New Thai Banking Fees To Take Effect Next Year

[webfact]

New Banking Fees to Take Effect Next Year

BANGKOK: -- The Bank of Thailand has concluded the issue of commercial banks' transaction fees and the new rates will be implemented after the New Year.

Banks claim they will each lose around 100 million baht in revenue a year and it will take a couple of years for them to be able to offset this loss.

Bank of Thailand Governor Tarisa Watanagase revealed results of her meeting with the Thai Bankers' Association yesterday on transaction fees.

Same-bank ATM transfers across provinces will be free once a month but will be liable to fee of no more than 15 baht for the second time onwards.

The fee is currently at ten baht per 10,000 baht transferred.

Same-bank ATM withdrawals across provinces will be subject to fee of no more than 15 baht per transaction from the current ten baht per 10,000 baht withdrawn.

These two new fee rates will be put in place by the New Year.

New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards.

For interprovincial services, the transaction fee will be at 20 to 25 baht for the first four times and an additional five baht per transaction for the fifth time onwards.

Fee for interprovincial cross-bank ATM withdrawals will cost no more than 20 baht per transaction from the current ten baht per 10,000 baht and an increase of five baht per transaction is applied from the fifth time onwards.

For all transactions with a fee, clients will be informed of the charge on the ATM screen everytime so they are eligible to cancel the service before they are charged.

The central bank governor thanked all the banks for their cooperation.

She remarked that even though the new transaction fees will cut into banks' profits, in the long term they will benefit from the rising number of ATM users.

Thai Bankers' Association President Chartsiri Sophonpanich, also Bangkok Bank president, said each bank will feel different effects from the changes but each should see a loss in revenue of 100 million baht a year.

He said it should be a couple of years before banks can recoup the loss with other kinds of revenue.

-- Tan Network 2010-09-28

[scratt]

"It should be a couple of years before banks can recoup the loss with other kinds of revenue."

Translation : We'll still get the same amount of cash from each customer, and probably more. We just haven't figured out the scam yet.

The rest is pretty much untranslatable. But basically when a goose sits on a log under a full moon and you are doing an ATM transfer standing on one leg then you might get it for free.... or not.

Edited September 28, 2010 by scratt

[otherstuff1957]

So, basically you will be charged 10 - 20 baht for almost any kind or ATM transaction. I guess they want to go back to a cash-based economy.

[basjke]

As far as I can read is that ALL fees will go UP by 5 baht per transaction and that some will even rise by 10 Baht per transaction.Still they claim they gonna lose money.

[Pib]

The new fee structure is clear as mud.

[visions]

Am I missing something? If the fees are hiked 50% (increase fromm 10b to 15b) how do the banks lose money??? What other business could up their fees by 50% and stay in business?

The comment about each bank losing 100 million is a smoke screen surely??

[dumpling]

Am I missing something? If the fees are hiked 50% (increase fromm 10b to 15b) how do the banks lose money??? What other business could up their fees by 50% and stay in business?

The comment about each bank losing 100 million is a smoke screen surely??

All I see lately in this country are companies and people grabbing what they can while they can, what do they know that we don't ??????

[GarryP]

Could someone please explain to me how the banks can talk about making a loss when they are paying such ridiculously low interest rates on deposits. Banks here are making a killing. 100 million is like a fart in a jam jar to these institutions.

[givenall]

Am I missing something? If the fees are hiked 50% (increase fromm 10b to 15b) how do the banks lose money??? What other business could up their fees by 50% and stay in business?

The comment about each bank losing 100 million is a smoke screen surely??

All I see lately in this country are companies and people grabbing what they can while they can, what do they know that we don't ??????

For sure there is no consumer protection agency over her. But they have big business protection laws, what they want they, they get

[SoftWater]

This is a move in the right direction, but its still not good enough.

It's not going up from 10baht to 15 baht, but from 10bht/10,000 baht transferred to 15 baht single fee. So if you send 20,000 via ATM transfer you pay 20baht as it currently stands, but after the changes you will pay only 15baht (and you'll still only pay 15baht even if you transfer 30,000 or 40,000 etc whereas before you'd pay 30 baht, 40 baht etc).

The banks will lose a lot of money on transfers from people like us and upper-working class and higher Thais - people who basically don't notice the transfer charges anyway. However, for people make a large number of less-than-10,000-baht per time transactions, it looks like they will end up paying more. The new charges seem to hit the poorest worst (ain't it always the way) such as those sending a few thousand baht home every month from their work in the city.

Edited September 28, 2010 by SoftWater

[cougar52]

This whole article is just white wash B/S. Bank Bank, just one is showing a 32% profit ove4r last year,

and it's first half NET Profit is 12.9 BILLION ???? That's right, BILLION. So please show me where is the loss?

http://www.reuters.com/article/idUSTRE68J0AX20100920

[jfchandler]

I think what some posters are missing is that they seem to be going to a flat single fee structure regardless of the amount involved, as opposed to the prior XX baht per 10,000 of funds handled...

So for someone moving larger amounts, a 15 baht single fee would be better than 50 baht (10 baht X 5) for a 50,000 baht transaction.

However, for the lower income folks, it looks like a lot of things are going to become more expensive...in the case where their amounts transacted are below 10,000 or 20,000 baht per item.

And, BTW, of course, absolutely no mention on action on the farang friendly 150 baht ATM withdrawal fee.

[jfchandler]

Now if the Bank of Thailand really wanted to help average people, how about reducing the standard 20% credit card interest rate charged by all the major Thai banks, apparently as a result of a rate set by the BOT...

But NOOOOO....... The banks' real cost of funds is 2 or 3%.... But if you think the BOT is going to give people a break on their credit card interest rates, forget it!!!

Could someone please explain to me how the banks can talk about making a loss when they are paying such ridiculously low interest rates on deposits. Banks here are making a killing. 100 million is like a fart in a jam jar to these institutions.

[jackr]

The banks shouldn't be charging anything for this type of service, period! One already pays to have an ATM card in one's pocket. They won't lose squat, it's all a smokescreen... as someone else pointed out, the majority of transactions are smaller amounts and charges in this bracket have been hiked. 'kin thieving so and sos, how's it go; take all, give nothing. Seems to be a recurring theme around this neck of the woods.

[asiawatcher]

Let's put this in context. It represents a rise of 67%. Great - and the banks are not crooks?

[Thai at Heart]

Well thankyou from Khun Tarisa.

Sticking it well and truly to the poor. What kind of an agreement is that? It really does show that the people at the top of this country, really do believe that the rank and file are thick.

Unfortunately, this story will do the rounds on the internet quite quickly I guess. Another strike against the Dems in the eyes of the poor.

[basjke]

I think what some posters are missing is that they seem to be going to a flat single fee structure regardless of the amount involved, as opposed to the prior XX baht per 10,000 of funds handled...

So for someone moving larger amounts, a 15 baht single fee would be better than 50 baht (10 baht X 5) for a 50,000 baht transaction.

However, for the lower income folks, it looks like a lot of things are going to become more expensive...in the case where their amounts transacted are below 10,000 or 20,000 baht per item.

And, BTW, of course, absolutely no mention on action on the farang friendly 150 baht ATM withdrawal fee.

No,we don't miss that since it isn't written anywhere.Where in the article is there talk about a flat fee?All I see is fee per transaction,and it is rising in every case.

[jfchandler]

I'm not in any way defending the fees... But... you really need a new pair of reading glasses... See below...

By flat fee, I meant, pretty clearly, a single fixed fee per transaction, as opposed to the current XX baht fee per each 10,000 baht value in a single transaction.

No,we don't miss that since it isn't written anywhere.Where in the article is there talk about a flat fee?All I see is fee per transaction,and it is rising in every case.

Same-bank ATM transfers across provinces will be free once a month but will be liable to fee of no more than 15 baht for the second time onwards.

The fee is currently at ten baht per 10,000 baht transferred.

Same-bank ATM withdrawals across provinces will be subject to fee of no more than 15 baht per transaction from the current ten baht per 10,000 baht withdrawn.

These two new fee rates will be put in place by the New Year.

New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards.

For interprovincial services, the transaction fee will be at 20 to 25 baht for the first four times and an additional five baht per transaction for the fifth time onwards.

Fee for interprovincial cross-bank ATM withdrawals will cost no more than 20 baht per transaction from the current ten baht per 10,000 baht and an increase of five baht per transaction is applied from the fifth time onwards.

[basjke]

I'm not in any way defending the fees... But... you really need a new pair of reading glasses... See below...

By flat fee, I meant, pretty clearly, a single fixed fee per transaction, as opposed to the current XX baht fee per each 10,000 baht value in a single transaction.

No,we don't miss that since it isn't written anywhere.Where in the article is there talk about a flat fee?All I see is fee per transaction,and it is rising in every case.

Same-bank ATM transfers across provinces will be free once a month but will be liable to fee of no more than 15 baht for the second time onwards.

The fee is currently at ten baht per 10,000 baht transferred.

Same-bank ATM withdrawals across provinces will be subject to fee of no more than 15 baht per transaction from the current ten baht per 10,000 baht withdrawn.

These two new fee rates will be put in place by the New Year.

New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards.

For interprovincial services, the transaction fee will be at 20 to 25 baht for the first four times and an additional five baht per transaction for the fifth time onwards.

Fee for interprovincial cross-bank ATM withdrawals will cost no more than 20 baht per transaction from the current ten baht per 10,000 baht and an increase of five baht per transaction is applied from the fifth time onwards.

Ok that is what is written now lets face the reality.For the money transfer there is a small profit for those who transfer big amounts of money by ATM on a regular base.I for sure never do and I even don't know if it is possible to transfer to another bank over ATM.So in my opinion rather useless for the moderate customer.

Second example: 15 Baht fee per withdrawal where it now stands at 10 Baht per 10.000.So unless you withdraw more then 15.000 you make a loss and anyway you cannot withdraw more then 20.000 anyway so even in the best scenario customer makes a small profit but in most cases a loss again.

Your 3rd example.Inter provincial cross bank ATM withdrawals will cost no more then 20 Baht per transaction where it is 10 Baht per 10.000 Baht now.

Again if you don't withdraw the maximum of 20.000 Baht you will make a loss as you will pay 20 Baht instead of 10 Baht now.Oh and then not to forget that after the fifth withdrawal they will rise the fee with another 5 Baht.Conclusion : Customer is the big loser again.

Oh and I almost forgot,I would not be surprised that since most ATM's are only able to provide 20 banknotes at a time that in the future we will see more and more the message " this machine has only 500 Baht notes currently do you want to proceed with your transaction".

[jfchandler]

Baskje, I never said I thought the changes were good... and I pretty clearly said above they would be disadvantageous to (small fry) Thai customers moving funds under the 10,000 baht threshold...

But nonetheless, it's still true that the general gist of the changes for better or worse is to move to a flat fee per transaction approach vs. a XX baht per each 10,000 baht approach. That's good for the bigger money types, though.

And yes, it's very possible to transfer funds via ATM from one bank in Thailand to a different account with a different bank in Thailand... usually for a fee. Thais do it all the time...since that approach pre-dated the Internet banking approach that most Western folks are familiar with... Some Thais also can do the same via their mobile phones, depending on their bank and set-up.

Edited September 28, 2010 by jfchandler

[RIJoe]

"New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards."

Does this mean I should use my debit card at another bank four times a month for free?

[jfchandler]

They're talking about using one Thai bank's ATM machine to withdraw funds from a different Thai bank's account.... not about non-Thai banks...

For example, using your Siam Commercial ATM card at a Bangkok Bank ATM to withdraw funds from your SCB account.

"New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards."

Does this mean I should use my debit card at another bank four times a month for free?

[Thai at Heart]

When you read that you will get so many transactions for free, and then start to pay, it seems to me that they might believe that this will increase the costs for loan sharks who stand in front of the ATM for 20 minutes at a time removing money and transferring it around.

[JimGant]

Now if the Bank of Thailand really wanted to help average people, how about reducing the standard 20% credit card interest rate charged by all the major Thai banks, apparently as a result of a rate set by the BOT...

But NOOOOO....... The banks' real cost of funds is 2 or 3%.... But if you think the BOT is going to give people a break on their credit card interest rates, forget it!!!

Many Asian countries learned the hard way about credit cards. And scrambled to implement regulations to correct the problems.

An excellent article about three of these countries is found HERE

From that article:

Forms of such restrictions have indeed been strengthened or reintroduced in some Asian markets following the recent distress episodes. For example, drawing lessons from the Korean experience, and in response to a marked acceleration in local credit card lending during 2001-03, the Thai regulators promptly introduced formal guidelines on credit card operations in 2002 and tightened them in 2004. In November 2002, the Bank of Thailand (BoT) set the minimum annual income requirement of THB180,000 for cardholders and a 5% minimum monthly repayment of the total credit card balance outstanding. In March 2004, the BoT acted again to set a credit limit of five times of monthly income, hike the minimum monthly repayment to 10% in a phased manner and request mandatory cancellation of credit cards in case of overdue for more than three months. In April 2007, the BoT raised the regulatory ceiling on credit card charges to 20% from 18% APR. Largely owing to these BoT moves, Thailand’s credit card balance outstanding decelerated sharply, from a worrisome peak of 80% growth in mid 2003 to below 10% by late 2007 (Graph 14). There were signs of some deterioration in the asset quality of credit card lending as well, probably in response to the tougher minimum monthly repayment requirement. Yet, it seems that so far, Thailand has managed to avoid a painful bust

Hmmmm. Sounds like the BOT has taken appropriate action.

And, in picking 20% as the deemed interest rate, could this actually be too low?

In Asia, legal ceilings on interest rates on consumer finance range from 18% in Malaysia, 20% in Taiwan and Thailand, 40% in Korea to 60% in Hong Kong....In the Philippines, the local regulatory ceilings on interest rates have been lifted since the 1980s so that higher card rates mostly reflect higher credit costs on card lending. Most Philippine card issuers currently charge some 30% APR

Wow. The market rate in the PI is 30%. No doubt caused, in large, by folks living beyond their means.

Which sounds a lot like Thailand, where one-upsmanship is truly ludicrous. Resulting, quite possibly, in over-extended credit. Which means a pegged 20% credit interest rate is probably too low (in the US, the market rate for at-risk credit card holders is over 20%).

Thai bank regulation, at least in the last decade, seems to have kept things on an even keel. That the fee structure is part of this doesn't seem too inappropriate -- kinda like how the utilities (some, at least) are regulated back in the States.

[aurelius]

Now if the Bank of Thailand really wanted to help average people, how about reducing the standard 20% credit card interest rate charged by all the major Thai banks, apparently as a result of a rate set by the BOT...

But NOOOOO....... The banks' real cost of funds is 2 or 3%.... But if you think the BOT is going to give people a break on their credit card interest rates, forget it!!!

Could someone please explain to me how the banks can talk about making a loss when they are paying such ridiculously low interest rates on deposits. Banks here are making a killing. 100 million is like a fart in a jam jar to these institutions.

Lets get some facts on the table..

Bank of Thailand sets a ceiling of 20% but does not mandate 20%.

Thailand's 12 million or so credit cards are held by only about 4 million people - these would be considered (on a local scale) affluent - by no means average. BKK Post also reported recently that only 2.3 million people pay income tax, so apart from the obvious self employed entrepreneurs who are earning but not declaring, there are very few who in the average bracket.

Furthermore, if you look at the performance of KTC - a stand-alone credit card business which is publicly listed, you will see that for whatever reason, their business is hardly a cash cow. Thai credit cards and home loans carry a very high proportion of non performing loans by international standards due to their (gross generalization ahead) laissez-faire approach to repayment, lack of enforcement law, and lack of concern for credit ratings etc.

And, who do you think is funding 5% cash back at Central, Paragon et al. This is not the benevolence of the department store - this is cash out from the card issuers which cardholders milk to the max. Most Thais don't carry any revolving balances, so they take 5% cash back plus 30+ days interest free, plus loyalty points - and they are quite content. (Of course its the banks who are giving up their profit margins in the drive for cardholder numbers). If you're a Citibank, HSBC, StanChart and you have basically no customers, then all this is quite justifiable in the name of growing your customer base (especially if you only have one branch). But if you're a BBL, KBank or SCB and you already have a heap of customers, then paying these card costs is hard to defend, but required in the name of having a competitive product/service.

Save some sympathy for the personal loan customer who pays a max interest rate of 28% and is a lower segment of the population than credit cards.

[tomyummer]

Hey great. So we get one free transaction per month before the charges kick in.

Anyone want to buy my monthly freebie? I'll charge 10 baht, so you'll save 33%!! Buy all 12 months for the price of 11!! But if you want to pay by credit card, I'll have to charge you a 200 baht process and handling fee. Any returns is subject to a 30% restocking fee. Call in for inquiries (3 baht per minute). At the end of your subscription your account will automatically be renewed and charged to your credit card (fees apply). Cancellation of account is subject to a 100 baht closing fee.

[jfchandler]

Jim, that's an interesting article re the Asian market for credit cards.However, in a better world, there are in my view lots of OTHER ways to regulate and keep in check the credit card spending market other than charging a 20% APR.... Like credit line limits, income requirements, monthly repayment minimums and credit history based rating.... But then, all of those perfectly good tools don't make heaps of cash for the Thai banks, they just regulate credit cards spending.

In a different thread here a few weeks back, another TV member who said he'd done work in the industry said the Thai credit card market is tremendously profitable for the Thai banks.... I'm no expert on their balance sheets, so I'm taking his word for it.. And, for example, the Reuters article posted above saying BKK Bank is expecting an all time record profit this year... and other recent similar news reports on the Thai banking industry.

From a variety of indicators, it seems the Bank of Thailand is far more interested in looking out for the financial health (profits) of the banks it supposedly regulates than it is the customers of those banks...

Just because Thailand had a financial market meltdown a decade ago, similar to the one the U.S. had more recently, shouldn't be a permanent excuse to gouge Thai banking consumers with overinflated fees and excessive interest rates. And I don't mean excessive compared to the U.S. marketplace. I mean excessive when comparing the banks' current cost of funds vs. the interest rates they are charging. The bank's rates for money have gone way down, and your article recounts the BOT a couple of years ago RAISED the credit card interest rate limit... Uhh huh.....

[aurelius]

They're talking about using one Thai bank's ATM machine to withdraw funds from a different Thai bank's account.... not about non-Thai banks...

For example, using your Siam Commercial ATM card at a Bangkok Bank ATM to withdraw funds from your SCB account.

"New transaction fees that will be introduced in the second quarter of next year include cross-bank ATM withdrawals and balance inquiry in the same provincial grouping.

These services will be free for the first four times in a month but will cost ten baht for the next service on. They currently cost five baht for the fifth time onwards."

Today's fees for ATM withdrawals across banks are different between provincial and BKK card holders- the new fees make some attempt to at least have everyone across the country paying the same amount for transactions - after 6 transactions at other bank's ATMs (today), a Bangkok card holder has paid fees of 10bt; the provincial card holder has paid fees of 130bt.

So, under the new pricing everyone pays the same: after having conducted 6 transactions at other bank's ATMs, any/all (local) cardholders will have paid 20bt.

So, I'd say this is a victory for the Dem's for the provinces, but only if Bangkokian's can GIVE UP something without whining forever. isn't it K Tarisa's last day tomorrow or the day after - a gift to the incoming Governor...

But fair as it may be, I agree its as clear as mud.

[scorecard]

Could someone please explain to me how the banks can talk about making a loss when they are paying such ridiculously low interest rates on deposits. Banks here are making a killing. 100 million is like a fart in a jam jar to these institutions.

- They have no intention to pay higher interest, they aim to keep 99% of their investment return for themselves, plus there is almost zero competition from other forms of deposit investment in Thailand so the mainstream banks keep the returns for themselves

- They are not good at investment and, overll, Thai banks gain very low return on investment compared to many many banks abroad, including many in Asia.

- They still suffer major bad debts (read loans which should have never ever have been approved.

- Many banks still have massive bad debts on credit cards (on cards which should never have been issued)

- And, they make big money on numerous fees.

300Baht now for an ATM. My local Thai bank manager has become a personal friend, privately he says he's embarrassed to ask for 3OOBaht for an ATM card.

Edited September 29, 2010 by scorecard

[henryalleman]

I only like to mention that wherever you take money out of an ATM in any EUROZONE country there is no fee asked or deducted. Also when you transfer money to any EUROZONE bancaccount there are no fees.

Thailand is still far away from a customer friendly banking policy.