Monetary Auth of Singapore
Encourage banks to charge fees for cash services
I suggest that MAS should ask the banks to increase the interest rate that they pay for savings and deposits, and to charge a fee for cash services (i.e. ATM withdrawals and cash deposits). This fee should allow the banks to recover their actual expenses in providing these cash services.
When the banks charge for the the actual cost of providing the cash services, it will encourage customers and merchants to move towards cashless payments - which are more efficient.
The merchants have to spend time to collect cash, give change, reconcile the cash collection against sales, and bank in the daily cash collections. These activities incur cost of manpower.
Many retailers have problem in employing retail assistants. By moving towards cashless payments, these retailers can overcome their labor shortages and reduce the labor costs. If the retailers have to incur high labor cost, they will have to pass the cost to customers through higher prices.
It will also overcome the problem that the retail assistants may steal some of the cash collection.
At present, the charges for cashless payments are high, i.e. 2% of transaction amounts or higher. It should be possible to reduce this charge to a more acceptable level, (say) 0.5%of transaction amount, subject to a minimum of $0.10.
If the charges for cash and cashless payments are rationalized and adjusted to a realistic level, retailers and customers will adopt a more efficient method of payment.
In Australia, some retailers refuse to accept cash and insist on card payment.
There is a fear that some customers do not have a bank account or are not able tp pay with a card payment.
They can pay with a transit card. All travelers now use a transit card to pay the fares on public transport. They are familiar with this form of payment. They can find it easy to use the transit card to pay for retail, food and beverage outlets.
We should move towards cashless card or mobile payments, instead of paying by cash.
We should take an active step towards cashless payment. It should start with asking the banks to impose a fee for cash services, so that the true cost of cash services is reflected in this form of payment.
Tan Kin Lian
Add Comment
Good points, but actually in Australia many establishments add on a 1.5-2% surcharge when paying by cards. Because with cards there are a lot of intermediaries that need/want to be paid as well
Daryl 06 Aug 2022