The notice has set up multi-level transaction fees for invdividual and corporate cross-bank money transfer business. It also regulates transaction fees for in-bank individual money remittance.
With the impact of competitive internet finance products and from lowering interest rate margin, we think the rolling-out of this notice is one more hit to commercial banks. Big Five banks used to charge 1% transaction fee for individual cross-bank transfer, with the cap set at RMB 50. The new regulation will lower revenues from the money transfer business. Take RMB 5,000 transaction as an example, Big Five used to charge up to RMB 50 based on 1% transaction fees. With the new fee rules, they only earn five RMB, a 90% decline in revenues.
It seems that the glory days for banks may be gone gone. Not only are interest margins narrowing, profits from money transfer business will probably also start to shrink. Lower commercial bank transaction fees means that they are furhter pushed into corner to rethink their position.
