Banks offer lower fees to woo more merchants to their EDC system
BANKS plan to offer additional promotions to merchants apart from reducing fees for electronic data capture (EDC) in an effort to persuade them to accept the banks’ debit cards.
The EDC fees merchants are charged by six banks will drop significantly after the banks recently formed a strategic partnership to share infrastructure and expand card acceptance.
The six banks in the partnership are Siam Commercial Bank, Krungthai Bank, Bank of Ayudhya, Thanachart Bank, TMB Bank and the Government Savings Bank.
Another EDC provider is Thai Payment Network Co, Thailand’s first local card network, in which Bangkok Bank is a major shareholder. Kasikornbank will hold shares in TPN as well.
In general, merchants that accept debit cards will pay 1.5-1.8 per cent per transaction to banks that operate EDC.
The fee for merchants accepting debit cards from the six banks will be lower than TPN’s, said Kunapat Sethavaravichit, vice president for merchant acquisition and card payment solutions at Bank of Ayudhya (Krungsri).
Earlier, TPN chairman Shoke Na Ranong said the fee for merchants accepting TPN debit cards would be less than 1 per cent.
Kunapat said the low fees and the banks’ promotions would allow merchants to offer special campaigns to shoppers, which would encourage consumers to open saving accounts in order to use debit cards.
Krungsri has prepared promotions for merchants who accept its debit cards and also made deals with new merchants installing EDC devices for the six banks.
What the banks’ promotions entail will be seen more clearly after the Bank of Thailand’s request for proposal.
The BOT believes there are too many EDCs per merchant, and wants their number reduced to just one or two each. Therefore, the banks decided to form a strategic partnership.
The Finance Ministry will issue terms of reference for a tender on EDC installation, which will be |limited to one or two winning banks.
Boontuck Wungcharoen, chief executive officer of TMB Bank, said that despite the sharing of |infrastructure, each bank had to compete to acquire debit-card holders.
The second phase of the National E-payment scheme, the EDC expansion, will begin in September. The number of EDC points should then grow to 2 million nationwide from only 400,000 currently.
According to the Finance Ministry, there are 800,000 merchants in the tax system, of which 400,000 have EDC points. Therefore, the remaining 400,000 merchants are the focus of the banks.
Somjate Moosirilert, president and CEO of Thanachart Bank, said merchants’ debit-card fees would decline, but the bank would seek fee income from bancassurance and mutual funds instead.
The trend to lower interest rates has encouraged customers to look for high-return investments, so there was an opportunity, he said, for his bank to acquire fee income from selling insurance and mutual-fund products.
