Thanh, director of a law firm that is opening a business account in Vietnam International Bank (VIB) confirmed that he has received the message announcing the money deduction for services with 3-4 times higher than the previous period.
The rising trend of transaction fee via ATM cards, account has recently been applied by commercial banks, causing reactions to both individuals and businesses.
*Too many kinds of fees
Thanh said he has just received the announcement about SMS Banking fee deduction with the increase from 50,000 dong per month to 200,000 dong per month; Internet Banking service fee (annual maintenance service fee, query service package) with the increase from 350,000 dong per month to one million dong per month. That is not to mention, his company is also charged an extra one million dong to maintain minimum balance in payment deposit account, applicable to active accounts with smaller balance than the minimum one.
“Our company has an average non-term deposit balance of 500-700 million dong at VIB and uses salary payment service via account, but we are still considered as a low effective customer and are subject to a fee which is 3-4 times higher than the previous time. Such high fee will affect small and medium businesses”, said Thanh.
In addition, VIB’s new fees are applicable to some typical businesses, while the collection of payment deposit management is 500,000 dong per month, and the maintenance fee of minimum balance for payment account (frozen account with smaller balance than the minimum balance) is one million dong per month.
VIB is arranging and refining the list of customers, from which customers with low transaction volume or less than the minimum balance will be subject to fee increase or account closure. Therefore, according to VIB, the numbers of corporate customers being affected by this increased fee policy will not be many.
Currently, many other commercial banks are also in the trend of raising fees for individual customers. From May 12, the Agriculture and Rural Development Bank (Agribank) will adjust intra-net withdrawal fee via ATM from 1,100 dong to 1,650 dong each (including VAT), raise interbank account transfer fee at ATM and on E-Mobile Banking apps to 0.05 percent out of the transacted amount, with minimum 8,000 dong each.
On May 7, some customers of Vietnam Export and Import Joint Stock Commercial Bank (Eximbank) said it has just received the noticement on transaction fee deduction via internet banking with 11,000 dong per month. As such, Eximbank’s ATM cardholders will have to pay SMS, Internet Banking and Mobile Banking fees totalling 33,000 dong per month for using the services.
Earlier, since March 2018, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) adjusted fees such as SMS Banking from 8,800 dong to 11,000 dong per month. The intranet account transfer fee for more than 50 million dong is 5,500 dong per month and account management fee is 2,200 dong per month. Many Vietcombank’s customers said regularly, at the beginning of the month, a series of messages about service fee deduction such as SMS Banking, Mobile Banking and Internet Banking (totalling 33,000 dong, including VAT) are sent to their phones. This is the fixed amount every month, and customers will continue being deducted with fees for any arising transaction.
*Cutting services to save costs
Agribank, Vietcombank, etc. are commercial banks with a large volume of card issuance, so each small adjustment of fees will affect customers. Many people hold 2-3 ATM cards at banks so they will have to pay more for using Internet Banking, Mobile Banking, and SMS Banking services at the same time.
Giang (living in District 9, HCM City) uses two ATM cards of Eximbank and Vietcombank, so each month, she has to spend nearly 100,000 dong service fee. Therefore, she is considering the cancellation of a card or cutting unnecessary services. Duong (living in District 2, HCM City) said at first, he opened Vietcombank’s credit card, but then his company transferred salary from another bank to Vietcombank, so he had one ATM but two accounts. Each month, he received SMS Banking fee deduction message for two accounts, totalling 22,000 dong. If he wanted to cancel, he had to go to branches and it costed him 50,000 dong.
According to many bank leaders, the increase in fees is aimed at offsetting the investment in ATM system and electronic banks in order to increase utility and security for customers. The fee increase is also targeted at encouraging customers to use non-cash payment methods.
But customers suppose that they have to bear so many costs. For example, Agribank’s service fees show that an ATM cardholder, when transacting on ATM, E-Mobile Banking, will have to pay a series of fees such as card issuance fee, card reissuance fee, money withdrawal fee at ATM, account transfer fee, banking statement printing fee. In addition, cardholders also have a to pay a series of other fees such as confirmation fee following the request of the card holder, inquiry fee (in case the card holder has a wrong claim), PIN code reissuance fee, card return fee held by ATM, credit card limit/card overdraft limit changing fee, card unlocking fee, fast issuance service fee, etc.
The increase in fee should go along with the improvement in service quality and safety. However, recently, there constantly happened money losses in accounts and ATM accounts, causing customers to worry. In another perspective, Dr Bui Quang Tin, a finance expert said banks are beneficial from card services that customers use. Each cardholder has to maintain a certain balance in their account (mostly minimum 50,000 dong per account) and banks can use this non-term deposit to do business. In fact, revenue and profits of many commercial banks from services are rising. In business plans, many banks have shifted their revenues to services, reducing profits from credit and moving to profits from fees.
*Profits from services are rising
While customers reacted to highly increased fees, the financial statements of commercial banks in 2017 and Q1/2018 showed increasingly large revenue and profits from service fees. Previously, banks’ revenue mainly came from net interest (credit), but now the proportion of profit from service fee is continuously rising. In the overall report about financial market in 2017, the National Financial and Supervisory Commission (NFSC) also recorded positive results from other business operations. The net income from banks’ service operation surged 34.7 percent, including fees from payment service.
According to 2017 financial statement, many banks have the profit from service fee exceeding one trillion dong (though service only contributed a small portion to the total revenue of banks) such as Vietcombank, Vietinbank, BIDV, Techcombank, Sacombank, etc.
However, leader of a bank with trillions of dong of profit from service supposes that the fee collection from ATM cards of banks is negligible and cannot offset costs. For example, the SMS Banking fee that banks are collecting is 11,000 dong per month per account but banks have had to pay 700 dong per message to network owner. Large revenue from service fees mainly come from such fees as credit card fee, insurance fee, intermediary payment service fee for real estate transactions, international payment fee, etc. “For ATM system alone, banks with a large issuance volume and large ATM system have to offset losses, causing the increase of fees to be unavoidable”, said the bank leader.
