The Bank of Israel’s supervisor of banks, Hedva Ber, announced Sunday a move to reduce the bank fees paid by small businesses.
Ber and Roi Cohen, the president of Lahav, the Israeli Chamber of Independent Organizations and Businesses, were behind the initiative. It requires banks to identify their small-business customers that could save by switching to a fixed-fee track from a line-item track.
Accordingly, the new fee track will allow setting checking account fees by pricing an expanded set of activities, such that account holders won’t be charged for every transaction. The banks will have to send offers to small business for this track and detail the expected savings.
An official in the banking supervision department said the move followed a November 2017 ordering banks to send every small business a letter telling it how much it could save by switching fee tracks. However, officials said, “the response of small businesses was negligible.”
Department officials said only 4,000 small businesses have moved of their own accord to the new fee track, and therefore the central bank division decided to take a more active step to increase the scope of small businesses switching tracks, which they expect to begin in early 2019.
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Data the banks gave the banking supervision department indicate that the new move will help 160,000 small businesses, whose annual revenues are 5 million shekels ($1.4 million) or less, as well as licensed dealers with turnover of up to 40 million shekels. The department believes these businesses could each save hundreds of shekels annually. Cohen said he thought some could even save “thousands of shekels in fees for essential services for running their business.”
A Bank of Israel survey showed that the expanded fee track is best suited to most small businesses and licensed dealers. It included up to 50 non-teller transactions and 10 teller-assisted transactions. Fees would be set at 20 to 30 shekels per month.
Ber said, “This step joins the reduction of credit card fees, which is expected in January.” She added, “We are working to ensure that the fruits of efficiency and technological changes in the banking system also benefit the banks’ customers.