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EghtesadOnline: Contrary to authorized payment companies, banks have welcomed Iran’s Fintech Association's proposed fee system for online payment in which aggregators and service providers cover the network fees, which currently are paid by banks.

The proposal was made by a group of fintech firms that consider themselves the real beneficiaries of the market. They say costs of transactions should be paid by aggregators and PSPs rather than banks. 

This will “help improve competitiveness and enhance the quality of payment services.” The measure is an attempt to help improve competitiveness in the payment market. 

As such, banks receiving and making payments pay the bulk of fees because when a payment is made with a bank card, the bank receiving the payment has to pay a fee to the bank whose card has been used. 

This is over and above the amount banks pay as rent and support fees for each POS device to PSPs. Besides, a portion of the payment fee, 500 rials, is paid to companies in charge of maintaining the payment network.

The proposal was presented in a meeting at the CBI in the presence of officials from banks, payment companies and network operators. 

Way2pay, a well-known media covering the domestic payment industry news, has interviewed bankers and experts from PSP companies about the viability of the proposed system. Majority of PSP companies expressed disinterest in the proposed system. 

Mehdi Anousheh, an official with Parsian E-Commerce Company, claims that the model has failed to provide a comprehensive solution that covers the interest of all sides. 

Currently, many e-payment companies pay a part of the fees they receive from banks to major acceptors, such as online shops. 

Banks, unsurprisingly, have welcomed the association's move in that banks are not obliged to cover the fees. It is estimated that elimination of online payment fees would cut banks' annual expenses by 16%. Payment transaction costs account for almost 60% of the total fees paid by banks.


Move in the Right Direction 

Alireza Lagzaei, vice president of Bank Mellat, says the plan covers a small portion of the market, but "is a positive beginning to correct the problematic system."

Mohammad Sadeghi, ENBank's deputy for IT affairs, expressed strong support for the plan, as it would boost transparency in the market and help cut costs of payment transaction from banks.

Some bankers say new mechanisms should consider charging cardholders for making larger payment transactions. Unlike rules in most countries, debit card holders in Iran are not charged for e-payment when buying goods and services. The decision (not to pay) was made years ago when the CBI started promoting debit cards.

However, experts now insist fees are necessary because one cannot use a service for free. They say people in Iran usually have a bad habit and expect other organizations to foot their bill.

The proposal also calls on the CBI to stop setting fixed fees on transactions processed through online gateways, so that market players can negotiate fees based on needs and quality of service. 

Experts say the CBI after years has finally found the courage to set things straight and rewrite the payment fee system.  After all, it is the top body in charge of the banking and payment systems and should make the final decision. 


Iran fintechs Banks Payment Companies Fee