News / National
Money transfer agents warn of massive transaction fee hike
12 May 2022 at 06:29hrs | Views
PRESIDENT Emmerson Mnangagwa's recent imposition of a mandatory 4% Intermediate Monetary Transfer Tax (IMTT) on domestic foreign currency transfers has the potential to double transaction fees being paid by customers, money transfer agents have warned.
The new measures are based on estimates seen causing charges to breach the 10% mark for some of the agents. This means that a customer will part with US$10 on every US$100 per transaction.
The agents said the transacting public had already started panicking and pushing transactions prior to the actual increases which are now expected any time.
The agents had become popular as banks suffered from an acute liquidity crisis that saw depositors unable to withdraw cash.
"This move flies in the face of financial inclusion, how can you say that you are putting 4% charges on transactions and claim you want financial inclusion? Very soon people will prefer to send their money on a bus, imagine if you have to lose US$40 every time you send US$1000 then it makes sense to drive if it's near or to just send on a truck or bus," said a top money transfer agent who requested not to be named for fear of victimisation.
"It's not just about the clients being overcharged, it's also about the risks this poses to our business," said a bank executive who preferred to remain anonymous.
Currently, Mukuru charges 7% with the rest including Banc ABC's City Hopper charging between 3% and 5% of the amount sent. The cheapest was possibly Simbisa Brands's Innbucks which was shut down by the Reserve Bank of Zimbabwe on grounds that it was not registered. Other domestic agents include Access Forex and NBS InstaCash.
"The average Zimbabwean sending money locally is doing so to supplement the income of relatives and loved ones back home. Keeping the cost of personal remittances low is therefore important for the survival of many families.
"Firstly, it puts more money in the pockets of those sending money to relatives within the country. Secondly, it will increase flows through formal channels. Thirdly, it will improve financial access for the most vulnerable segments of our society. High fees place a financial burden on the remitters and on the recipients of the remittances, who receive a smaller amount of the much-needed funds sent by their family members," one of the agents said.
The new measures are based on estimates seen causing charges to breach the 10% mark for some of the agents. This means that a customer will part with US$10 on every US$100 per transaction.
The agents said the transacting public had already started panicking and pushing transactions prior to the actual increases which are now expected any time.
The agents had become popular as banks suffered from an acute liquidity crisis that saw depositors unable to withdraw cash.
"This move flies in the face of financial inclusion, how can you say that you are putting 4% charges on transactions and claim you want financial inclusion? Very soon people will prefer to send their money on a bus, imagine if you have to lose US$40 every time you send US$1000 then it makes sense to drive if it's near or to just send on a truck or bus," said a top money transfer agent who requested not to be named for fear of victimisation.
"It's not just about the clients being overcharged, it's also about the risks this poses to our business," said a bank executive who preferred to remain anonymous.
Currently, Mukuru charges 7% with the rest including Banc ABC's City Hopper charging between 3% and 5% of the amount sent. The cheapest was possibly Simbisa Brands's Innbucks which was shut down by the Reserve Bank of Zimbabwe on grounds that it was not registered. Other domestic agents include Access Forex and NBS InstaCash.
"The average Zimbabwean sending money locally is doing so to supplement the income of relatives and loved ones back home. Keeping the cost of personal remittances low is therefore important for the survival of many families.
"Firstly, it puts more money in the pockets of those sending money to relatives within the country. Secondly, it will increase flows through formal channels. Thirdly, it will improve financial access for the most vulnerable segments of our society. High fees place a financial burden on the remitters and on the recipients of the remittances, who receive a smaller amount of the much-needed funds sent by their family members," one of the agents said.
Source - NewsDay Zimbabwe
