Response to article titled “Too much if recipients of cheques are charged” published in Nanyang Siang Pau on 20 February 2014
The Association of Banks in Malaysia (ABM) would like to clarify some points highlighted in the article titled “Too much if recipients of cheques are charged” published in Nanyang Siang Pau on 20 February 2014.
1. Doubts over the safety aspect of electronic payments
Our member banks have made significant investments in IT systems to ensure reliability, efficiency and safety of the payment infrastructure, and will continue to do so. Various steps have also been taken by the banks to engage with their customers on security features and safe practices in conducting online banking and e-payments.
In addition, ABM has been working very closely with the Royal Malaysian Police and in particular, parties have collaborated to launch awareness campaigns on the various types of scams in the country, one of which is the e-banking fraud awareness campaign launched in January 2013. The objective of the campaigns is to inform and educate members of the public on the different types of fraud and cyber crime scams being used by today’s criminals. The various methods and modus operandi used in these scams can be accessed via our website, www.abm.org.my
Meanwhile, we would strongly urge customers to also play their part in safeguarding their own assets and savings by knowing the types of scams which are out there and be vigilant over suspicious emails and calls.
2. Unfair if recipients of cheques who are playing the passive role, are charged
We would like to emphasize that the cheque processing fee of 50 sen to be introduced with effect from 1 April 2014 is imposed on the issuer of the cheque and not on the recipient. The fee is imposed with the hope of encouraging behavioural change in the move towards e-payment as the preferred payment method.
It cannot be denied however that there are instances whereby it is the recipient who insists on being issued a cheque as a payment method. Under such circumstances, it is presently envisaged that the issuer of the cheque would still have to bear the cheque processing fee unless the issuer chooses to request for reimbursement from the recipient.
3. Banks’ income will increase with the imposition of the 50 sen cheque processing fee
This is not true. To promote the national agenda of migration to e-payment, Bank Negara Malaysia announced a new pricing strategy for payment services in March 2013. The fee for fund transfers using Inter-Bank GIRO (IBG) performed via internet banking and mobile banking was reduced to a maximum of 10 sen per transaction with effect from 2 May 2013. The base cost for banks for such IBG fund transfers is already 10 sen per transaction.
The cheque processing fee of 50 sen is to be imposed some 11 months later on 1 April 2014. All this time, banks have been fully subsidizing the production cost of cheques which is about RM3 per cheque. The production costs include, but are not limited to, the following:-
- cost of printing the cheques (third party cost);
- fee imposed by MyClear for the e-SPICK clearing services (third party cost);
- manpower and operational costs incurred to collect, scan and process the cheques for payment (internal and third party cost); and
- information technology (hardware and software) cost (internal and third party cost).
The imposition of the cheque processing fee of 50 sen would barely cover the production costs. Given that the volume of cheque processed is targeted to reduce to 100 million by the year 2020, banks would be receiving approximately RM50million in processing fee income (all things being equal) but would still need to incur an estimated RM300million in cost.
4. There are still many senior citizens who are not familiar with e-payments or internet banking
The banking community is committed to assist consumers in migrating to e-payments in a seamless manner. Most banks are assigning staff ‘ambassadors’ at the banking halls to assist customers to familiarize themselves with the e-payment channels. We would encourage bank customers to approach their banks for information of these services as banks would be most willing to guide them.
To facilitate convenient access to internet banking, by end March 2014, banks have deployed (or will have deployed) internet kiosks or such similar services at their bank branches. In addition, by September 2014, banks will be offering IBG services at their automated teller machines (ATMs).
Let us make the migration together. There is understandably a certain degree of apprehension at the start when one is asked to deal with something new. IBG is not a new feature in the range of banking services being offered by banks. To-date 29 banks offer IBG. IBG can be presently accessed via internet banking or over the counter or in a limited way, via ATMs.
There is a need for a conscientious and concerted effort to promote e-payments in tandem with Malaysia's economic growth as research has suggested that successful migration to e-payments can save the country in terms of costs (of about 1% of GDP annually). In the long run, IBG made via internet banking or mobile banking will prove to be the faster, more affordable and convenient for funds transfer or third party payments.
THE ASSOCIATION OF BANKS IN MALAYSIA
Chuah Mei Lin