Market News

Equity group targets billions from ATM card fees

eqty

Equity Group Managing Director and CEO Dr James Mwangi at the Equity Centre in Nairobi on Monday, October 25, 2021. PHOTO | DENNIS ONSONGO | NMG

BDgeneric_logo

Summary

  • Equity Group is set to earn billions of shillings from the introduction of an annual debit card fee of Sh240, which is being charged on millions of active customers in Kenya.
  • The bank, which has more than 10 million customers in the local market, has started collecting fee from a section of its clients.
  • This will see it earn upwards of Sh2 billion per year, assuming most of the issued cards are active.

Equity Group #ticker:EQTY is set to earn billions of shillings from the introduction of an annual debit card fee of Sh240, which is being charged on millions of active customers in Kenya.

The bank, which has more than 10 million customers in the local market, has started collecting fee from a section of its clients. This will see it earn upwards of Sh2 billion per year, assuming most of the issued cards are active.

“We wish to advise that this is an annual charge that was recently introduced as per our tariff guide,” Equity Bank Kenya said in response to customer queries.

“In this regard, Sh240 shall be deducted from your account only once per year, for the period the card remains active.”

The fee is applied 12 months after the card is issued and continues until the card expires.

It was not immediately clear whether Equity has introduced a similar charge in its other banking subsidiaries in the region.

Most other banks do not charge an annual debit card fee. Banks have, however, been expanding their list of fees. This has partly been attributed to the need to cover operating costs of providing specific services.

The new charge is set to boost Equity’s non-interest income by roping in millions of retail clients who previously only paid a one-time fee when acquiring or renewing their debit cards.

It also provides stable and recurring revenue as most clients hold debit cards for withdrawing cash at ATMs and making payments at point of sale terminals.

Equity’s non-interest income stood at Sh31.9 billion in the nine months ended September, representing 39.6 percent of the total operating income of Sh80.4 billion.

Introduction of debit card fees adds to the bank’s income from credit cards. Credit cards have, however, fewer takers as they target middle to upper income clients with significant disposable incomes.