Bank Fee by Another Name is Still a Fee
It was reported on the Central Bank of Barbados website that effective 1 November 2021 financial institutions were directed to charge up to a maximum of $3.00 for an ATM withdrawal -from reports some financial institutions had been charging as high as $6.50 for an ATM withdrawal! – See Central Bank of Barbados Intervenes on Debit Card Fees
The development is interesting for many reasons.
Financial institutions in Barbados have joined the outside world to implement strategies that force customers to access cheaper services via electronic means. A review of fees posted to the websites of banks reveals higher fees charged to do transactions inside the branch compared to ‘outside’. Why on earth would the Central Bank agree to a ceiling charge of $3.00 to do an ATM withdrawal when the old charge was $1.00 to $1.50 before the banks switched from the local network to Visa and Mastercard networks? The banks previously owned a local network called Carifs before a decision was made to shut it down, forcing credit unions who piggybacked on the Carifs service to add to the cost of doing business by having to issue Visa and MasterCard debit cards as well.
Secondly, the public is relieved no fee is being charged if the debit card is used at point of sale, whew! However, is the central bank aware the cost to business has significantly increased because the new debit cards are treated by Visa and MasterCard systems like credit cards? Instead of paying cents for a debit card transaction, the business will be charged between 2.5% and 4% on the AMOUNT of the transaction? For example, John Public buys an item for $100.00 – before the cost to the business 10 cents, with the new Visa and MasterCard the business pays between $2.50 and $4.50 for the transaction. Any guesses who will have to pay the increase cost especially at a time businesses are stressed?
Thirdly, where is the good reasoning to charge a $3.00 ATM fee IF customers are being encouraged to do more transactions outside the physical branch? It seems to the banks have decided to recoup millions in loss revenue from the 2018 domestic restructure made worse from poor lending conditions. A case can also be made for out of control consumption behaviour coming back to bite Barbadians hard in the rear-end. The message to Barbadians from inception of Barbados Underground has been – there are consequences for avoiding our civic responsibility under our so called democracy. We meekly accept wickedness in high places.
Fourthly, why did the Central Bank opt to ‘intervene’ in the matter of debit card fees when there have been many other public protests about high charges? What was the straw that broke the proverbial camel’s back?
Unlike its counterparts in the rest of the region, local regulators seem to play a passive role by comparison. The Kirk Brown matter comes to mind although a non bank transaction. It has not gone unnoticed in the Eastern Caribbean how governments working with indigenous banks have collaborated to buyout international banks who for obvious reasons want to bail from the region. The days of banks making too much money are finished with the rise of non bank institutions and the increasing risk of doing business. Unlike many countries in the region, we do not own a local bank and therefore unable to intervene in the market to offer relieve. Local banking is now the playground of foreign interest like most business sectors in Barbados.
The old people say, you made your bed, now lie in it.