I am not sure or convinced that it is the banks’ duty to be the “police” of illegal activities supposedly facilitated through the banking system – and without compensation. I see increased resistance by the banks to perform this very expensive role on behalf of the governments and surrounding powers.

I would love someone to do a study either the country or globally as to the cost-benefit of KYC /CDD (Know your customer or Customer Due Diligence) or whatever it may locally be called. Having been involved in the fight for the last 2 decades it is of great concern that the number of un and underbanked individuals as a percentage of the population has not changed significantly. ( I am working from the premise that a mobile money account that primarily facilitates the sending of money to relatives does not count as a bank account). This is very concerning indeed. Digitalisation will force greater attention and I expect to see a renewed effort on financial inclusion. (This is controversial and should sark a lot of debate. We are not for one minute condoning illegal or illicit activities and banks certainly do not want to be the channel supporting such activities. )

The next major pressure point will be on acquiring rates,- This field is dominated by Visa, Mastercard and increasingly Union Pay. We will continue to see an increase in consumer pressure to reduce the merchant acquiring rates. We could well see other players tackling this holy grail but the big opportunity is going to be in equipping the SMME market with the ability to acquire digital payments in a very cost-effective manner which will open up massive opportunities for entrepreneurs. 

Acquiring rates are made up of the Interchange fee paid to the issuing bank, the card associations transactions fee as well as the acquiring bank fee. The biggest portion is the interchange fee which is based on the risk taken by the issuing bank which is why the fee is generally lower for card-present transactions as opposed to card “not” present transactions. If technology can assist in reducing this risk, this rate will fall.

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