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Meanwhile in EU the interchange fee is 0.3% on credit and 0.2% on debit cards: https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchang

Meanwhile in EU the interchange fee is 0.3% on credit and 0.2% on debit cards: https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/Intra-Europe-EEA-December-2019.pdf https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PD...

pixelpoet 7y ago
My Czech bank (Equabank) also made withdrawals free anywhere in the world a few days ago; I was worried that this would come with hideous rate increases, but apparently not. Weird instance of banking actually getting better with time?!
- pawelos 7y ago
  Check what is the currency exchange fee - while you might not pay for withdrawal, they can still add a few % of the exchange fee (that’s at least the case for some of Polish cards).
  - hocuspocus 7y ago
    More and more traditional banks are getting rid of these fees too. Mastercard rates are very good (typically better than Transferwise's), and Visa has been catching up as well.
  - glogla 7y ago
    It is definitely the case for Czech banks. GP's Equa has about 2.5 % in fact. Worse, there's basically no banks that have under 2 %.
  - lotsofpulp 7y ago
    Schwab's currency exchange fee (via withdrawal at non-US ATMs in local currency) has basically been the spot rate in my experience, for a decade or more that I've been using it. And there's no other fees so it's basically free forex (for small amounts I presume, they're not going to let you do that for $1M I bet).
    - nemothekid 7y ago
      Same - I’ve found Schwabs rates to be better than virtually any other option
    - User23 7y ago
      Given that the daily forex volume is around $5 trillion[1], I wouldn't be surprised if they'll give you $1 million at the same rate as $1000. [1] https://www.quora.com/How-much-volume-is-traded-per-day-in-the-forex-market https://www.quora.com/How-much-volume-is-traded-per-day-in-t...
    - gnicholas 7y ago
      How do you find out what exchange rate they use and how it compares to the spot rate? I have cynically assumed that they make money on this (despite claiming “no foreign transaction fee!”) but never knew how to check one company versus another.
      - lotsofpulp 7y ago
        I google “USD to GBP” or whichever currency right after I get the money. My BoA/Chase credit cards also give me basically spot rate conversions. Although this article explains why it might not make sense to use that number: https://www.thinmargin.com/blogs/why-comparing-against-exchange-rates-from-google-is-wrong https://www.thinmargin.com/blogs/why-comparing-against-excha...
  - ValentineC 7y ago
    With HSBC, the bank rate they use at their ATMs isn't as good as the interbank exchange rate I would get if I used some other bank's ATM.
- zyberzero 7y ago
  I think that's due to pressure from a number of fintech-companies such as revolut, monzo, transferwise, and what not. They focus on exactly just that, lower exchange rates and simpler money transfers.
  - _trampeltier 7y ago
    A friend went to a talk from a large swiss bank and there was also this question, why they did not go faster forward. The answer was pretty short. Why kill a cashcow.
  - madeofpalk 7y ago
    I believe actually there was EU regulation that forced this... When Monzo made EU withdrawals completely free (again), they said > After a change in EU regulation on cross-border payments we've decided to remove ATM fees and limits for countries in the European Economic Area (EEA). This means in all EU countries (and a few more) your cash withdrawals are now free! You can see the full list of countries here.
  - martin8412 7y ago
    What I hear from people in the traditional banking sector, they actually don't mind the newer fintech companies such as Revolut, N26 and so on because they'll mainly attract the kind of customers that the traditional banks would rather not have. If you don't have a mortgage, loans, credit cards, stock or so on, then you're not really worth the hassle of having you as a customer. The fintech startups offer none of those things.
    - mantap 7y ago
      No surprises that shortsightedness pervades the traditional banking sector. These services appeal to people who like to travel, i.e. people who are relatively more well off. Then they hope to upsell other financial products to them.
- marc3842h 7y ago
  A Fintech banking startup in Switzerland (Neon) recently did the same. They also removed the surcharge on the exchange rate and now give the official MasterCard exchange rate.
- rsynnott 7y ago
  The interchange rates are governed by EU rules. They’re not up to the banks.
astura 7y ago
The EU caps interchange fees by law, the US doesn't (except on debit cards). As a result, credit card fees are much higher in the US because they can be. Credit card issuers kickback some of the fees collected from merchants in the form of rewards for using the credit card.
- Slartie 7y ago
  This is also called the "poor people tax", because the merchants all bake these fees into their prices, which rise accordingly for all customers, including those who pay cash, or use debit cards or credit cards without those kickbacks. In order to evade the "tax", you are basically forced to pay with a credit card that has good kickbacks (>= 2% is acceptable if I remember correctly) so you recoup those 2% that are implicitly included in any price of any good in any store. Those who lose out are people with poor credit rating, because they either have no access to the best cards or have to pay ridiculous fees to get them. In my eyes it's useless circulation of money in the best case (when recouping via kickback) and a tax on the financially illiterate or poor in the worst case. In any case it is creating a lot of expensive administrative overhead for no economic purpose whatsoever, and thus a healthy capitalistic society should want to get rid of it - which is even relatively easy to do in this case, as the European regulation demonstrates.
  - jcrben 7y ago
    Surcharging is becoming more common with a couple companies like CardX focusing on it: https://thepaypers.com/expert-opinion/credit-card-surcharging-a-new-model-for-payments-in-america-part-2--777887 https://thepaypers.com/expert-opinion/credit-card-surchargin... Particularly driven by https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._Schneiderman https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._S...
    - Slartie 7y ago
      This is an interesting development. I didn't know about that Supreme Court decision. So it effectively allows merchants to communicate a credit card surcharge as exactly that to customers, letting them know that it is caused by using a particular card? Does that also allow merchants to put an additional surcharge depending on the card used onto a receipt? Or has that been deemed legal in an earlier ruling? Because I always thought the big card networks had some kind of legally binding contract with merchants which prohibits the addition of surcharges that only apply to their particular payment method - contract clauses that they could only muscle through because merchants effectively didn't have the possibility to just not accept Visa or MasterCard payments, while most of their competitors accepted them.
adrr 7y ago
I bet the banks lose money on credit cards in EU. They are loaning out money up to 60 days for only a 0.3% fee. Interchange is meant to cover these loans.
- rsynnott 7y ago
  That’s 1.8% annually. Better rates than European banks are getting on most low-risk lending.
  - Rexxar 7y ago
    It's even better, 3 month euribor rates are currently negative. So it's a safe way to use their money without "paying" the negative interest rate.
  - adrr 7y ago
    You can get home loans in EU with 1.8%? That’s the lowest risk since it has collateral. These are unsecured loans.
    - rsynnott 7y ago
      (A) Yes, in many countries. (B) that card loan is only at effective 1.6% for 60 days; if it’s not paid at that point it turns into potentially 20%. (c) Most card payments are debit anyway afaik; no loan longer than a day or so involved.
bufferoverflow 7y ago
Still ridiculous, considering it's just updating balances in a few rows of a database. Cryptocurrencies, except BTC and a couple of others, are doing it right. A transfer should cost a fraction of a cent.
- rsynnott 7y ago
  Bank transfers in Europe are now typically free. Cards expose the bank to a certain (small) degree of risk Nd administrative cost, so they’d probably stop offering the service if rates were regulated to zero.
- 3fe9a03ccd14ca5 7y ago
  But unlike bitcoin, visa doesn’t create an enormous carbon footprint every time somebody buys a pack of gum at a gas station.
  - bufferoverflow 7y ago
    Every time you Google something, you create an enormous carbon footprint. Every time you drive. Every time you eat. Every time you watch a movie.
- gregmac 7y ago
  I'm out of the loop on this stuff, but are others doing things to prevent the situation Bitcoin had a couple years ago, when it hit $37 per transaction? That seemed to happen due to a massive price and volume increase, so is hard to design for. At the same time, at peak, it was still doing a tiny fraction of the volume that any of the credit card networks do.
  - bufferoverflow 7y ago
    Yeah, BTC limited the block size, so transaction cost went through the roof. Thankfully there are many alternatives. BCH is great.
  - leppr 7y ago

pixelpoet 7y ago

My Czech bank (Equabank) also made withdrawals free anywhere in the world a few days ago; I was worried that this would come with hideous rate increases, but apparently not. Weird instance of banking actually getting better with time?!

pawelos 7y ago
Check what is the currency exchange fee - while you might not pay for withdrawal, they can still add a few % of the exchange fee (that’s at least the case for some of Polish cards).
- hocuspocus 7y ago
  More and more traditional banks are getting rid of these fees too. Mastercard rates are very good (typically better than Transferwise's), and Visa has been catching up as well.
- glogla 7y ago
  It is definitely the case for Czech banks. GP's Equa has about 2.5 % in fact. Worse, there's basically no banks that have under 2 %.
- lotsofpulp 7y ago
  Schwab's currency exchange fee (via withdrawal at non-US ATMs in local currency) has basically been the spot rate in my experience, for a decade or more that I've been using it. And there's no other fees so it's basically free forex (for small amounts I presume, they're not going to let you do that for $1M I bet).
  - nemothekid 7y ago
    Same - I’ve found Schwabs rates to be better than virtually any other option
  - User23 7y ago
    Given that the daily forex volume is around $5 trillion[1], I wouldn't be surprised if they'll give you $1 million at the same rate as $1000. [1] https://www.quora.com/How-much-volume-is-traded-per-day-in-the-forex-market https://www.quora.com/How-much-volume-is-traded-per-day-in-t...
  - gnicholas 7y ago
    How do you find out what exchange rate they use and how it compares to the spot rate? I have cynically assumed that they make money on this (despite claiming “no foreign transaction fee!”) but never knew how to check one company versus another.
    - lotsofpulp 7y ago
      I google “USD to GBP” or whichever currency right after I get the money. My BoA/Chase credit cards also give me basically spot rate conversions. Although this article explains why it might not make sense to use that number: https://www.thinmargin.com/blogs/why-comparing-against-exchange-rates-from-google-is-wrong https://www.thinmargin.com/blogs/why-comparing-against-excha...
- ValentineC 7y ago
  With HSBC, the bank rate they use at their ATMs isn't as good as the interbank exchange rate I would get if I used some other bank's ATM.
zyberzero 7y ago
I think that's due to pressure from a number of fintech-companies such as revolut, monzo, transferwise, and what not. They focus on exactly just that, lower exchange rates and simpler money transfers.
- _trampeltier 7y ago
  A friend went to a talk from a large swiss bank and there was also this question, why they did not go faster forward. The answer was pretty short. Why kill a cashcow.
- madeofpalk 7y ago
  I believe actually there was EU regulation that forced this... When Monzo made EU withdrawals completely free (again), they said > After a change in EU regulation on cross-border payments we've decided to remove ATM fees and limits for countries in the European Economic Area (EEA). This means in all EU countries (and a few more) your cash withdrawals are now free! You can see the full list of countries here.
- martin8412 7y ago
  What I hear from people in the traditional banking sector, they actually don't mind the newer fintech companies such as Revolut, N26 and so on because they'll mainly attract the kind of customers that the traditional banks would rather not have. If you don't have a mortgage, loans, credit cards, stock or so on, then you're not really worth the hassle of having you as a customer. The fintech startups offer none of those things.
  - mantap 7y ago
    No surprises that shortsightedness pervades the traditional banking sector. These services appeal to people who like to travel, i.e. people who are relatively more well off. Then they hope to upsell other financial products to them.
marc3842h 7y ago
A Fintech banking startup in Switzerland (Neon) recently did the same. They also removed the surcharge on the exchange rate and now give the official MasterCard exchange rate.
rsynnott 7y ago
The interchange rates are governed by EU rules. They’re not up to the banks.

astura 7y ago

The EU caps interchange fees by law, the US doesn't (except on debit cards). As a result, credit card fees are much higher in the US because they can be. Credit card issuers kickback some of the fees collected from merchants in the form of rewards for using the credit card.

Slartie 7y ago
This is also called the "poor people tax", because the merchants all bake these fees into their prices, which rise accordingly for all customers, including those who pay cash, or use debit cards or credit cards without those kickbacks. In order to evade the "tax", you are basically forced to pay with a credit card that has good kickbacks (>= 2% is acceptable if I remember correctly) so you recoup those 2% that are implicitly included in any price of any good in any store. Those who lose out are people with poor credit rating, because they either have no access to the best cards or have to pay ridiculous fees to get them. In my eyes it's useless circulation of money in the best case (when recouping via kickback) and a tax on the financially illiterate or poor in the worst case. In any case it is creating a lot of expensive administrative overhead for no economic purpose whatsoever, and thus a healthy capitalistic society should want to get rid of it - which is even relatively easy to do in this case, as the European regulation demonstrates.
- jcrben 7y ago
  Surcharging is becoming more common with a couple companies like CardX focusing on it: https://thepaypers.com/expert-opinion/credit-card-surcharging-a-new-model-for-payments-in-america-part-2--777887 https://thepaypers.com/expert-opinion/credit-card-surchargin... Particularly driven by https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._Schneiderman https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._S...
  - Slartie 7y ago
    This is an interesting development. I didn't know about that Supreme Court decision. So it effectively allows merchants to communicate a credit card surcharge as exactly that to customers, letting them know that it is caused by using a particular card? Does that also allow merchants to put an additional surcharge depending on the card used onto a receipt? Or has that been deemed legal in an earlier ruling? Because I always thought the big card networks had some kind of legally binding contract with merchants which prohibits the addition of surcharges that only apply to their particular payment method - contract clauses that they could only muscle through because merchants effectively didn't have the possibility to just not accept Visa or MasterCard payments, while most of their competitors accepted them.

adrr 7y ago

I bet the banks lose money on credit cards in EU. They are loaning out money up to 60 days for only a 0.3% fee. Interchange is meant to cover these loans.

rsynnott 7y ago
That’s 1.8% annually. Better rates than European banks are getting on most low-risk lending.
- Rexxar 7y ago
  It's even better, 3 month euribor rates are currently negative. So it's a safe way to use their money without "paying" the negative interest rate.
- adrr 7y ago
  You can get home loans in EU with 1.8%? That’s the lowest risk since it has collateral. These are unsecured loans.
  - rsynnott 7y ago
    (A) Yes, in many countries. (B) that card loan is only at effective 1.6% for 60 days; if it’s not paid at that point it turns into potentially 20%. (c) Most card payments are debit anyway afaik; no loan longer than a day or so involved.

bufferoverflow 7y ago

Still ridiculous, considering it's just updating balances in a few rows of a database. Cryptocurrencies, except BTC and a couple of others, are doing it right. A transfer should cost a fraction of a cent.

rsynnott 7y ago
Bank transfers in Europe are now typically free. Cards expose the bank to a certain (small) degree of risk Nd administrative cost, so they’d probably stop offering the service if rates were regulated to zero.
3fe9a03ccd14ca5 7y ago
But unlike bitcoin, visa doesn’t create an enormous carbon footprint every time somebody buys a pack of gum at a gas station.
- bufferoverflow 7y ago
  Every time you Google something, you create an enormous carbon footprint. Every time you drive. Every time you eat. Every time you watch a movie.
gregmac 7y ago
I'm out of the loop on this stuff, but are others doing things to prevent the situation Bitcoin had a couple years ago, when it hit $37 per transaction? That seemed to happen due to a massive price and volume increase, so is hard to design for. At the same time, at peak, it was still doing a tiny fraction of the volume that any of the credit card networks do.
- bufferoverflow 7y ago
  Yeah, BTC limited the block size, so transaction cost went through the roof. Thankfully there are many alternatives. BCH is great.
- leppr 7y ago