An amendment to the Banking (Service to the Customer)(Fees) Rules, 5768–2008 (hereinafter, the Fees Rules) comes into effect today, and will lead to a reduction in the number of fees collected from customers of the banking corporations. In addition, the amendment sets out a uniform fee schedule for operational services provided by the credit card companies by way of providing settlement services for payment (debit/credit) card transactions.
The following are the main points of the amendments, including the date they come into effect:
· Debit transaction on a debit card—As of today, February 1, 2015, a banking corporation will not be permitted to collect a customer-executed transaction fee in respect of this service. Among other things, the objective of the amendment is to increase the use of this means of payment as an alternative to the use of cash. This amendment is in line with the Locker Committee recommendations that, alongside limiting the use of cash, encourage the use of cash alternatives such as debit cards.
· Fee in respect of producing a confirmation of ownership—As of today, banking corporations will only be permitted to collect a fee in respect of producing confirmation of ownership of a bank account starting only from the second confirmation during a calendar year. In this context, we note that this fee ranges from NIS 13 at Bank Yahav to NIS 55 at Discount Bank and at Mercantile Bank.
· Transfer through the Zahav system—As of today, the fee for monetary transfers in real time through the Real Time Gross Settlement (Zahav) system up to NIS 1 million, will be limited to the price of one teller-executed transaction. In other words, where the listed fee prior to the amendment was NIS 39 on average for this service, the feel will be an average of NIS 6 for this service once the amendment comes into effect. Such a transfer contains many advantages for the customer, including the efficient and reliable final settlement of payments in real time, and constitutes an alternative to cash.
· Fee for managing a housing loan—The housing loan management fee is cancelled. This is a fee that was under supervision and was limited to NIS 2 per month (NIS 24 per year) per loan, which was collected with the monthly payment of the housing loan. In order to make it easier to compare the cost of a housing loan, it has been decided to cancel it. This amendment will apply to all monthly payments made from February 1, 2015, both in respect of new loans and in respect of existing loans.
· Fees collected from credit card holders
- Deferred payment fee—As of today, the deferred payment fee for new transactions made in payments on a payment (debit/credit) card has been cancelled. The deferred payment fee is a fee of about NIS 0.5 that was collected by the credit card companies for each payment, in respect of transactions made in payments.
- Transactions in foreign currency and withdrawals abroad—In order to simplify and make it easier for customers to compare the fees collected from them for making transactions and withdrawals in foreign currency by way of a debit/credit card, new rules have been set out for how to calculate these fees. For instance, the conversion will be calculated according to the representative rate and in respect of only one conversion from foreign currency to the shekel. This amendment comes into effect on April 1, 2015.
· Operational services by way of providing settlement services for payment card transactions—The amendment includes a uniform fee schedule for small businesses receiving settlement services from credit card companies for payment card transactions. The objective is to increase transparency and to make it easier to compare the cost of operational services provided by way of settlement services for payment card transactions by the credit card companies.
The objective of the proposed amendment is to create uniformity in the companies’ fee schedules, to increase simplicity, transparency and competitiveness for the business, and to remove impediments to moving from one provider to another. As part of this measure, the credit card companies will be required to publish the fee schedules for the services included in the uniform fee schedule, which will make it much easier for small business to compare. This amendment comes into effect on July 1, 2015.
· Definition of a small business—The definition has been amended such that a company that issues an annual report stating that its business turnover in the year preceding the date of the report does not exceed NIS 5 million will not be required to issue an additional annual report (which it would have been required to do every year on a regular basis in order to benefit from the lower fee schedule). This means that such a customer will continue to be defined as a “small business”, and the retail fee schedule will apply to it, unless the banking corporation requires the customer to submit an annual report in circumstances where the banking corporation has reason to believe that the business turnover of that company exceeded NIS 5 million in the previous year. The amendment transfers the burden of proof to the banking corporation, and its objective is to make it easier for small businesses to be eligible for the fee schedule applicable to individuals and small businesses. This amendment comes into effect on February 1, 2015.
Supervisor of Banks David Zaken notes: “The Banking Supervision Department is continuing to pursue the reduction or elimination of fees and ways to simplify them. Fees that are an impediment to competition or a market failure have been cancelled, with the aim of simplifying the banking service products, increasing transparency to the customer—particularly households and small businesses—and increasing customers’ ability to compare.”