What does it cost? How much do you charge? What’s the expense? These are the questions we’re always asking ourselves when buying any product or service.
Banking is no different. With banking, it’s even more important as you’re going to use the service probably for a long time, and if the transaction fees are high, it may become a considerable overhead for the company.
For example, banking has been one of the main administrative issues for crypto exchanges in recent years. At our consultancy and licensing business, we’ve always told our clients that it’s definitely possible to open a bank account, but whether the fee-structure of the account is acceptable for the client is a whole different story. If the business is dependent on the transaction fees it charges from the clients, then fees paid to the bank or an EMI (online bank) need to be reasonable in order to provide a competitive service.
While most Fintechs and banks claim to have transparent pricing, and well, they kind of do, it’s not always easy to understand which fees apply and when even if they’re written out on the homepage. In this blog post we’re going to bring out different types of fees you have to keep your eyes on, and we may start a series of articles where we compare different pricing structures of Fintechs and banks.
That’s a new thing which we’ve never seen before since a few years ago, and it’s due to the AML policies which force banks to reject many clients, making the verification process time-consuming and expensive, as they can’t often on-board the clients. I would also say it’s due to some industries exploding up requiring banking services while being a highly risky proposition for the banks - like companies dealing with cryptocurrencies. The craziest amount we’ve seen a bank charge for the due diligence process is 8000€. This amount was required from crypto exchanges to apply at one bank in Liechtenstein a few years ago.
Monthly maintenance fee is and has been a standard fee in the banking industry. Although these fees were constantly getting lower and basically disappeared in many countries, we’ve noticed that they’ve been re-appearing lately, and it’s probably due to several reasons, like the burdensome AML requirements, negative interest rates and as a consequense banks having trouble generating profits from the loan business in the recent years. The question is what is the acceptable rate for maintenance? When we talk about extremes, we’ve heard a bank asking 5000€ maintenance fee per month from crypto exchanges, which obviously is a crazy number.
Fee per transaction is another standard fee, and for the most of us it’s almost non-starter, as it’s always been part of the banking industry. However, with IBAN transactions being 0€ in some banks (only accessible for the lowest type of risk-profiles), seeing few Fintechs charging 5€ per transaction or even 30€ per Swift transaction, is something we haven’t been used to. Probably the growing competition will normalise these fees in time.
Account closing fees are rather rare, but there are banks who even want to get your last dime when you’re closing down the account. We’d consider this as a red flag, but then again, if that’s the only option you have.
Any dispute/claim fees are sometimes part of the deal. Not often, but sometimes you can find them in the pricelist, and these fees can be around a few hundred euros.
That’s standard almost everywhere, but the price you pay for these documents definitely differs quite a bit. Paying for account statement, however, is something that’s weird and we can’t understand. Why would you need to pay for that? If it’s stamped, then it’s fine, but otherwise, difficult to accept.
Not all fees are applicable for every bank or Fintech, so look at the pricing pages carefully. You also need to understand that together with industries or countries which are seen as higher-risk, your options get thinner, and the ones that do accept you, are pricing the risk they take, and you may end up paying high fees for having the account alone. Then it becomes a question whether the business can absorb the fees and remain profitable.
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