Thursday, May 21, 2009

There’s an international banking problem alright

…and it’s not the overnight inter-bank rate.

We had to send 25 Euros to an agency of the German government. They would accept no form of payment but a bank transfer – no cheques, credit cards, money orders. It had to be a bank transfer to a specific branch and account.

So we paid our local TD Bank $30 in fees to handle the 30 seconds of paperwork (which itself is absurd in this era of electronic funds transfers) and waited for the transfer to work its way through the system.

When, after a few weeks, there was no response from Germany, we followed up to find that the recipient only got 5 of the 25 Euros sent. So it was back to our bank where we were told they “think” it’s because the transfer was handled by 2 banks in Germany, each of which took a 10 Euro fee, leaving just 5 Euros for the ultimate payee.

Our “helpful” banker offered to do some more research to confirm that, but indicated that would entail a further $10 service charge. Instead we could assume that’s what likely happened and just send the missing 20 Euros. For another $30 TD Bank fee. And keeping in mind that the German banks will skim off another 20 Euros when it gets there.

So at the end of the day, a 25 Euro ($40) interbank transfer to Germany cost:

  • Funds to payee – 25 Euros ($40)
  • TD Bank fees - $60
  • German bank fees – 40 Euros ($64)

For a total of $164!

Now there’s a problem I’d like to see old Flim-Flam Flaherty try to fix – the usurious fee structure on the international movement of money in this so-called global economy.

5 comments:

penlan said...

That's disgusting. A scam from beginning to end.

Anonymous said...

We used my BIL's credit (actually a debit) card in France to pay for our airfare (a European carrier) & our rental vehicle. We've a legit account there so takes it gets taken out of our account. What a scam. My DH had to get a money order from TD in US funds. They quoted the cost for the MO in Cdn. but charged us the equivalent in US $.

The Mound of Sound said...

Remember when we used to settle these things with Panzers?

Ross said...

Life would be so much simpler if we all just used paypal. It's world is flat.

Canajun said...

Anon - and at every exchange a little bit more gets skimmed off....

MOS - LOL.

Ross - agreed. There's no reason this type of transaction can't be handled by the user directly at virtually no cost to the banks. It's simply another opportunity for them to take fees for no work.