Commercial banks introduce increased fees for electronic transactions

− hikes to offset installation cost of new US$6M payment systems – BOG head

Commercial banks across Guyana have introduced an increase in the service charges for all electronic transfer transactions.
These fee hikes fall under the Bank of Guyana’s modernisation of the National Payment System. Under the US$6 million World Bank-funded project, a range of electronic payment options have been made available.
These include the Guyana Electronic Funds Transfer (EFT), which enables low-value bulk payments such as payrolls and other electronic transfers, and the Guyana Real Time Gross Settlement (RTGS), which facilitates timely processing of high-value and urgent payments.
In a notice to the public, the Guyana Association of Bankers said that these services align with international banking practices and also help to ensure efficient financial services.
However, in order to support the maintenance of these service enhancements, there will be a $100 charge for each EFT transaction, while RTGS transactions have incur a $500 charge.
These charges were approved by the Bank of Guyana and its Governor, Dr Gobind Ganga who defended the increases in these fees. He pointed out these hikes, which he noted are not that significant, are to offset expenses incurred by both the Central Bank and the commercial banks for implementing these modern payment services.
“It’s somewhat [to cover the costs of] equipment that was purchased, software that had to be put in place and other oversight kind of charges. But it’s not that excessive. I think it’s up to $5 million for the EFT and for RTGS, above $5 million [in electronic transfers. So, it is very, very small charges and all of it does go to the commercial banks by the way… Some of it will come back to the Bank of Guyana because we would have also invested quite a lot in these systems,” the Governor explained during a telephone interview with the Guyana Times.
While these increased fees officially took effect from August 3, 2021, Dr Ganga disclosed however, that some of the commercial banks were already charging for these services. It was against this backdrop that the hikes in the fees were instituted in order to bring some sort of uniformity across the local banking sector.
While these electronic payment methods are increasingly becoming the preferred option, according to Dr Ganga, there has been a sharp increase in the utilisation of these services especially over the past year.
“There has been a steady increase in the usage of the G-EFT system primarily as a result of the prevailing COVID-19 pandemic,” he noted, adding that it is being used continuously by the Finance Ministry and at least six commercial banks.
In fact, the BOG Governor shared that during the period January to June 2021, there were 426,226 transactions valued at $122.3 billion. This is compared with some 87,711 transactions valued at $22.3 billion in the entire 2020, representing an increase of 486 per cent and 548 per cent, respectively.
“The use of the G-EFT system is projected to increase significantly in the second half of 2021 as additional users sign-on to the system such as GRA (Guyana Revenue Authority) and NIS (National Insurance Scheme),” Dr Ganga indicated.
The Bank of Guyana begun the development of a modern, electronic payment infrastructure in 2017 with the US$6 million loan from the World Bank.
The introduction of these new services was facilitated through the National Payment System (NPS) Act, which was passed in the National Assembly back in 2018. However, the legal framework for the new payment services in Guyana came into effect until the following year and sought, among other things, to reduce prevalence of cash transactions and promote more electronic payments.
In the past, Guyana’s National Payments System was predominantly paper based, with a cash-oriented culture driving most transactions.
A National Payment System (NPS) is a system that provides the economy with information communication technology (ICT) options for processing payments resulting from the many different types of economic transactions that take place daily. In other words, this includes e-payments, credit cards, and wire transfers.
The Bank of Guyana was tasked with leading the development and implementing a strategic approach to advancing the development of Guyana’s NPS by establishing the parameters to guide policy and set priorities.
The Act describes electronic money as something representing cash that is “stored electronically, including magnetically or in any other tangible or intangible device such as a SIM card or a software; issued on receipt of funds of an amount not less in value than the monetary value issued for the purpose of making payment transactions; and accepted as a means of payment by persons other than the issuer”.