The logic behind when, how and why banks charge customers remains a mystery. In the UK it is like that game where you have a club and plastic meerkats pop out of their holes randomly. Your challenge is to hit them before they pop back in again. It is difficult trying to keep up. If they are not charging you for simply banking with them, they are charging you for transferring money from one account to another. In the UK they are now proud that same day transfers are free. This is actually because the Government said they should be. So they charge customers for anything else they can think of.
With profits back to the pre-crisis levels, it is hard to see how they can justify it.
Part of the reason is that banks across Europe have been forced to invest billions to make transfers across Europe easier and quicker. The fact that 99.99 percent of customers do not want to transfer money to other accounts in other parts of Europe has not put the regulators off their mission. SEPA is not only up and running, it is also being modified and upgraded all the time. Presumably because those that run it need to stay in a job. Indeed there are initiatives afoot that will extend the easy transfer of money across the globe.
What is interesting is that in the updated version – PSD2, the introduction to why it was updated says that the first version was generally fit for purpose. So they updated it anyway. The latest iteration of this Directive apparently aims to make it easier and fairer for new entrants in the payments world to compete. Oddly, this would seem to go against the wisdom that says that regulation is going to make it more expensive to bring a product or solution to market – and slower. So, quite how they think more regulation is cheaper is baffling. They also point to this regulation bringing with it a reduction in charges to the consumer. If you look at this particular area, yes. If you look at bank charges as a whole, not so much.
That said, this update does target the despicable practice of surcharging for credit card purchases. The record was the recent charge of £17.50 for a £200 purchase. The company in question, who obviously we could not name – but it begins with an ‘e’ and ends with a ‘bookers’ – is probably not alone. The sooner that that practice is banned the better but presumably companies that do this will simply charge more for other things, like seats on an airplane, or checking in.
As we have discussed before, every extra investment and channel that banks feel they need to offer and support will stretch their resources further towards the limit. What customers need from banks is not an array of things they do not need. What they want is to sleep at night knowing that their money is safe. That, and choice.