The Central Bank wants commercial banks to harmonise fees charged at Automated Teller Machines (ATMs) as part of the work plan that seeks to embrace digital transactions.
While speaking at an event organised by Uganda Bankers Association (UBA) on Tuesday 22nd September, the Bank of Uganda (BoU) director national payments systems, Mackay Aumo said harmonisation of tariffs charged at ATMs is very critical in encouraging digital payments.
“Up to now, I have failed to understand it. When I go to bank A, I’m not charged, when I go to bank B, [I am charged] Shs7,000 and bank C is Shs6,500. Even when you go to Interswitch, two banks that are connecting, the international tariffs tend to reign. Instead of Shs1,500, it will be Shs5,500,” he said, noting thst the banks have no need to operate individually.
Aumo said the banks must reconsider harmonising their fees, which in turn promises a return on investment premised on economies of scale.
“You will be surprised that you can still benefit from bigger volumes of transactions,” he said.
The Bank of Uganda deputy governor, Micheal Atingi-Ego also emphasized the need for the harmonisation to grow digital transactions, stating that the move will depend on the willingness of the commercial banks.
“The players in the industry first of all, will discuss among themselves if that is the best way to go forward. So if they don’t agree on something, that will make the central bank rethink that, in the spirit of wanting to promote financial inclusion and improving e-payments. Is this the best way to go forward? If it is not, then we would have to think about it,” he said.
According to charge schedules released by the Central Bank in January, bank ATM withdrawal charges range from Shs600 to Shs1,500 while whole cross bank transactions range between Shs7,000and Shs15,000.
The reluctance among the public to embrace digital transactions has been on the increase for a while and this has been blamed on high costs of transactions.
Bank of Uganda is seeking to at least have achieved a cashless economy by 2021 through the National Payment Systems Policy.
The Central Bank did however recently indicate that achieving the cashless economy might take longer than initially planned.
Up to 75 per cent of payments in Uganda are still cash transactions.
The UBA chairman Mathias Katamba, said the discussion to harmonise costs has been ongoing, but like many other things, was interrupted by the Covid-19 pandemic.
He further explained that while the lenders are on board with the move, there is need for infrastructure sharing, for harmonisation to be realized.
“That is something we have been working on with the Central Bank for quite a long time and it is just about putting in place the enabling infrastructure that can be shared to lead to harmonisation of tariffs,” he said, attributed the difference in costs to the independent nature of cost structures employed by different banks.