News

Banking panel recommends ATM surcharging in South Africa

June 29, 2008

JOHANNESBURG, South Africa — A report issued by the Banking Enquiry Panel in South Africa says that South African banks are being encouraged to launch pricing schedules that allow ATM surcharging — more commonly known as "direct surcharging" in South Africa.

The Banking Enquiry Panel oversees competition and pricing for South African banks.

According to the panel, South Africa's banking structure is a bit unique, with the country's four major banks controlling more than 90 percent of the retail market for personal banking transactions.

In its report, the panel writes that transactional and interbank charges in South Africa "are higher than what they would be at competitive levels. The market structure, because of current information asymmetries and product complexities, means that the banks have the ability to abuse their market power."

The panel outlines 28 recommendations to improve the competitive landscape in South Africa. Five of those recommendations relate to ATM pricing, specifically surcharging.

"The report advocates the implementation of a direct-charging model, offering full disclosure and transparency at the start of the transaction, in order to allow for more price competition in the provision of ATM services," the report states.