It is, or will soon be, against regulations to charge more for electronic payments within a country, than for payments between countries, as long as both are carried out in Euros. Single Euro Payments Area - Wikipedia
I am puzzled by the complexity of money transfer in other countries. I am with Danske Bank, who own National Irish Bank in Ireland.
Suppose I want to give you €500. I ask for the sort code of your branch (six digits) and your account number (eight digits). I open up eBanking. Their ID verification system is excellent, but that’s another discussion. I go to the transfer page. I input your account details, the account that I want to debit and the amount I want to pay. I can add a brief message to tell you I sent it, and a note to my account to say who I paid. I can also make payment happen at a later date.
Then I verify payment with my password, and it’s done. You get the payment the next day or so, depending how fast your bank is.
I can use a similar process to set up regular payments to you, instead of a single one, and cancel them when I wish.
I have an account package under which I pay no fees for transactions, so long as my accounts are in order. Of course, if I borrow on overdraft, they charge interest.
When it’s as simple and cheap as that, why would I waste time writing a cheque, writing a cover letter, putting it in an envelope, buying a stamp, posting it to you? And then you have to walk it down to to your bank, and give it to them. Then I have to reconcile my account to see what cheques have come in and which are outstanding.
Seems obvious to me where the future lies.
OK. But it doesn’t say they’ll reduce fees, just equalise them. Maybe that means fees will be introduced for domestic transfers, effectively subsidising cross-border transfers. I mean, I presume they charge cross-border fees for a reason, because there is some real extra cost involved, and if they have to be the same as domestic fees (currently zero in many places) then domestic fees will have to rise. Or perhaps they will get the money back elsewhere, but something will have to give and it could mean a less fair system in which people who move money around the Euro zone get subsidised by people who don’t.
The general pattern since the completion of the Single European Market has been that fees for cross-border services/transactions/etc have move downwards towards the domestic fees. You say you assume that there is an extra cost to cross-border transfers, but why should this be so? The cost of electronic transfers is not distance-dependent, both banks are using the same currency at all stages in the transaction, and there are no legal or regulatory barriers/impositions/charges to cross-border transactions which do not apply to domestic transactions. So whence the extra cost?
Costs in the past were higher becasuse of lack of the competitive pressure of alternative payment mechanisms - trying to negotiate a cheque denominated in pounds and drawn on an Irish bank in a Portuguese bank was a complete pain - and because of the ability to conceal in them in foreign exchange bid/offer spreads. There may also have been different price-sensitivity among customers; most of the payments you will want to make are domestic and so you are much more likely to object to/react badly to/change banks because of high charges for domestic payments than for international payments. To the extent that these were factors then the international transfers were subsidising the domestic transfers, the very evil you seek to avoid. And, more to the point, the very evil the EU seeks to avoid - hence the regulation requiring uniform charges. True, they don’t require low uniform charges; they rely on competitive pressures to achieve that.
Do you believe that people who transfer money between states in the US are subsidised by those who only transfer intra-state?
Well any flat-fee system where the costs are not actually equal does imply that some people are paying more than they should and some are paying less i.e. some people are effectively subsidising others.
That’s probably not right either. I can transfer money to any European bank account for free. I just need the IBAN (International Bank Account Number) and BIC/SWIFT code of the recipient. I have a regular Giro account (similiar to an American checking account) at my local Sparkasse, so nothing out of the ordinary.
One thing I find horrible is the high overdraft fees I hear about in the U.S. My account is a so called “Guthabenkonto”, which means I am not allowed an overdraft at all. The reason for having that kind of account is that I hate debt, and prefer to not be allowed an overdraft at all. That way I know if there’s no money in the account I can’t spend anymore. If I inadvertantly don’t have enough money in my account to cover a transfer I am charged 2.50 euros and the transfer does not take place.
That means I also don’t pay any interest rates on a possible overdraft. This is where the German banks like to gouge people. They charge between 10 and 15 percent interest, which is very high, considering you only get between 1 and 2% interest on a savings account.
Another thing that bothers me about German banks is the fact that they charge a lot (up to 10 Euros) if I use my debit card to get cash at an ATM that does not belong to the same bank or chain of banks. In the Netherlands I was able to get cash at any ATM for free, no matter what bank I used.
Any European bank, or any Euro-zone bank? I get charged a fee to transfer money to a non-UK bank.
Well, almost. Any European account that’s in Euros. If you transfer to an UK bank, you will have to pay a fee for converting Euros to GBP.
You might want to check back with your bank advisor about that. I always had no overdraft amount, either, but when I recently talked to my advisor, she informed me to my surprise that she has the authority to allow uncovered withdrawals if she thinks it’s okay - e.g. a regular amount. Only in this case, I would be charged 16% interest for being overdrafted, while if I tell them upfront I want to have 1 000 Euros Reserve for being minus, I’ll “only” 13% for being in the red.
But a credit card, which is what Americans use to be overdraft, also charges between 15 and 20%, at least to what the USians tell in other threads.
Well, you picked badly by choosing the Sparkasse, they have the smaller net. You need one of the following:
Postbank, Hypovereinsbank, Commerzbank, Dresdner Bank,
which are all members of the Cash group (they have their own logo on the ATMs and the cards), and no longer charge their members for ATM use.
I’m generally very unsympathetic towards banks but I don’t understand why people think they should be allowed to use the facilities of another bank without paying.
You wouldn’t expect to go into a grocers and have him collect things from another grocer and supply them to you at no additional cost.
I know that the costs of transferring money between banks is in no way comparable to transporting groceries but the principle is the same.
In the UK we had that situation and it came about because one bank had a lot more ATM’s than any of the others so they were bearing an unfair share of the burden of provision and running the machines. They started charging other bank’s customers and the other banks, of course, retaliated. (Or, maybe they planned the whole thing so that they could all gouge the customers :eek:).
Anyway there was such an uproar that most of the charges were withdrawn.
It’s interesting to note, however, that there are now large numbers of cash machines that do not belong to banks (in shops, off licences and petrol stations), and do charge a withdrawal fee and these seem to be widely used. It amazes me that people will habitually pay £1.50 for something that with a little foresight they could get for nothing (Bank ATM’s are very plentiful).
Yes, IF the costs are not equal. In a lot of cases, the costs ARE equal (and close to negliable), and the banks gouge as much as they can, until a law is passed or a court decides that this is illegal and smacks them down.
Past court decicions were for example: It’s illegal to demand a fee for paying cash into your own account at your own bank, although it causes costs, because that’s one of the primary services of a bank.
It’s illegal for banks to book withdrawals and transfers out on the same day, but book credits and transfers in several days later (this has often caused a lot of money in interest against the customer - the account goes negative for two days, until the plus is credited, and the bank gets 50 Euros or more). They still try to get away with it, though…
I prefer to not be in the minus at all. It helps you plan ahead and teaches you to live on a budget. Once you have overdrafted a couple of Euros you tend to think, “well I can overdraft some more” and before you know it, you are constantly at the limit of your overdraft, and you are paying the bank a lot of money in interest.
If I unexpectedly need to make a large purchase (say my washing machine breaks down and I need a new one) I have money in a savings account. Other than that, if there’s no money in my bank account, I can’t spend any. It’s amazing how much you can buy for 20 Euros at ALDI if that’s the only money you have for the next couple of days. 
I suspect a very large part of it is the 7800+ banks in the US, plus the untold numbers of credit unions, not to mention that the big banks will themselves do business with multiple branches of the Federal Reserve.
It’s just so much easier to cut a check and mail it, rather than having to keep track of tens of thousands of ABA (routing) numbers and any number of different account number formats. Plus, sending a check made out to Captain Ridley neatly eliminates the mess that would happen if just one of those digits was wrong or transposed. Ask your bank some day about “ACH Rejects” and how much fun those are to sort out.
There is some very basic error-detection in the ABA numbers, so the computers can tell right off if it’s a valid ABA or not, but your bank won’t know my bank’s account format. The real fun is if those transposed digits cause the funds to land into someone else’s account. Then you wind up investing lots of expensive human effort to find and retrieve the funds, and thinking that a 42¢ stamp would have avoided it all. :smack:
If the grocers are all just selling one product, and they have an easy method of transfering funds between themselves (shouldn’t be too hard, they’re banks after all) why should I not be able to go into one grocer, buy something there, pay with my card, and he gets the money from my “home” grocer via bank transfer? Any customer from the grocer I went to, can also go to my “home” grocer and do the same thing. At the moment there are actually quite a few pending law suits stating that this practice (or at least the amount taken) is unethical.
The banks make huge profits as it is. The small amounts of profit that they would lose here are tiny in comparison. Luckily many banks in Germany have already grouped together to increase the number of ATMs their customers can use without paying a fee (see the “Cash Group” constanze mentioned earlier). The Sparkassen and Volksbanken are also well represented all over Germany, as every city or Landkreis (kind of like a county) has their own Sparkasse and Volksbank.
No interbank ATM fees in Ireland. If you pay anything to take out money, it may be a transaction fee of a few cents to your own bank. Many people pay no fees at all for an ATM transaction.
The banks are happy with this, because the alternative is to pay expensive staff to verify your identity, count out cash across a counter and store some more paper.
I’m not really supporting the banks but I don’t understand why people expect to use the facilities of a company of whom they are not a customer for nothing.
Certainly the charge should be small but it is their money and their equipment. If you have to pay and don’t like to do so why not simply only use ATM’s that belong to your own bank? It only takes a little foresight and, after all, is what people always had to do before ATM’s.
Don’t get me wrong. I do only use my own bank’s ATMs, because I am not about to pay a 5 Euro fee for getting 20 Euros from another bank’s ATM. But there are always situations and emergencies where you won’t have the time to look for your own bank’s ATMs.
I still think it’s not fair (at least not at that amount). The banks in the Netherlands and Ireland don’t seem to have any problems with it, so why do I have to pay here in Germany? Especially if I end up paying 25% of my transaction on top!
Yes, I agree that that amount is way too high.
People were complaining vociferously in the UK when it was ~€2. Maybe €0.50 would be appropriate.
However, the facility is still there for emergencies and there is no reason why another bank should even allow you to use its machines in the first place.
That’s what I do, because I don’t like the ATM fees. But they didn’t always have fees, and there are other ways this can work. Over 20 years ago I was living in Denver, and had an ATM card issued by a credit union, back when ATMs were first appearing. The Credit Union didn’t HAVE ATM machines. A couple interchange systems existed for ATMs at that time, and they told me I could use the card in any Star System ATM. As it turned out, all ATMs in the Denver metro area were on the Star System, and I could effectively use any one of them. There were no fees. I was rather surprised when I visited elsewhere, and found that the interchange systems weren’t universal. When I moved to CA, BofA teller machines were the only ones on the Star System, and I could only get cash out of BofA machines until I opened a local bank account. Since I was standing outside a BofA using their ATM as I was thinking about this, I opened a BofA account. I’ve banked with BofA ever since. IMO, there just isn’t much difference between major banks anyway.
The European posters are describing something that works roughly like Denver, and possibly several other metro areas, well over 20 years ago. Fees for universal use of everybody’s ATMs came later. Of course, it isn’t really “free”. Presumably, the banks in the Star System payed some sort of membership fee for collective use of all the machines. That was simply a cost of providing that service to their customers, covered by the profits made from customer’s deposits or fees charged to the customers to maintain things like no-minimum-balance checking accounts. A less aggravating model than making your customers look ONLY for your ATMs, or nickle-and-diming them.
ATM fees? We don’t need no stinking ATM fees (not for cash withdrawals)… Probably because the ATMs are owned by the ATM companies, not banks. Actually, withdrawing money from the counter at the bank has a fee… they want you to use ATMs, it’s less work for them.