Come November 1, the amount that Barbadians pay for a transaction at a bank’s Automated Teller Machine (ATM) other than theirs will be capped at a maximum of $3.
Governor of the Central Bank of Barbados Cleviston Haynes made the announcement on Tuesday as he delivered his latest economic review for the July to September quarter.
Pointing out that the Central Bank was aware of the complaints from residents about high bank fees associated with debit card transactions, Haynes announced that as of November 1, there will be a standard fee of $3 for the use of a debit card at an ATM that is not of the corresponding bank of the issued card.
In addition, he declared that carrying out a transaction at a place of business using the point of sale (POS) system will not attract a fee.
“The Bank has reviewed the fees that a bank charges each other as proposed by Visa and Mastercard, and following discussions with the bank and credit unions the Central Bank has decided to intervene in the pricing of debit card transactions. This initial intervention is intended to standardise the interchange rate for Visa/Mastercard debit card transactions and to cushion the impact of the increased fees on depositors and the business sector,” said Haynes.
“In terms of the rates that we have looked at, as you are aware, if you use your own ATM at present that is free and will continue to be free. However, if you use the ATM of another bank there is a charge. My understanding is that those charges go as high as $6.50. Therefore, we have indicated to the banks and credit unions that this charge should be capped at no more than $3,” said Haynes.
“Also when you use your point of sale card at a merchant, some banks are free, but for others there was a charge. However, effective November 1, there will be no charge for using your Visa debit card or Mastercard at a merchant,” he added.
Residents have been complaining for several months about high and rising bank fees when carrying out certain transactions including using an ATM.
The Governor said the Central Bank recognised that current charges raised the cost of banking services, adding that it considered the high fees for the use of digital banking services “may serve to undermine the national efforts to reduce the use of physical cash and increase reliance on digital transactions”.
He said the capping of the ATM fee at $3 and no charges for swiping a debit card at a merchant was an “initial step”. He said the Central Bank would continue to monitor and assess the impact and could make a “further intervention” if needed.
“We need to be fair to customers both in terms of individuals, in terms of merchants and in terms of the financial institutions, but this is where we are at this time, he added.
“I would encourage you where possible, use your own bank or credit union ATM. I do recognise there are cases where some institutions do not have a lot of machines in the market and therefore the temptation to use another bank’s ATM is there, but try to plan where possible your purchase because it is a service you can get free if you use your own bank,” said Haynes.
He also noted that the payments system was still being modernised, including through the implementation of a real time Automated Clearing House.
“This should create the potential for adoption by financial institutions of other more cost-effective solutions and the Bank will seek to incentivise their early adoption. At the same time, we encourage financial institutions to provide education to their clientele so that prudent choices about low-cost services can be made,” said Haynes.
Banks and credit unions are in the process of switching from the Caribbean Integrated Financial Services Ltd. (CarIFS) platform that links ATM machines and POS terminals on the island to the Visa/Mastercard platforms.
Haynes said some banks were allowed to continue to operate on CarIFS beyond the November 1 when the new ATM charges take effect.