In a surprising turn of events, the Commonwealth Bank has abandoned its plans to charge customers a $3 fee for withdrawing cash over the counter at its branches.
This move comes after a stern intervention by the federal government, which deemed the changes “unacceptable”.
What Did the Bank Plan to Do?
Initially, the CBA intended to migrate around 1 million customers from an old account that didn’t charge an over-the-counter cash withdrawal fee to a new account that did. This meant that customers who withdrew cash in branches would be forced to pay $3 per transaction. The news sparked widespread outrage on social media and talkback radio, with many Australians feeling it was unfair to charge them to access their own money.
The Government Steps In
On Wednesday morning, Treasurer Jim Chalmers called CBA chief executive Matt Comyn to express the government’s concerns about the proposed changes. Chalmers stated that the government considered the changes “unacceptable” and that the CBA had changed its stance after the call.
CBA’s Backdown
In response to the government’s intervention, the CBA announced that it would pause the migration of customers to the new account for those who would be financially worse off as a result. However, the account in question will still charge the $3 withdrawal fee for over-the-counter services. The bank believes this fee is a necessary “price signal” to customers about the costs of handling cash, as it tries to drive people to use its ATMs instead.
Who’s Affected?
The account at the center of the controversy is the Smart Access account, which has a $3 withdrawal fee for over-the-counter services. While the CBA claims that around 90% of customers will be better off with the changes, some could be worse off if they frequently withdraw cash in branches. The bank’s retail banking head, Angus Sullivan, conceded that the bank had “done a poor job communicating aspects of this change” to its customers.
The Human Impact
Dr. Chalmers emphasized that some of the customers affected by the changes were among “the most vulnerable people in the banking system”. He welcomed the CBA’s change of heart, stating that “people are doing it tough enough as it is”. The federal government has also taken steps to ensure that Australians can continue to use cash for essential purchases, mandating cash acceptance for items like groceries and fuel.
The Bigger Picture
The CBA’s initial decision to introduce the $3 withdrawal fee is part of a larger trend in the banking industry. As more transactions shift to digital payments, banks are facing increasing costs to provide cash services. The CBA estimates that it costs the bank $350 million each year to put cash in its branches and ATMs. While the bank’s decision to backtrack on the fee is a win for customers, it’s clear that the debate around cash usage and bank fees is far from over.