By: Omar Silva, Editor, National Perspective Belize (DIGITAL EDITION)

Belize City: Thursday 21st December 2023

In a long-awaited move, the Central Bank of Belize has taken action to restrict ATM withdrawal fees, aiming to alleviate concerns and frustrations voiced by consumers who have been charged excessive fees by retailers and wholesalers for using their ATM cards. While this decision is being applauded by many, questions are being raised about why it took so long to address these blatant abuse and exploitative charges.

For years, customers have been complaining about the fees imposed on them by sellers when they choose to use their ATM cards, despite the fact that the Central Bank itself does not charge for ATM card usage. Governor Kareem Michael acknowledged the ongoing issue and revealed that internal discussions and dialogues with commercial banks have been taking place to find a solution.

Governor Kareem Michael stated, "We've had internal discussions and we've sort of continued the dialogue with the commercial banks on this. What those discussions have centered around is that where does, who does, who will have jurisdiction over correcting this practice? And I think the angle was to see if there was any room for it in the Financial Consumer Protection Bill that's coming along, the act, but it doesn't seem to fit there at all. That would be a very different structure. Now, if the commercial banks and the retailers are the ones who enter into this contract, then shouldn't that control authority rest between the two? It might be better fit there. And that's where we're still continuing the dialogue."

The Central Bank's decision to restrict ATM withdrawal fees to twenty-five cents per transaction, effective January 2, 2024, is seen as a significant step toward addressing the issue. However, it has not been without resistance from the banking sector. Some are concerned that banks may try to recoup their losses by increasing fees in other areas.

Governor Kareem Michael assured the public, "All banks must reduce or limit ATM withdrawal fees to a maximum of 25 cents per transaction. The banks have also committed to reviewing these fees over the next 12 months. This is sort of a transition period with the aim of reducing them further or applying thresholds based on the level of activity and type of customers in the system. The end objective of the Central Bank is to have this as zero for own network, own account usage."

Despite these positive steps, questions remain about why it took so long to address the issue and whether it will have unintended consequences in the banking sector. Governor Michael defended the move, saying, "Every time you try to put in a ceiling or a floor or a restriction in a market that is supposed to be driven by competition, you will have, or it's likely that you have negative consequences. Again, the mandate of commercial banks is solely to its shareholder, and that's a profit-driven mandate. That is a concern for us that it may be passed on. But look at the fees which we targeted. It is largely speaking to a vulnerable, marginalized segment. For every withdrawal, if you make four withdrawals for a month, that's the one loaf of bread. That's pretty harsh. So, these things we have to take into our context. What we have implemented certainly will not bring any bank to its knees."

In conclusion, the Central Bank's decision to restrict ATM withdrawal fees is a welcome development for consumers who have long felt exploited by excessive charges. However, the delay in addressing these charges raises questions about the regulatory process and the potential consequences for the banking sector. The Central Bank will continue to monitor the situation and work towards a fair and balanced resolution that benefits all stakeholders.