Saswitch fees

[duncan drennan]

I don't understand Saswitch fees. I was reading an article on the Sunday Times website, which I was led to by this blog post.

I was about to post a comment saying how, if the banks won't all drop their fees, then changing the way the fee is charged will introduce more competition. When I tried to elucidate this I ended up going in circles trying to figure out who pays who what when.

How do Saswitch fees currently work? If I am a customer at Bank A and draw money from a Bank B ATM, then who pays whom the Saswitch fee (which eventually comes out of my pocket)?

[Dave A]

They probably have a "knock for knock" agreement

I think the SASWITCH fee goes to Bank B, at least some of it, errr most of it..... Now you've got me thinking.

[duncan drennan]

I'm trying to figure out what the pros of the new approach would be, but this is the line from the article which is....vague....to say the least.

Saswitch fees are levied whenever one bank’s customer draws cash from another bank’s ATM. Banks pay each other a net carriage fee for introducing a customer or handling another bank’s customer’s business.

I would think that Bank A (my bank) pays Bank B....else they are taking money from me, and charging the other bank as well. Although I would not be surprised if that was the case....

[Debbiedle]

The way I understand it is that if I draw (Bank A) then my bank (Bank A) pays a fee to the bank that the ATM belongs to. (like a rental) Big deal! Cause actually I pay for all of that PLUS!

The issue I believe is because BANK A has a montly expense of a gazillion rand to BANK B, C and D - they then treat this like another profit center and charge the client a mark-up on this expense?

Therefore I get charged a fee for using my own banks ATM - then I get charged a fee (mark-up) on the other banks ATM usage as well.

What I found interesting is that some banker dude last night is on television saying that the banks may not speak to each other to discuss the dropping of these fees as that will be considered collusion....go figure!

It's been frowned upon (if not illegal) for years but it didn't bother them one bit when they could "collude" to increase prices???

[duncan drennan]

What I found interesting is that some banker dude last night is on television saying that the banks may not speak to each other to discuss the dropping of these fees as that will be considered collusion....go figure!

I saw that too! My reaction was, "Oh woe is me...the poor little banker. It must be tough to make millions off of your clients because legislation allows you to."

[duncan drennan]

Let's stir up this pot a bit....from the article,

[FNB CEO Michael Jordaan] “You only charge it when your customers use other banks’ ATMs, so if we drop it we would have fewer customers because they would use the closest ATM [and not an FNB ATM].”

I understand that statement to mean that if my bank (A) were to drop Saswitch fees then I would not pay a fee if I drew money from another banks ATM, which implies that my bank is charging me a "penalty" for using another banks ATM. Basically they are charging the other bank (B) a fee to access their network.

Seems crazy