jamali stated that in the new model, unfortunately, the banks have to pay 5/10,000 of the amount, which, with the addition of the issuing bank’s 24 Tomans fee, causes the banks to pay for the incoming flow of deposits with an annual interest of 20%, adding: In the previous model, 24% of the money went to the banks. In fact, in the new model, the cost for banks has been reduced by four percent, which is not enough at all. Of course, if high-transaction guilds such as bakeries and others are removed, this cost is equivalent to paying 36% interest on the deposits of the receivers.
According to him, in addition to the cost of fees, infrastructure maintenance costs and the costs that banks give to banks under the title of renting card readers should also be added.
Jamali also answered the question, how much will the financial burden of the new model be for the adopters? He said: In terms of payment fees, maximum 55% of the total fees are paid by the acceptors, and if those special guilds are exempted, this fee will be reduced to about 30%. If we calculate the actual cost of the transaction, each transaction will not cost less than 10 thousand Tomans. On average, the acceptors pay about 2% of the actual cost and according to the limit of 4000 Tomans, the fee is 40% of the amount.
A member of the Digital Economy Commission of the Chamber of Commerce stated: It should be noted that 50% of transactions are less than 45 thousand Tomans, 85% of transactions are less than 200 thousand Tomans, and only about 25 percent of transactions are more than 20 million Tomans, and a very small percentage of Transactions are subject to a fee cap.
He considered the excess of electronicizing all payment matters to be unjustified and stated: Since guilds have high bargaining power from a political point of view, these types of costs have been imposed on banks, and of course the main loss will return to the entire country and all They lose from it, even a person living in a remote village will suffer from this state of payment systems. Due to the security policies, the pressures on the central bank from these institutions and the Ministry of Economy, and of course, the experts on the wrong tools to replace coins and bills, have become very weak, and for many guilds, buying a card reader costs a lot. The wallet has not been developed seriously due to the wrong model of the previous fee, and of course its costs are lower than card readers but more than coins and bills.
Jamali found the implementation of the new fee model insufficient for the development and stability of the network and stated: If we consider it from the banking aspect, the factor of five ten thousandths is very high, and even in the world we see the opposite, that banks pay five ten thousandths of the fee in the card fees. They get debt. If special and high-transaction trades are excluded, this coefficient increases to 9/10,000. Every 10,000th of the fee is equal to the annual interest payment of 4% by the banks to the recipient’s accounts. This number should be reduced to two in ten thousand or one in ten thousand, so that it costs at least the same as a short-term account for banks, and it should also be reduced and become negative every year to create extraordinary income for banks.
A member of the Digital Economy Commission of the Chamber of Commerce stated that due to the payment of fees based on the amount to the payment companies, the Central Bank should declare illegal any contract with the payment companies in order to attract resources. They attract resources. Nowhere in the world do they allow a bank to charge more than the official interest rate for money. Consider that banks rent at least one hundred thousand tomans for each card reader. There are many justifications and discussions of pocket to pocket and that the pocket of the bank and the company does not pay, and these cases are raised, none of which can be defended. A few years ago, the short-term daily profit was declared illegal, which caused the cost of money in banks to decrease by three percent.
Emphasizing that we have to accept that we have gone the wrong way, he said: everywhere in the world, the card reader has its place in average payments. There are about 10 million card readers in the country, which has no justification, and unfortunately, 85% of their transactions are less than 200 thousand tomans. These transactions must be paid with coins, bills and wallets. Unfortunately, this 85% of transactions also accounts for 85% of the income of payment companies, Shoprak and Shatab.
Jamali added: As we do not use trucks to go to the alley, there is no justification for using card readers for small payments. Why is a banknote or coin that can be circulated hundreds of times in the country’s economy and the cost of its circulation is not more than a few Rials for each circulation, has been removed for small payments, while coins and bills will be used in the world at least until 2050, and here the cost should be 120 tomans subsidy and spend at least 10 thousand real tomans. This expensive operation of payment systems with the weakening of coins and bills, as well as the lack of proper development of wallets, is not justified at all, and small businesses are seriously harmed.
A member of the Digital Economy Commission of the Chamber of Commerce noted: Payment companies, considering their inappropriate position in payment systems, actually have no justification for 85% of what they do. The high number of these companies has caused many parallel infrastructures to be created for each of them. For more efficiency, it is necessary to reduce these companies or return to their real position in the economy by modifying the income model and develop the credit card. Shaperk’s reports fuel this situation and the managers of these companies are under excessive pressure from shareholders or are trying to show their performance in order to increase the share of the number of transactions. In the stock market, the inappropriate footsteps of these companies have caused serious damage to the country’s economy. It should be noted that countries of our size and similar economy have one-tenth to one-twentieth card readers, and if the business model and position of card readers in our payment systems were correct, between 500,000 and one million card readers would be active in the country.
Jamali said: Money-carrying tools, including coins, bills, wallets, Shaperk, Paya, Chekauk and Satna, should be placed together in the right way, and just as the traffic situation cannot be improved by the increase of taxis alone, a suitable package is also needed here. Design and move to the right point within a few years with the aim of changing the business model of banks. It seems that we will move in the right direction with the new model that is based on a fixed amount and a multiplier of the amount. Maybe this will was not there in the previous years, but now we see that the beneficiaries have a better orientation.
According to this banking expert, the necessary condition for the economic development of the country is to have diverse payment systems with the correct business model and in accordance with global standards, so that no country is developing without having such basic infrastructure in the field of domestic economy and International has not been successful and will not be.