Reducing cash withdrawal fee win-win for all

The China Banking Association and the Payment and Clearing Association of China recently introduced a proposal calling on all banks and clearing agencies to lower their processing fees. According to the proposal, if a customer draws cash through an automated teller machine of a bank different from the one he or she holds an account in, or in a different city, the processing fee should not exceed 3.5 yuan ($0.54) per withdrawal.

Currently, on not finding the preferred ATM, customers are forced to draw cash from another bank's ATM, for which the latter charges a certain processing fee. Standards vary from bank to bank but, in general, customers are charged anything from 2 to 50 yuan per withdrawal.

Latest data show that 376 million people live in cities far away from their hometowns, while 264 million people are aged 60 or above and, therefore, are more accustomed to using cash. Considering the size of the population depending on other banks' ATMs, the fees collected in this manner are huge. However, the cost of processing such withdrawals is a lot less now thanks to computerization of the system, and that's reason enough to lower the transaction fees too. Lowering this fee could result in at least 4 billion yuan being saved annually for customers.

It is a good turning point for banks, too, as they will rely less on collecting fees from customers and more on improving their services to make profits.

The two associations are doing a good job by trying to lower the burden on bank customers. The government has always been working with such goals in mind. In 2014, the government introduced the Administrative Measures on Service Prices of Commercial Banks, marking the start of the process of the government calling for regulating banks' processing fees. Since then a number of fees, such as those for resetting passwords, have been dropped. The latest proposal deepens reform in this sector, thus promising a brighter future for the banking sector.