Question: Why does my bank in Malta apply a charge for sending payments in euro to other banks in the EU? Isn’t there supposed to be an EU rule which stipulated that all EU transfers should be free?
There is no rule in the EU which states that cross-border transfers should be free. EU rules, however, state that a bank in the EU cannot discriminate in its charging structure between a national payment (ie to another bank within the same country) and a cross-border payment (ie to another bank within the European Economic Area).
Up to 31 December 2007 (when Malta’s currency was the Lira), all local banks had an arrangement whereby transfers in MTL within Malta were either free or at a very low cost. As of 1 January 2008, this arrangement could no longer apply as all transfers in euro became subject to the rules of a regulation (EC Regulation 2560/2001) on cross border transfers in euro.
In effect, the regulation had been in force throughout the EU since 2001 and has been applied by local banks for all transfers in euro, whether to banks in Malta or to any other bank in the EU irrespective of the way the transfer was requested of the bank (i.e. whether via the branch network or internet banking, where available).
A month after Malta joined the euro, all banks in the EU (including Maltese banks) started to process bank payment in euro under a new ‘payment regime’ called the SEPA Credit Transfers. SEPA involves the creation of a zone for the euro in which all electronic payments are considered domestic, and where a difference between national and intra-European cross border payments does not exist.
At the same time, local banks took the opportunity to revise their charging structures for bank transfers (especially, but not exclusively) in euro. What the local banks did was distinguish between charges depending on the way the request for the transfer originates. Indeed, as the respective bank tariffs indicate, a customer sending a payment via a bank’s internet banking system (where available) is charged less compared to ordering the same payment at the branch. Strictly speaking, the payment is processed through the same systems, but local banks seem to prefer receiving instructions for payments via their internet banking systems rather than through their branch network (where there is an additional cost for a bank clerk to fill out the form etc).
It must be emphasised that the local banks are not distinguishing between an internet transfer from a branch in Hamrun to either another branch of another bank in Gzira or a branch of a bank in Hamburg. The cost is the same. The charge would vary (i.e. higher) if the bank is given instructions for a transfer over the branch counter.
As of 1 November 2009, payments are regulated by an EU Directive – the Payment Services Directive. Your bank is obliged to give you all information you may require to enable you to receive and pay into your payment account. Have you checked your bank’s website or called its call centre to enquire about your rights when paying electronically?
All local banks have made available information about payments and charges on their main websites. Indeed, a consumer rightfully expects to have full access to the bank’s full list of tariffs applicable for the service he requires before the transaction. The MFSA has complemented such information with the publication of tariffs for bank-to-bank transfers, including information about the customer’s rights and obligations when making payments, in its comparative tables.
KEEP IN MIND that whilst cheques may be convenient for you to make a payment, the use of cheques are not covered under the Payment Services Directive and you may not enjoy the high level of protection which is afforded to consumers who make or receive payments electronically through their bank. So be informed about your rights. ASK!
