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Bank card charges to be regulated
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An insider with the China Banking Association (CBA) said on October 14, 2008 that the CBA and banks are discussing efforts to further standardize the fees charged for bank card services.

The CBA said that they are trying to simplify the fee charging procedure for all commercial banks. Following the CBA's efforts last April, cross-bank inquiry fees were scrapped.  

Recently banks have begun to charge fees for some services that were previously offered free. Shanghai Putong Development Bank began to charge 5 percent service fees for intercity withdrawals or account transfer payments from October 8, 2008. It also charges a service fee for cash withdrawals of over 1000 yuan from other banks' ATMs. This means that the last bank to provide free bank card services has joined the ranks of the fee-chargers.

But the new fees charged are not the same for all clients. Those clients holding the Shanghai Putong Development Bank Platinum card can still enjoy intercity withdrawals or deposits, intercity account transfer payments, and the SMS notifications service, all free of charge.

Other banks have also begun to charge fees for many services. Since September 1, 2008, the Bank of Communications has charged credit card users a 12 yuan (US$1.76) per quarter service-fee for SMS notifications.

A bank insider remarked that it is reasonable for banks to charge fees because services incur costs for banks. To charge different fees for different clients helps banks to service their most valuable clients, eliminate dormant accounts, and save costs.

However, Dong Zhengwei, a lawyer with the Zhong Yin Law Firm of Beijing, doesn't agree. In his view, banks' main profits come from the gap between the interest rates on savings and loans, which should already cover their daily operating costs. Charged bank services should add value, and fees charged should add to their clients' wealth. However, if 100 yuan is placed on deposit with a bank, a year later one will find only about 80 yuan left due to annual fees deducted and the devaluation caused by inflation. The client's wealth has shrunk. So to charge a client fees in addition is a form of extortion.

(China.org.cn by Zhang Ming'ai, October 16, 2008)

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