Posted by Techjaja Staff ( Written By David Mugabe)
TELECOM service providers this week raised the cost of transferring money, a move expected to be followed by the traditional providers including MoneyGram and Western Union. But despite the hike by the telecoms, a comparative look at the banking sector versus mobile money transfer and other transaction charges related to financial access indicates that banks still charge the highest fees for money transfers.
The minimum charge for traditional transfers such as electronic funds transfers (EFTs) and Real Time Gross Settlement (RTGS) cost from sh2,000 to as high as sh20,000 charged by Housing Finance, according to information from Bank of Uganda.
Also, the cost of withdrawing money using the automated teller machines (ATM) averages sh500, with the highest being Standard Chartered Bank and Fina Bank charging sh800 per transaction and the lowest is Cairo Bank at sh250, while Barclays Bank does not charge.
Deposits are free for most of the banks, but Crane Bank and Tropical Bank charge sh2,000 and sh1,000 respectively. Banks only fair well in bulk cash deposits and withdrawals, for which most of them do not charge anything.
On the other hand, sending money using the mobile phone shot up from an average of sh800 per transaction to between sh500 and sh2,200 for amounts ranging from sh500 to sh4m since yesterday as telecoms revise their tariffs basing it on the pronouncements of a new tax read out in the 2013 budget last month.
It is more expensive to send money to unregistered users with charges ranging from sh1,000 to sh70,500 for amounts ranging from sh500 to sh4m.
During the 2013/2014 budget reading, finance minister Maria Kiwanuka announced an excise duty of 10% on fees charged on transfer of money by mobile network operators and other money transfer operators to widen the tax base.
The Central Bank’s figures also show that only two banks; Bank of Baroda (sh1,000) and Cairo Bank charge for withdrawals without passbooks. Cairo Bank charges sh5,000. Centenary and dfcu banks have the lowest minimum balance at sh5,000, while Baroda (sh50,000) and Cairo (sh30,000) have the highest minimum balance requirement for savings accounts.
Crane Bank charges a deposit of sh300 upto 10 transactions and shs 600 for more than 10 transactions. The stark difference between the two transfer platforms (banks and mobile phones) indicate the convenience that mobile telephony has brought. A notice from MTN Uganda on Monday said the rates would change by yesterday. Uganda Telecom (utl) also announced that “effective Monday, the Msente transfer rates have been adjusted.”
What are the new rates?
Msente is the third biggest platform after MTN and Airtel. Airtel Uganda communications manager Fiona Wall said Airtel was not immediately raising its money transfer charges. Close to 10 million Ugandans use mobile money compared to about four million bank accounts. The maximum account balance allowed on mobile money is sh5m and the maximum daily transaction is sh4m. Total mobile money transactions grew from sh3.8trillion to sh11.7trillion in 2012.
Sarah Banage, the Uganda Revenue Authority assistant commissioner corporate affairs, said the budget announcement is still a proposal until the Finance Bill is passed by Parliament and it is endorsed by the
“These are budget proposals that Parliament has to discuss and sometimes they refuse them (like the water tax in 2012), but if they pass it, we then go and collect arrears,” said Banage, adding that the
guidelines are not even there.
But she also added that MTN is a private player and it is within their rights to increase their rates
Source: New Vision