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Starting July 1, the Agricultural Bank of China (ABC) plans to charge a 10 yuan (US$1.20) annual fee for the use of its previously free debit card.
The Industrial and Commercial Bank of China (ICBC), another of the country's top four state-owned commercial banks, has vowed to follow suit later this year.
The other two - China Construction Bank and Bank of China - have expressed their understanding for such a move, referring to it as "a matter of course."
Facing growing pressure from both home and abroad, these banks are obviously making the move to increase profits, which will be their lifeline in future competition.
Still, profits should not be gained by breaking promises. Otherwise it is only obtained at the sacrifice of image and credibility.
Public outcry quickly followed announcement of the new fee.
For card users the small fee is affordable. But what they object to is the banks' tendency to unilaterally break a contract previously agreed on.
To expand their business and prepare for grabbing future market share, the commercial banks have been wildly issuing free debit cards in recent years.
For example, the fourth article of the ABC's debit card agreement, which was made public in 2002, unambiguously promised that the card would have "no expiration date and no annual charge."
This abrupt change of policy, no matter how necessary the banks think it is, constitutes an unlawful attack on the interests of card holders.
The ABC explained their card issuance is costing a huge amount and the annual fee is necessary to recoup some of that cost.
Still, it is untenable.
By 2002 ABC had issued 93 million debit cards in China. By 2003, ICBC issued 84 million.
Admittedly, issuing debit cards and maintaining the service is a costly endeavour. But even if we do not take into consideration the additional income gained by the new service, the ABC's explanation does not hold water given the legality of the previous agreement on free service.
The decision to charge an annual fee cannot help but make people doubt the banks' sincerity to provide quality service. Their stratagem may go like this: First, to grab market shares, they use free service to entice customers into having the cards; then when card users become accustomed to the service, the banks peremptorily start to charge.
How can we expect consumers to trust such changeable service providers?
Although people currently do not have many choices in the domestic market, they will no doubt foster a dislike toward such irresponsible behaviour. When competition intensifies and foreign competitors come and become localized in the future, the losers will be those who have shown they don't care for consumer feelings.
The banks should therefore concentrate on fostering a friendly and constant relation with their customers instead of garnering instant income.
To improve their balance sheet, they should resort to providing more attractive services.
Taking the charge on their debit cards as the last straw, regardless of their previous promises, may just mirror the banks' inability to profit through improved services.
It is encouraging to hear the ABC might revise its plan in the face of public anger. It may only charge new card holders and grant a one-year grace period for the rest.
But no matter what remedy the ABC ultimately implements, it should bear in mind that better and more transparent customer service should be the prime considerations.
(China Daily April 20, 2004)
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