High bank fees squeeze the public

Your Money, Your Call

Cresencia Marjorie Chiremba

IN Zimbabwe, the cost of banking and transferring money has become a significant burden for consumers.

Faced with exorbitant fees, many people are choosing to keep their cash at home, a practice that is increasingly dangerous due to rising robbery cases.

Local banks are known for their high charges.

Basic account maintenance fees can range from US$2 to US$10 per month, depending on the bank. Over-the-counter cash withdrawals incur fees ranging from 2,25 percent to 5 percent of the withdrawn amount, with minimum charges of US$1,50 to US$5.

ATM withdrawals, both within the same bank and at other banks, carry similar fees, further straining consumers’ finances.

These high costs have driven customers away from formal banking, prompting them to keep cash at home or at their business premises. While this might be a way to avoid fees, it exposes individuals to the risk of theft and loss.

For example, the Mbare Musika incident saw thousands of dollars being lost in an inferno. Similarly, in places like the Glen View Area 8 furniture complex, traders have frequently lost both property and money in fires.

Traders argue that they keep money outside banks to avoid charges or because they struggle to open accounts.

Sometimes they fail to access the money due to withdrawal limits.

Imagine how many millions of dollars are currently circulating outside the formal sector or being lost to other undocumented incidents.

High bank charges reduce disposable income for individuals and businesses, hindering savings and investment.

Furthermore, they discourage the use of formal banking channels, pushing people towards informal financial systems that lack security and protection. This undermines financial inclusion efforts, contributes to a rise in commercial crime and ultimately hinders economic growth.

Borrowing money presents its own set of challenges.

Instead of using banks, many Zimbabweans are turning to unregistered money lenders who charge exorbitant interest rates, often around 20 percent per month. While these lenders offer quick access to funds without the cumbersome processes of traditional banks, this practice is unsustainable and unsafe, effectively reviving dangerous loan-sharking.

Although technology offers the potential to reduce banking costs, digital banking platforms and mobile money services in Zimbabwe also impose high fees.

The popular money transfer platforms, while offering alternatives to traditional banking, come with their own set of costly charges.

Fees for transferring money can reach up to 1,5 percent of the transaction amount. However, many find this figure a bit convenient, especially when using a registered agent; hence, the platforms have become popular.

A personal experience illustrates this point. In December, I attempted to send US$70 to a relative in Gutu via a popular mobile money transfer platform. The “agent” required a deposit of US$75 into my wallet, with the US$5 difference covering a US$3 transfer fee and a US$2 collection fee.

To ensure the relative received US$70, I had to send US$72, resulting in an effective charge of approximately 7,14 percent.

These high fees leave many feeling penalised for using banking and money transfer services. Service providers must innovate and commit to offering more affordable options. Consumers should explore different digital solutions and advocate fairer pricing structures.

Regulatory intervention is crucial.

The Reserve Bank of Zimbabwe (RBZ) and other relevant authorities should consider implementing measures to cap fees and enforce greater transparency in fee structures. This would protect consumers from excessive charges and promote fair competition among financial institutions.

To encourage people to return to the formal banking system, banks must adopt more customer-friendly policies and reduce charges.

We want banks of old that gave interest, not those that diminish people’s funds with unjustified bank charges.

The high cost of banking and money transfer fees in Zimbabwe is a pressing issue that demands urgent attention.

Cresencia Marjorie Chiremba is a marketing consultant with a strong passion for customer service/experience. Contact: [email protected] or at +263712979461, 0719978335, 0772978335, www.customersuccess.co.zw