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LKI Press Statement 2021-005
February 12, 2021
Consumer group raises alarm over recent banking developments
In a recent press statement by consumer advocacy group Laban Konsyumer Inc. (LKI), they wrote “our group has released many comments on the new BSP policy vis a vis the depositor. First… is that we hold that increased fees in the use of ATM add another burden to the ordinary customer, and this is an immediate room for concern. This new policy can be a way of indirectly marginalizing banks with smaller branch networks since over the long term, depositors may be enticed to transfer their accounts to the bigger banks. Do we want huge banks or friendly neighborhood banks who know us and our needs?”
The consumer group went on and questioned “Is there a real demonstrated need for higher fees? Are there actual improvements/enhancements on the current ATM services, advances in technology or infrastructure that justify the increased fees or the need for them?”
To continue the discussion and conversation, LKI President Atty. Vic Dimagiba said “the more accurate statement would be that the banks with large branch networks are the ones increasing fees because they see that they are earning more. In the distribution of ATM fees in one ATM transaction, the sharing is between the bank that issued the ATM card (issuer bank), the bank whose ATM machine was used to transact (acquirer bank) and the network that connects them (Megalink or Bancnet).”
Dimagiba pointed out that “In the old scheme, the base is the fee charged by the issuer bank and from this is deducted a fixed amount that goes to the acquirer bank, a fixed amount that goes to the network, and the residual amount goes to the issuer bank.
In the new BSP policy, the base is the fee charged by the acquirer bank, and fixed amounts go to the issuer bank and the network. The residual amount goes to the acquirer bank.”
Related to this, LKI highlighted as well that “The new policy is more beneficial to the banks with large branch networks because of the greater probability of more people using their ATMs since they are more in number. Therefore… they will benefit more from the new sharing formula, and therefore it makes sense to them to increase their fees too.”
LKI raised several points and demanded a response from the sector quickly, regarding “LKI now has to observe those acquiring banks that announced increases in atm fees are the big boys.”
Dimagiba actually explained “I didn’t notice Union Bank amongst them. All are members of Megalink and Bancnet and there is mutual and reciprocal connectivity amongst the member banks. So… what happens to that agreement? What is the logic of the acquirer and the issuer bank distinction?”
The consumer group argued that “Are the big banks laying the predicate to depositors to transfer their accounts to them considering they have more ATM machines anywhere. In the same bank, no ATM fees increases for now. This BSP policy is breeding unfair competition to the issuer bank in favor of the acquiring in the long term.”
Dimagiba also went on to reason that “There are no new infrastructure or technology that would warrant recovery of new investments. Or is this another BSP laying the groundwork for banks to consolidate again and strengthen amidst the backlash of the pandemic? Are depositors now encouraged to deposit and withdraw in retail banks versus the issuer bank? These are the consumer questions that must be answered immediately.”
Dimagiba concluded that banks should instead “prioritize in ensuring that depositors develop trust in online commerce payments by strengthening digital privacy, security and eliminate offline downtime for consumer welfare.”