[size=75:2827huft]Sofia echo 22 January 2010

Till fees do us part

Whether a service is expensive or not is a matter of perspective, but people like to know how much and what exactly they are paying for. Until now, as far as cross-border currency transfers were concerned, that was not exactly the case – on their way between the sender’s bank and the receiver’s bank, the money could have passed through intermediary financial institutions, who add their own fees to make the service more expensive.

The new European Union directive on payment services and the Bulgarian law implementing it aim to prevent such practices, introducing a number of changes. The important one is that bank fees will now have to be split between the sender and receiver.

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This means that the senders will pay the fees charged by their banks and the fees charged by the receivers’ banks will be paid by the beneficiaries,"
Postbank, a subsidiary of banking group EFG Eurobank, said.

The Payment Services and Payment Systems Act went into force on November 1 2009. "
There is a grace period of three months for implementing the law as concerns the existing users,"
the head of the operations department at UniCredit Bulbank, Ivan Raichkov, said.

The changes affect the services related to depositing and withdrawing of funds, the execution of payment operations, including transfers between accounts, card payments and money transfers.

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The law’s intent is to increase transparency for the customer and protect his rights, which caused a series of changes in our procedures, systems and processes. As a whole, the law is customer-oriented,"
Raichkov said.

The biggest changes concerning cross-border money transfers are three-fold: more information and transparency for the customer;
shorter terms to carry out operations and splitting the costs of the transfer;
and, finally, a guarantee that no fees and commissions from intermediary financial institutions would be charged.

Things to know

The first thing you must know when going to a bank to make a cash transfer abroad is that you have the right to demand all details prior to making the transfer, including fees and transfer periods. It is possible to transfer funds both from your account and if you bring the money in cash.

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Usually, cash transfers are more expensive than account transfers because the money has to be processed, the costs of which are factored into the total costs,"
Raichkov said.
When you order a transfer, usually in addition to the data being collected – the beneficiary’s account number and the amount transferred, to give an example – you are given three fee payment options: paid by the sender, paid by the beneficiary or split.

Now, with cross-border currency transfers within the EU and the European Economic Area (EEA) – namely Iceland, Liechtenstein and Norway – you will have to split the fees with the person on the other end. In essence, that means that each has to pay the fees charged by their respective banks.

Additionally, if you order a transfer of, for example, 220 euro to an acquaintance in Germany, but his bank does not have any commercial relationship with yours, then the money passes through intermediaries – until November 1, each of those banks could charge a fee and commission, so that in the end your acquaintance would receive 200 euro.

Now, the law guarantees that intermediary banks cannot do so. Furthermore, no one can charge commissions or fees that you have not agreed to pay. "
These fees could have been settled through agreements between banks based on monthly bills or some other way chosen by banks, but these are inter-bank issues that customers cannot be saddled with,"
Raichkov said.

Exceptions to rules

These rules only matter for transfers of currencies of the countries from the EU and the EEA. So, if you want to transfer US dollars to one of those countries, you will have all three options available to you. If your transfer is in one of those EU or EEA currencies, but the beneficiary is outside the EU or EEA, you will also have all three fee payment options available.

Another exception is when there is a currency exchange during the transfer – for example, if you order a euro transfer from your leva account. This exception is in force regardless of the currencies involved.

No one can force you to accept the transfer costs, but you could decide to transfer a larger amount, although it could be difficult to guess the fees charged by the beneficiary’s bank.

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As a rule, banks around the world apply differential fees for different customers, which are seldom available for general use. In practice, it is impossible at the time of ordering the transfer to make an exact calculation of the fees charged by the other bank,"
DSK Bank said.

So, you can order a transfer that is 10 euro higher to your acquaintance to cover the fees on the other end if you want to ensure that he receives the amount you want him to.
Another innovation concerning cash transfers are the shorter transfer periods. "
If the operation is in a currency covered by the new rules, by the next day, at the latest, the funds should have reached the beneficiary’s bank, which is required to transfer the money to the beneficiary on the same day,"
Raichkov said.

If there is a paper trail – in the case you went to the bank to order the transfer, rather than order it from your account – the bank is given the option to add one day to the period, which means that transfers covered by the new regulations should take two days at most.

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Before that, it was possible to have different practices and a transfer could take two or three days. For some banks it is acceptable to delay you with one day, but because of the high competition on the market, I think most will decide to go for a day plus one,"
UniCredit Bulbank said.

Great artical Ashly this is very helpful to people like me who dosen't know about these things thank you