Opinion: FinTech vs High Street

If you’re a regular reader of this blog, you may have noticed that I have strong opinions regarding consumer financial services, particularly when it comes to Revolut, which I wrote about a lot by now.

I didn’t start writing about these services because of a professional interest, but rather because when I moved from Italy to Dublin (via Los Angeles), I felt like I stepped back ten or more years with the banking system. And while this improved significantly when I moved to London, there are still a few things baffling me from time to time.

But as I discussed in one of my recent Revolut-bashing posts, compared to Ireland the high street banking options in London are so much more interesting that I’ve effectively ditched Revolut for day-to-day payments. So why would anyone care about FinTech products?

I have been thinking this for a while, not just as a customer, but with an awareness that, if I decided to change my perspective in life and go for a riskier professional position, from my rather cushy one, FinTech appears to be the place to be right now. Particularly given the unfortunate experience I have gained in this field by now.

One of the issues appears to be one of branding, and trust. Quite a few people appear to have a dislike for high street banks because of their association with previous scandals or news. And that’s what makes it funny to see how high street banks appear to just want to enter the market with new brands.

Another thing that Monzo appears to capitalize on, in their tube advertisements, is the ability to receive instant notification of the money spent. And that’s something that I deifnitely can relate to. This is particularly important when you get to more shady stores, or to coffee stores with untrained staff, that may suggest that a transaction didn’t really go through, and suggest you to pay cash instead, charging you twice.

Indeed, this was one of the biggest advantages of using Revolut for me in Ireland. The “famous” Tesco Bank credit card didn’t really have even an online banking platform, and the only way for me to confirm whether a transaction went through was by looking at my Tesco points statements. But this is not something revolutionary: I had notifications of all online transactions, and card-present transactions over €50, on my Italian pre-paid card in 2006 (via SMS, not via app at the time, of course.)

While I feel Monzo is right to take a swing to most high street banks for not implementing these notifications, even in 2019 London it’s not true that you need to “go FinTech” to have this level of support. My American Express does the same, and you cannot say that AmEx is a new player on the market!

And it doesn’t stop at just sending me notifications for the charges: American Express goes one step further, and integrates with Google Pay so that you get the notifications even without having the American Express application installed.

Indeed, I have a feeling that, for the most part, customers would be happy if the level of support in high street banking was on par with American Express:

Their website lets you log in with a simple username/password combination, rather than the silly security theatre of “Give me the 1st, 2nd, 123th character of your password, and 1st, 5th and 6th digit of your PIN” (seriously, setting aside the random index selection, why on Earth do you need two equivalent factors?)
New charges on the card are notified immediately, either through app or through Google Pay (I don’t know about Apple Pay but I assume that’s the case there as well).
You can get your card’s PIN online, which is usually verified by a text message OTP.

One of the things that AmEx does not do, that I think all of the FinTech players appear to do, is freezing/unfreezing the card on the fly. A feature that Barclays has been advertising all over as if they had invented it.

It is pretty much possible, or certain, that some UK high street banks already started providing all of these options, maybe in different combinations. As I said, Barclays does appear to have the ability to freeze/unfreeze the card. Fineco does not mail out the PIN but rather has you requesting it online and delivers it as text message. And as I made as a point before, Santander has a credit card with no foreign transaction fees.

Many of the articles I read over the importance to FinTech startups imply that the main reason why big banks can’t be this flexible or “innovative” is that they have old, heavy and difficult to manage backends. From second hand discussions, I can believe that the backends are indeed as heavy and clunky as they are purported to be, but it does seem to me that many of the features involved can’t be that tied to the backends, given that most of the banks can provide those features already.

A number of features that I see being deployed throughout different banks is the ability to “budget” expenses. While they sound particularly interesting, this appears to be mostly a “frontend” feature. Santander has this feature, but somehow they decided to implement this on a separate Android app only, which I gave up on. Indeed, it does not allow you to correct their classification of expenses, which makes it pretty much useless, not just because some vendors are classified completely wrong, but also because sometimes the same vendor might be used for different reasons (Boots, CVS, Walgreens, and similar all provide both medicines and groceries; how you categorize their spend depends on what you bought!)

While Santander have already won me over as a bank customer, I do feel that they would win over more of my credit card expenses from American Express if they implemented “this one weird trick” of informing me of charges as they happen. Because small things like that are one of the reasons I use my AmEx quite a lot in the UK, even after I reach the needed spend to upgrade my Marriott membership to gold.

So yeah, my hope is that high street banks will finally see the competition from FinTech as a list of features that they should, opportunistically, implement, rather than an excuse for the branding and marketing departments to come up with new ideas to be “hip”.

Speaking of Foreign Transaction Fees

In the previous post about Revolut, I have left open a topic that I wanted to move to its own post: foreign transaction fees.

For those who are not acquainted with the terminology here, with foreign transaction fee I’m referring to the additional fee levied by banks and payment card companies when you incur expenses in a different currency than the one the card was issued for. Sometimes (particularly in UK and Ireland) this is referred to as an “overseas transaction fee” — which is confusing, particularly for Ireland, where the fee is applied for expenses in GBP (which is not overseas, but rather “up the road”), but not in EUR (which is mostly oversea).

This is a different cost incurred than the possible bad exchange rate that the financial institution may be applying, and it has nothing to do with the various DCC scams that you may run into when going to touristy destinations with a non-local card, although there is a link there: even online, services may suggest you to apply the charge in your local currency to avoid foreign transaction fees — as you can see in the linked post, that’s rarely a good idea, with a few exceptions (e.g. PayPal actually applies sane conversion fees in my experience, even if not the best ever).

These foreign transaction fees are set by the card issuers, and vary widely. I have seen cards with up to 6% “fex fees”, but that was back in Italy (why I say that will be clearer in a moment). In Ireland, with the exception of various fintech companies, the typical fex fees were of 2-3% — I was very happy with Tesco Banks‘s 1.75% fex fee (Tesco Bank no longer operates in Ireland.) In the UK, it appears most cards either have 0% fex fee, or 2.99% fex fee; there are a few divergences, but those two appear to be the most common options.

The reason why I am specifying this information with a country attached is that, in addition to telling you what the currency is, the mix of local-vs-foreign spend for the average person is also connected to the country. For instance, for my friends and family living in Italy, foreign transaction fees only exist when buying from foreign websites (or eBay), or when going on a “far” trip — Croatia and Switzerland being the closest countries that incur the fex fee. On the other hand, if you live in Ireland, you’ll probably have at least one recurring expense in GBP — depending on how Brexit is going to go this may change.

Indeed, for electronics you often need to look at the UK, rather than the continent — because of plugs, regulations, availability, etc. And quite a few eShops with presence both in the continent and the UK used to refuse you service from the European website, referring you to the UK one instead — this is another thing that may change after Brexit. There is a reason why, when discussing markets, most companies call it “UKI”.

I’m told that a similar situation exists for those living in Switzerland, and I can imagine this goes similar in the Nordics, given that Denmark, Sweden, and Norway have their own currencies as well, and likely a lot of services overlap.

In the UK (and again this may change after Brexit), you may very well never spend money outside of GBP because all the services exist within the country. Unless you’re an expat, in which case you’re probably still visiting the continent (Eurozone or not) fairly often, or may be paying for ongoing services (such as cellphone contracts) in that currency. This probably explains why the two sets of fex fee groups: if you’re part of the first group, you probably don’t need a card with no foreign transaction fees — while you really do in the latter case.

In my case, I have two credit cards: one from Santander, which I spoke of last time, with no foreign transaction fee, and an American Express with a 2.99% foreign transaction fee. I effectively spread the expenses on the two cards, depending on where I am — namely I try to use the Amex in the UK, and the Santander anywhere the other does not work. I could give up on the Amex, as the Santander is strictly a superset usage, but the perks provided by Amex are worth having. And that’s the most important thing: cards have perks, so you should probably consider those as well.

Thus the utility of fintech services like Revolut and Curve depend on the country you live in not just because it sets the band for foreign transaction fees, but also because they set the tone of foreign currency usage. In the UK, with the wide availability of debit and credit cards with no foreign transaction fees, their services are likely less useful than in other countries — except when it comes to perks. Indeed in the case of Curve, you would be able to keep most of the perks of a credit card, such as cashback, even if the card comes with a hefty foreign transaction fee. Except for Amex of course.

But is it convenient for you to pay for such a service? That’s another very good question. And to answer it, I’ll try to forget about the UK and go back to Ireland — mainly because here, as I now repeated a number of times, cards with no foreign transaction fee exists and you can just use one of those. Metro Bank has free current accounts with cards that come with cards without foreign transaction fees in Europe. Santander has a £3/month credit card with no foreign transaction fees, and 0.5% cashback. Halifax has a Clarity MasterCard that comes with no monthly fee, no foreign transaction fees (and of course no perks.)

But let’s go back to Ireland and take a look at the options. As I said the usual foreign transaction fee in the country was between 2% and 3%. In the case of Ulster Bank, the card I used to have had 2.75% foreign transaction fee. At which point would it have been cheaper for me to subscribe to Curve Black, at €9.99/month, rather than give Ulster Bank their fees? (And for simplicity here, I’m not talking about exchange rates; the exchange rate for their MasterCard is network-provided so it’s not at all bad, and in fact it’s comparable to Revolut’s.)

As most services would require a yearly commitment, we should consider the spend on an yearly basis too. This makes the cost €119.88, but we’ll call it €120 to make it easier to run umbers on them. Let’s just call the twelve cents a rounding error. If we’re ignoring the cashback options (as in Ireland there were none, beside Tesco Bank), the amount of foreign expenses you’d need to break even on Curve black with the foreign transaction fee noted above is about €4364 (divide the yearly cost by the foreign transaction fee). That’s the cost of fairly big vacation for a family (note that you can’t include flights in the vacation cost, as those would be billed by the currency of the country of origin, which is likely local).

If you have a card that provides cashback, then things become more complicated, because you’d have to include the cashback in the calculation. If you’re curious the following formula will give you the number, making S the yearly subscription cost of the service, F the foreign transaction fee percentage, and C the cashback percentage:

(S + (S/F) * C) / F

For Revolut Metal, with their variable cashback, figuring out the number is a bit more annoying. But we’re also talking about 1% in the best case scenario (all non-European spend). So the basic number (€5673) only goes down to €5616. The 0.1% cashback option of all European spend is so minimal that it’s not worth calculating exactly.

So what should you do if you don’t usually spend that kind of money on foreign transactions? You can still use the Revolut and Curve and other fintech services without paying for them, and grab the best deal you can until they go bust. Or if you don’t want to bother, you can just spend on your normal cards, get your usual perks and ignore the need for no foreign transaction fees.

Indeed, if your options are spending on Curve attached to a debit card with no cashback and no perks, or spend on an American Express Platinum Cashback Credit Card, you would need to spend more than £5330 a year in foreign transactions for it to be worth it — and that’s assuming you don’t qualify for the higher tier. And this is probably the worst case scenario for the UK, for a non-zero foreign transaction fee card.

Is Revolut Still a Good Thing?

You may remember that a few years ago I wrote a positive review of Revolut, the fintech startup that provides payment cards with stored value and no foreign transaction fees. I have been using it for a long time by now, and had mostly stood by that review, until the second half of last year, where things started to appear more complicated. Given the current flurry of stories on the company, from silly advertising shenanigans to uncovering of poisonous working conditions, I thought it would be a good time to write some more up to date words, as I don’t think I can recommend Revolut as much as I did before anymore.

First of all, I started feeling uneasy recommending Revolut since they started down the path of selling cryptocurrencies as an added-value feature. I hold a personal belief that participating in the trading of Bitcoin and other similar “currencies” is unethical (see Thomas’s rant on the topic), and I don’t like being associated with companies focusing on them. I have looked the other way for a while, though, because I knew that using the words “cryptocurrency” and “blockchain” make money appear out of nowhere for most startups, even when there’s no rhyme or reason for it. I just had a bad taste in my mouth for this.

The problem is that Revolut, even when I had the Premium version, built something very cool, but a bit rough around the edges. And as a customer, it is annoying to see them jumping the shark onto cryptocurrencies, instead of making location-based security actually reliable, implementing 3DSecure/VBV integrations, or finding a way to get a proper banking license and FSCS insurance (all of which would be requirements for me and most people to use Revolut as a replacement for high-street banking).

Instead, what we see is that Revolut is adding “features” trying to upsell you into their premium services. This is not entirely bad, because you need paying customers to run a business. Unfortunately my impression is that they offered and offer so much on their free tier, that they are tackling on random stuff that has nothing to do with banking itself, just to get people to sign up for their Premium and Metal tiers.

As an aside, I still don’t understand this trend of providing heavy (“18g” as they boast some companies) metal cards. The last thing I want from a credit card is to be heavy, as I barely even want to have to take it out. I’m all in favour of the trend of not embossing the name and number, preferring to print it on the back, but it does not need to be metal for it. Indeed, Curve (that I’ll get again in a moment) did exactly that.

We’ve just come back from a trip to the Continent, and what we did notice that Revolut tried to upsell us medical and travel insurance at every change of country (even when we just connected flights through third countries). This is not just annoying as we’re not interested in it (we’re European citizens, visiting European countries, and work provides both of us with a basic travel insurance), but it’s also annoying because it makes use of the location information, which I provide for the security feature, for marketing. Similarly, I recently had more notifications about them trying to upsell me Metal than actual transactions.

For a while, I actually did pay for the Premium service. Mostly under the idea of “putting my money where my mouth is”, that is to make sure that the company could keep operating a service I loved. Unfortunately it turned out a bad idea: not just because Revolut cannot replace a high street bank in the UK (no FSCS to protect your account, no BACS direct debits, etc), but also because the Premium “perks” were not something I cared about, and the dedicated service team was still useless when it came to even telling me the top-up limits when I changed the card I used for top-up.

If you already have two physical cards (and paid for it), you need to pay to replace one of them with a Premium card, if you so wish (but it gains nothing but a different colour, so I never did that). The unlimited exchange is not particularly useful when you already don’t reach the free tier’s spend, and the ATM limits is only useful if you plan to actually use cash, which I really try not to. The one interesting feature that is advertised for Premium customers, but as far as I can tell is also present as a one-off charge for non-Premium one, is the disposable virtual card, that changes PAN every time you use it. But even that is not as secure as it looks, as I’m told that vendors are still able to charge again a disposable card that already changed number.

Okay admittedly there’s the travel and medical insurance, but as I said earlier, I get a better travel medical insurance from work (and probably there’ s better out there) and a credit card such as American Express would provide a better baggage/flight insurance. This is very subjective of course, it’s well possible that for other people, with other employers, and in other countries, these insurances are actually worth it.

Speaking of circumstances, I think I might not have felt so strongly against Revolut if I was still in Ireland. Not just because they seem to have implemented SEPA DD Core support, so you can actually use it to pay your bills there, but also because the alternatives of high street banking there are significantly worse than here.

In London, I now settled on Santander as my primary bank, both for the current account and for a 0% foreign transaction fee credit card, their All-in-One Credit Card. These come to £5 per month for the account, and another £3 per month for the credit card (compare against Revolut’s premium at £6.99 and Metal tier at £12.99), and while the free foreign ATMs withdrawal are limited to Santander’s own network (limiting the countries you can use them on), this is a full-featured, FSCS-insured account, with cashback, retailer offers, and active interest on the current account’s deposit. If you don’t want (or can’t afford) a credit card, Metro Bank offers 0% foreign transaction fee for European transactions on their free accounts’ debit cards. And I’m sure that other banks have similar arrangements all over the place. Basically, the UK has a significantly wider range of offers, that make Revolut less necessary than in Ireland.

But even for Ireland, and for other countries that do not have such a selection of high-street banks, Curve – that I complained about before – decided to change their target marketing a bit, now offering a “front” for any Visa and MasterCard card to provide 0% foreign transaction fee, with their premium option existing to raise the limit of monthly transactions. That would have been something awesome to have when I lived in Dublin, to keep getting Tesco points, while not paying the 1.75% of foreign transaction fee on their credit card. (If you are interested to try that, my referral code is BG2G3).

Both Curve and Revolut have a Metal card with which they provide cashback. In the case of the former, these are retailers-limited, and I can only assume they are based on some third party’s selection of perks, as the retailers are pretty much the same that Santander and Lloyd’s provide retailers offers for. Revolut instead provides cashback on all spend, 0.1% on European spend, and 1% for non-European spend (although there does not seem to be an obvious definition of Europe on their marketing material, I assume it’s deep into the terms of service).

While cashback is always a nice bonus, it only makes sense if you can break even on the cost of one’s service by spending. With Revolut Metal, that would be an astounding £13k (thirteen thousands pound) per month in European spend, or £1299 of non-European spend. I do know some extremely frequent travellers to the States or Asia that would be able to spend the latter, but that’s more of an exception than a rule. And if you can spend the former, you probably can get more than that in interest by keeping the money in an active-interest current account, and paying with a normal credit card.

For comparison, Santander’s card I linked above costs £3/month (you don’t even need their bank account). It has 0% foreign transaction fee on all spend. And a cashback of 0.5% (five times Revolut’s European cashback) on all spend. It takes only £600 a month to break even, and that’s without counting additional retailer offers, or additional perks from their current accounts.

And even if you look at American Express (which is never considered a cheap option) and their cashback options, the numbers are significantly different. Their Platinum cashsback card is £25 per year, and includes a better travel insurance, 1% cashback on all spend to £10k and 1.25% over that. Plus retailers offers and supplementary cards for the family. Although be warned if you want to go down that road, that American Express charges you 2.99% foreign transaction fees, for every single one of their cards in the UK.

I was going to take a detour talking about foreign transaction fees, but I will leave it for another post, because it’s a lot of content, and a lot of explanation to be done there.

So the final words of this post are: I’m not sure I trust Revolut anymore. They seem to be taking “marketing risks” to get people to pay for services, but at the same time there’s very little value in their paid services. I don’t think that the company will be able to sustain the current trajectory without venture capital money, and I find scary the idea of relying on a VC-funded pseudo-bank for my own money.

Update (2019-03-27): just a few days after I wrote this blog post, I received two email from Revolut, with widely different content, that I think merit a bit of description, thus why this update.

The latest email is an announcement of new details (new sort code and account number) for their GBP accounts. This is effectively a change in intermediary bank that maintains the GBP account proxies for Revolut. Nothing particularly eventful in by itself, but there are a few notable things. The announcement is declared “great news” for their customers, but it also highlight yet another feature that high street banking would have, and Revolut lacks: redirections.

When you switch bank account with a high street bank, the bank will take care of moving standing orders, direct debits, automatic salary payments, and redirect any transfer to the old bank account to the new one. Revolut is instead telling all the customers that they have to deal with all the required changes of both payment and transfer. Not just that, but they don’t appear to guarantee any specific grace period in which both accounts would exist: they say that the new details will appear in the app before May 22nd, which is when the old account will stop working:

⚠️ Your old account details will stop working from the 22nd May 2019.

Salaries and standing orders

If you receive your salary into your Revolut account, you’ll need to send your new account details to your employer before the 22nd May. Again, we’ll let you know as soon as they arrive.

For standing orders from your external bank to your Revolut account, you’ll need to update your bank with your new details before 22nd May. For recurring payments set up from your Revolut account to another bank, you don’t need to do anything.
Revolut email arrived on 2019-03-27

To give you an idea of time frame involved, the company I work for freezes the salary payment details around the 5th of the month for payments on the 25th. This means that if the new details arrive after 5th of May, and you’re paid monthly, you may be unable to receive the salary. Hopefully, the old accounts would just reject the transfer, but even in that case, retrieving the missing salary can easily take two weeks, which for a number of people would be a significant risk.

For comparison, the previous email I received just twenty hours before, also from Revolut, had as subject «👕Should we release Revolut merch?». This is a company that just before announcing a significant disruption of service, that a high street bank would never subject their customers to, asks whether you would like to wear their brand around, making yourself not just a product, but a walking billboard.

UK Banking, Attempt 3: Tesco Bank (and the Irish credit card)

It feels like most of what I end up writing nowadays is my misadventures across a wide range of financial service companies. But here we go (I promise I’ll go back writing about reverse engineering Really Soon Now™).

The last post on this topic was my rant, about how Fineco lacks some basic tools to be used as sole, or primary bank account in the UK. Hopefully they will address this soon, and a sane bank will be available in this country, but for now I had to find alternatives.

Since the various Fintech companies also don’t provide the features I needed, I found myself having to find a “high street bank”. And since my experience up to this point both with Barclays and NatWest was not particularly positive, I decided to look for a different option. Since I have been a mostly-happy customer of Tesco Bank for nearly four years, I decided to give their UK service a try.

At first it appeared to have an online sign-up flow that looked sweet for this kind of problem… except at the end of it, they told me to wait for them to ask me for paperwork to send them through. Turns out the request was for proof of identity (which needs to be certified) and proof of address (which needs to be in original) — the letter and form I could swear is the same that they sent me when I applied for the Irish credit card, except the information is now correct (in Ireland, the Garda will not certify a passport copy, though it appears the UK police forces would).

Let’s ignore the fact that by mailing me at that address, Tesco Bank provided their own proof of address, and let’s focus instead on the fact that they do not accept online print outs, despite almost every service (and, as I found out now, themselves) defaulting to paperless bills and statements. I actually have had a number of bills being mailed to me, including from Hounslow Council, so I have a wide range of choices of what to provide them, but as it turns out, I like a challenge and having some fun with corner cases (particularly as I already solved the immediate need for a bank account by the time I looked into this, but that’s a story for another day).

Here is a part of the story I have not told yet. When I moved to the UK I expected to have to close every account I had still in Ireland, both because Ulster Bank Private is a bloody expensive service, and because at least in Italy I was told I was not entitled to keep credit cards open after I left the country. So as soon as I was in working order over here, I switched over all the billings to Revolut. Unfortunately I couldn’t do that for at least three services (Online.net, Vodafone Italy and Wind/3 Italy) — in two cases because they insist they do not accept anything but Italian cards, while somehow still accepting Tesco Ireland cards.

While trying to figure out an ad-interim solution I got to find out that Tesco Bank has no problem with me still having the “Irish” credit card, and they even allowed me to change the address (and phone number) on file to my new London one. We had some snag regarding the SEPA direct debit, but once I pointed out that they were suggesting breaching the SEPA directives, all was good and indeed the card is debited to the EUR Fineco account.

This also means i get that card’s statements to my London address. So of course I ended up sending, to Tesco Bank, as proof of address… a Tesco Bank Ireland credit card statement. As a way of saying “Do you feel silly enough, now?” to whoever had to manually verify my address and send the paperwork back to me. Turns out it worked just fine, and I got not even a passive aggressive note about it.

Now let’s put aside the registration and let’s take a look at the services provided. Because if I have to rant, I would like at least to rant with some information to others to make up their own mind.

First off, as I said, the first part of the registration is online, after which they get in touch with you to send them the proofs they need. It’s very nice that during the whole time, they “keep in touch” by SMS: they remind you to send the paperwork back, they tell you that the account was open before you receive the snail mail, and so on.

I got a lot of correspondence from Tesco Bank: in addition to the request of proofs, and the proofs being mailed back, I received a notification about the account being opened, the debit card PIN, and a “temporary access number” to sign up online. The debit card arrived separately and through a signature-required delivery. This is a first for me in the UK, as most other cards just got sent through normal mail — except for Fineco, as they used Fedex, and they let me receive it directly at the office, despite it not being the proof of address I sent them.

Once signing up for the online banking, they ask you for an 8-digits security code, a long(er) password, and a selection of verbal question/answers, that are the usual terrible security (so as usual I’ve answered them at random and noted down what I told them the answers were). They allow you to choose your username, but they suggest it to stay the email address on file.

The login for the first time from a different computer is extremely awkward: it starts with two digits of the security code, followed by a SMS second factor authentication, followed by the password (not a subset thereof, so you can use a password manager easily for this one), all through different forms. The same happens for the Mobile Banking application (which is at least linked directly from their website, and very easy to install). The mobile banking login appears to work fairly reliably (and you’ll see on the next post why I call this out explicitly).

I set up the rent standing order on this account, and it was a straightforward and painless process, which is the same as a one-time transaction, except for saying “I want to repeat this every month” checkbox. All in all, it looks to me like it’s a saner UI than Barclays, and proper enough for the needs I have. I will report back if there is anything particularly different from this that I find over time, of course.

UK Banking, Fineco is not enough

You may remember that the last time I blogged about UK banking I had just dismissed Barclays in favour of Fineco, the Italian investment bank, branch of UniCredit, This seemed a good move, both because people spoke very good of Fineco in my circles, at least in Italy, and because the sign up flow seemed so good that it sounded like a good idea.

I found out almost right away that something was not quite perfect for the UK market, in particular because there was (and is) no way to set up a standing order, which is the standard way to pay for your rent in the UK (and Ireland, for what it’s worth). But it seemed a minor thing to worry about, as the rest of the features of the bank (ability to spend up to £10k in a single transaction by requesting an explicit lift on the card limits with SMS authentication, just to say one).

Unfortunately, a couple of months later I know for sure it is not possible to use Fineco as a primary account in the UK at all. There are two problems, the first being very much a problem to anyone, and the second being a problem for my situation. I’ll start with the first one: direct debit support.

The direct debit system, for those not used to it in Europe, is one where you give a “debtor” (usually, an utility service, such as your ISP or power company) your account details (Sort Code and Account Number in the case of the UK), and they will tell the bank to give them money at certain time of the month. And it is the way Jeremy Clarkson lost £200, ten years ago. There is a nearly identical system in the rest of the EU, called SEPA Direct Debit (with SDD Core being the more commonly known about, as it deals with B2C, business-to-consumer) debits.

After I opened the Fineco account, I checked on Payments UK’s Sort Code Checker which features were enabled for it (30-02-48) and then, as well as the time of writing, it says «Bacs Direct Debits can be set up on this sort code.» So I had no refrain in closing my Barclays account and moving all the money into the newly created account. All of my utilities were more than happy to do so, except for ThamesWater that refused to let me set up the debit online. Turns out they were the only ones with a clue.

Indeed, when in January the first debit was supposed to land, instead of seeing the debit on the statement, I saw a BACS credit of the same amount. I contacted my ISP (Hyperoptic, with the awesome customer support) to verify if something failed on their side, but they didn’t see anything amiss for them. When even Netflix showed up the same way, and both of the transaction showed up an “entry reversal” of the same amount, I knew something was off with the bank and contacted them, originally to no avail.

Indeed, a few more debits showed up the same way, so I have been waiting for the shoe to drop, which it did at the end of January, when Fineco sent me an email (or actually, a ticket, it even has a ticket number!) telling me that they processed the debits as a one-off, but to cancel them because they won’t do this again. This was professional of them, particularly as this way it does not hit my credit score at all, but it still is a major pain in the neck.

My first hope was to be able to just use Revolut to pay the direct debits, since they are all relatively low amounts, which fit my usual auto top-up strategy. When you look at the Revolut information page with your account details for GBP, the text says explicitly «Use this personal UK current account to get salary and to pay bills», which brought me hope, and indeed the Payment UK’s checker also confirmed that it supposedly accepts Bacs Direct Debit. But when I checked with the in-app chat support, I was told that, no Revolut does not support direct debits, which makes that phrase extremely misleading. At least TransferWise explicitly denies supporting Direct Debit in the sort code checker, kudos to them.

The next problem with Fineco is not actually their fault, but is still due to them not having the “full features” of a UK high street bank. I got contacted by Dexters, the real estate company that among other things manages my apartment and collects my rent. While they told me the money arrived all good when I moved to Fineco (I asked them explicitly), they sent me a scary and threatening email (after failing to reach me on the phone, I was going to be charged excessively high roaming charges to answer an unknown number)… because £12 were missing from my payment. The email exchange wasn’t particularly productive (I sent them a photo of the payment confirmation, they told me «[they] received a large sum of money[sic] however it is £12.00 that is outstanding on the account.» So I called them on Monday, and they managed to confirm that it was actually £6 missing in December, and another £6 missing in January.

Throwing this around with colleague, and then discussing with a more reasonable person from Dexters on the phone, we came to figure out that Barclays (as the bank used by Dexters to receive the rent) is charging them £6 to receive these transfers because they are “international” — despite the fact that they are indeed local, it appears Barclays apply that fee for any transfer received over the SWIFT network rather than through the Faster Payments system used by most of the other UK banks. I didn’t want to keep arguing with Dexters over the fact that it’s their bank charging them the fee, I paid the extra £12, and decided to switch the rent payment over to the new account as well. I really dislike Barclays.

I’ll post later this month on the following attempts with other bank accounts. For now I decided that I’ll keep getting my salary into Fineco, and keep a running balance on the “high street” account for the direct debits, and the rent. Right now for my only GBP credit card (American Express) I still pay the balance off Fineco via debit card payment anyway, because the credit limit they gave me is quite limited for my usual spending, particularly now that I can actually charge that card when booking flights on BA without having to spend extra money in fees.

Barclays and the single factor authentication

In my previous post on the topic I have barely touched on one of the important reasons why I did not like Barclays at all. The reason for that was that I still had money into my account with them, and I wanted to make sure that was taken care of before lamenting further on the state of their security. As I managed to close my account now, I should go on and discuss this further, even though I have touched upon the major topics of this.

Barclays online banking system relies heavily on what I would define as “single factor authentication”.

Usually, you define authentication factors as things you have or things you know. In the case of Barclays, the only thing they effectively rely upon is “access to the debit card”. Okay, technically you could say that by itself it’s a two-factor system, as it requires access to the debit card and to its PIN. And since the EMV-CAP protocol they use for this factor executes directly on the chipcard, it is not susceptible to the usual PIN-stripping attacks as most card fraud with chip-and-pin cards uses.

But this does not count for much when the PIN of the card they issued me was 7766 — and to lament of that is why I waited to close the account and give them back the card. It seems like there’s a pattern of banks issuing “easy to remember” 4-digit PINs: XYYX, XXYY, etc. One of my previous (again, cancelled) cards had a PIN terribly easy to remember for a computerist, at least not for the average person though: 0016.

Side note: I have read someone suggesting to badly scribbled a wrong PIN on the back of a card as a theft prevention. Though I like that idea, I’m just afraid the banks won’t like it anyway. Also it would take some work to make the scribble being easily misunderstood for different digits so that they can try the three times needed to block it.

You access Barclays online banking account through the use of the Identify method provided by CAP, which means you put the card into the reader, provide the PIN, and you get an 8-digits identifier that can be used to login on the website. Since I’m no expert of how CAP works internally, I will only venture a guess that this is similar to a counter-based OTP, as the card has no access to a real-time clock, and there is no challenge provided for this information.

This account access sounds secure, but it’s really not any more secure than an username and password, at least when it comes to dealing with phishing. You may think that producing a façade that shows the full Barclays login, and proxies the responses in real time is a lot of work, but the phishing tools are known for being flexible, and they don’t really need to reproduce the whole website, just the parts they care about getting data from. The rest can easily be proxied as it is without any further change, of course.

So what can we do once you can fool someone into logging in to the bank? Well, you can’t really do much, as most of the actions require further CAP confirmation: wires, new standing orders, and so on so forth. You can, though, get a lot of information about the victim, including enough proofs of address or identity that you can really mess with their life. It also makes it possible to cancel things like standing orders to pay for rent, which would be quite messy to deal with for most people — although most of the phishing is not done for the purpose of messing with people, and more to get their money.

As I said, for sending money you need to have access to the CAP codes. That includes having access not only to the device itself, but also the card and the PIN. To execute those transactions, Barclays will ask you to sign a transaction by providing the CAP device with the account number and the amount to wire. This is good and it’s pretty hard to tamper with, hopefully (I do not make any guarantee on the implementation of CAP), so even if you’re acting through a proxy-phishing site, your wires are probably safe.

I say probably, because the way the challenge-response is implemented, only the 8-digits account number is used during the signature. If the phishers are attacking a victim that they studied for long enough, which may be the case when attacking businesses, you could know which account they pay every month manually, and set up an account with the same number at a different bank (different sort code). The signature would be valid for both.

To be fair to Barclays, implementing the CAP fully, the way they did here, is actually more secure than what Ulster Bank (and I assume the rest of RBS Group) does, with an opaque “challenge” token. While this may encode more information, the fact that it’s opaque means there is no way for the user to know whether what they are signing is indeed what they meant to.

Now, these mitigations are actually good. They require continuous access to the card on request, and that makes it very hard for phishing to just keep using the site in the background after the user logged in. But they still rely on effectively a single factor. If someone gets a hold of the card and the PIN (and we know at least some people will write the real one on the back of the card), then it’s game over: it’s like the locks on my flat’s door: two independent locks… except they use the same key. Sure, it’s a waste of time to pick both, so it increases the chances a neighbour would walk in on wannabe burglars trying to open the apartment door. But there’s a single key, I can’t just use two separate keychains to make sure a thief would only grab one of the two, and if anyone gets it from me, well, it’s game over.

Of course Barclays knows that this is not enough, so they include a risk engine. If something in the transactions don’t comply with their profile of your activity, it’s considered risky and they require an additional verification. This verification happens to be in form of text messages. I will not suggest that the problem with these is with GSM-layer attacks, as that is still not (yet) in the hands of the type of criminals aiming at personal bank accounts, but there is at the very least the risk that a thieve would get a handle of my bag with both my card and my phone, so the only “factors” that are still in my head, rather than tied to the physical objects, are the (provided) PIN of the card, and the PIN of the phone.

This profile fitting is actually the main reason why I got frustrated with Barclays: since I had just opened the account, most of the transactions were all “exceptional”, and that is extremely annoying. This was compounded by the fact that my phone provider didn’t even let me receive SMS from the office, due to lack of coverage (now fixed), and the fact that at least for wires, the Barclays UI does not warn you to check your phone!

There is also the problem with the way Barclays handle these “exceptional transactions”: debit card transactions are out-and-out rejected. The Verified by Visa screen tells you to check your phone, but the phone will only ask you if it was your transaction or not, and after you confirm it is, it’ll ask you to “retry in a couple of minutes” — retrying too quickly will lead to the transactions being blocked by the processor directly, with a temporary card lock. The wire transfer one will unblock the execution of the wire, which is good, but it can also push the wire to after the cut-off time for non-“Faster Payments” wires.

Update (2017-12-30): since I did not make this very clear, I have added a note about this at the bottom of my new post, about the fact hat confirming these transactions only need you to spoof the sender, since the content and destination of the text message to send are known (it only has to say “Y”, and it’s always to the same service number). So this validation should not really count as a second factor authentication for a skilled attacker.

These are all the reasons for which I abandoned Barclays as fast as I could. Some of those are actually decent mitigation strategies, but the fact that they do not really increase security, while increasing inconvenience, makes me doubt the validity of their concerns and threat models.

UK Banking, Attempt 2: Fineco Bank

So after a fairly negative experience with Barclays I have been quickly looking for alternatives. Two acquaintances who don’t know each other both suggested me to look into Fineco, which is an Italian bank also operating in the United Kingdom. As you can tell from their website, their focus is on trading and traders, but turns out they also make a fairly decent bank in and by themselves.

Indeed, opening the account with Fineco has been fairly straightforward: a few online forms, uploading documents to their identity verification system (very similar to what Revolut does, except using an Italian company that I already knew and was a customer of), and then sending £1 from a bank account that is already opened in your name. I found the forms also technically well-designed, particularly the fact that all the “I agree to” checkboxes automatically trigger JavaScript downloads of PDFs with the terms agreed, whether you clicked to read the agreement or not — I guess it’s a «No excuse, you have a copy of this» protection on their side, but it also made it very easy to archive all the needed information together with everything else I keep.

I should note here that it looks like Fineco’s target audience is Italian expats in the UK explicitly. It is common for most services to “special case” their local country as the first entry in the country drop-down, and then add the rest in alphabetical order. In the case of Fineco, the drop-down started with United Kingdom and Italy for all the options.

One of the good thing about this bank being focused so much on trading is that the account is by default a multicurrency one, similar to TransferWise Borderless Account. Indeed, in addition to the primary Sterling account, Fineco sets you up right away with accounts in Euro, Swiss Francs, and US Dollars, all connected to the same login. And in addition to this, they offer you the choice between a Sterling debit card, an Euro credit card, or both (for a reasonable fee of £10/yr). The two debit cards that are connected to the respective currency accounts (and no card is available for Francs or Dollars), and there are no foreign transaction fees for the two. While Revolut mostly took care of my foreign transaction fees, it’s always good to have a local debit card with a much higher availability, particularly as ATM access for Revolut has a relatively low monthly limit.

One of the interesting details of these currency accounts is that they all have Italian IBAN and BIC (with a separate SWIFT routing number, of its parent group UniCredit). For the main Sterling account, UK-style Sort Code and Account Number are available, which make it a proper local account.

This is actually very useful for me: for the past four years I have been keeping my old Italian account open, despite it costing me a fair bit of money just in service, because I have been paying the utilities for my mother’s house. And despite SEPA Direct Debit having been introduced over two years ago, the utilities I contacted failed to let me debit a foreign (Irish) account. Since I left Ireland, and the UK is not a Euro country, I was afraid I would have to keep my Italian account open even longer, but this actually solved the problem: for Italian utilities, the account is a perfectly valid Italian account, as for the most part they don’t even validate the billing address.

An aside: Vodafone Italy and Wind 3 Italy are still attached to my Tesco credit card, which Tesco Bank assures me I can keep using as long as I direct debit it into an Euro account anywhere. They even changed my mailing address to my new apartment in London. Those two companies insist that they only ever accept Italian credit cards, but they accepted my Irish credit card just fine before; in the case of Vodafone, they have an explicit whitelist of the BIN (for whatever reason), while Wind couldn’t get a hold of the concept that the card is Irish at all. Oh well.

Speaking of direct debits and odd combinations, while I should have now managed to switch all the utilities, including the council tax, to direct debit on this new account, I had some trouble doing the setup with Thameswater, the water provider in my area. If I tried setting up the direct debit online, it would report Fineco’s sort code (30-02-48) as invalid. The Sort Code Checker provided by the category association says it’s valid and it works for everything beside the cheque and credit clearing (which is unneeded). I ended up having to call them and ask them to override the warning, but they have not sent me confirmation that they managed. This appears to be a common “feature” of Thameswater — oh and by the way their paper form to request the direct debit was a 404 response on their website. Sigh.

The UI of the bank (and of their app) is much more information-dense than any other bank I’ve ever used. It’s not a surprise when you consider that they their target audience is investors and traders. It does work well for me, but I can see how this would not be the most pleasing interface for most home users. The only feature I have been unable to find yet in the interface is how to set up standing orders – I contacted them this weekend and will see what they say – so for the moment I just set up a few months worth of rent as scheduled payments, which work just as fine for the moment.

The Android app supports fingerprint authentication (unlike Barclay’s) and does not come with its own NFC payment system. Unfortunately the debit cards also appear not to be enabled for Android Pay, which is a bit of a shame. They also don’t leverage the app to send notifications, but they do send free SMS for new offline¹ transactions happening on the debit card, which is great.

All in all, I may have found the bank I was looking for. It’s not a “cuddly” bank, but it appears to have what I need and it appears to work for my needs. With a bit of luck it will mean by Q1 I’ll be done with all the other bank accounts in both Ireland and Italy, and finally it’ll be simpler to keep an eye onto how much money I have and how much of it is spent around the place (although GnuCash does help a bit there). I’ll keep you all posted if this changes.

Confusingly enough, a transaction happening over the Internet is an “offline” transaction. The online/offline is referred to the chip for chip’n’pin cards. If the chip is connected to a terminal that is in turn connected to the bank, that’s an online transaction. Otherwise it’s offline. If you read or type the number manually, it’s also offline.
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UK Banking, Attempt 1: Barclays

You may remember that back in August, I tried opening a NatWest account while not living in the UK yet, and hit a stonewall of an impossible declaration being required by the NatWest employees. I gave up on setting up a remote account, and waited to open one once I got in the country. Since the Northern Irish account seemed to be good for all I needed to do (spoiler: it wasn’t), I decided to wait for the Barclays representative to show up on my official starting date, and set up a “Premier” account with them.

The procedure, that sounded very “special” beforehand, turned out to just be a “Here is how you fill in the forms on the website”. Then, instead of sending you to a local branch to get your documents copied and stamped (something that appears to be very common in the British Isles), they had three people doing the stamping on a pre-made copy of the passport. Not particularly special, but at least practical, right?

Except they also said it would take a few day for the card, but over a week to have access the online banking as they need to “send me more stuff”. The forms were filled in on Monday, set up by Tuesday, and the card arrived on Wednesday, with the PIN following on Thursday. At that point I guessed that what else they told me to wait for was a simple EMV CAP device (I did not realise that the Wikipedia page had a Barclays device as an example, until I looked to link it over here), and decided to not wait, instead signing up for the online banking using my Ulster Bank CAP device, which worked perfectly fine.

On the Friday I also tried installing the Barclays app on my phone. As you probably all noticed by now, looking for a new app from the Play Store is risky, particularly when banking is involved, so I wanted to get a link to it from their website. Turns out that the Barclays website includes a link to the Apple App Store page for their app, but not for the Google Play one. Instead, the Play Store badge image is not clickable. Instead the option they give you is to provide your phone number and they will send you a link to the app as a text message. When I tried doing so, I got an error message suggesting to check my connection.

The reason for the error became apparent with developer tools open: the request to send the SMS is sent to a separate app running on a different hostname. And that host has a different certificate than their main website, which at that point was expired for at least four days! Indeed, since then, the certificate has been replaced with a new one, an EV certificate signed by Entrust, rather than Symantec as they had before. I do find it slightly disconcerting that they have no monitoring on the validity of the certificates for all of their websites, as a bank. But let’s move on.

The online banking relies heavily on “PINSentry” (that is, CAP) but doing so it makes it fairly easy to set up most things, from standing orders to transfers and changes of address. Changing address to my new apartment was quite straightforward, and it all seemed good. The mobile app on the other hand was less useful at first. The main problem is that the app will refuse to do much for the first ten days, because they “set it up” for you. I assume this is a security feature to avoid someone to get access to your account and have the app execute the transactions instead of the website. Unfortunately it also means that the app is useless if your phone dies and you need to get a new one.

Speaking of the mobile app, Barclays supports Apple Pay, but they don’t support Android Pay, probably because they don’t have to. On Android, you can have a replacement app to provide NFC payment support, and so they decided to use their banking app for the payments as well. Unfortunately the one time I tried using it, it kept throwing errors, and asked me to login, with network connection. I don’t think I’ll use this again and will rather look for a bank that supports Android Pay in the future.

Up to here everything sounds peachy, right? The card arrived, it worked, although I only used it a handful times, to buy stuff at IKEA and to buy plane tickets where Revolut would push an extra £5 due to it running on the credit card circuit¹, rather than the debit card one.

Then the time came for me to buy a new computer, because of the one ““lost”” by the movers. Since Black Friday was around the corner, and with it my trip to Italy, I decided to wait for that and see if anything at all would come discounted. And indeed Crucial (Micron) had a discount on their SSDs, which is what I ended up ordering. Unfortunately, my first try to order ended up facing a Verified by Visa screen that, instead of trying to get more authentication factors for myself, just went on to tell me the transaction failed, and to check my phone for messages.

Indeed, my phone received two text messages: one telling me that a text message would be sent to confirm a transaction, and one asking me whether the transaction was intentional or not. After confirming it was me doing the transaction, I was responded to try the transaction again in a few minutes. Which I did, but even if this went through the Verified by Visa screen, PayPal refused the payment altogether. Trying to order directly through Crucial without using PayPal managed to get my order through… except it was cancelled half an hour later because Crucial could not confirm the details of the card.

At this point I tried topping up my Revolut account with the same card, and… it didn’t go well either. I tried calling them then, and they could only tell me that the problem was not theirs, and that they couldn’t even see the requests from Revolut, and they didn’t stop any other transactions, giving the fault to the vendor. The vendor of course blamed the bank, and so I got stuck in between.

Upon suggestion from Revolut on Twitter, I tried topping up by UK bank transfer. At first I got some silly “security questions” about the transfer (“Are you making this transfer to buy some goods? Is someone on the phone instructing you to make this payment?” and so on), but when it supposedly completed, I couldn’t see it in the list of transactions, and trying again would lead to a “technical problem” message. Calling the bank again has been even more frustrating because the call dropped once, and as usual the IVR asked me three times for my date of birth and never managed to recognize it. It wasn’t until I left the office, angry and disappointed, that the SMS arrived telling me to confirm if it was really me requesting the transfer…

The end result looked like Barclays put a stricter risk engine in place for Black Friday which has been causing my payments to not go through, particularly not from the office. Trying later in the evening from my apartment (which has a much more clear UK-based geolocation) allowed the orders to go through. You could say that this is for my own protection but I do find this particularly bothersome for one reason in particular: they have an app!

They could have just as easily sent a push notification to my phone to confirm or refuse the transaction, instead of requiring me to be able to receive text messages (which is not a given, as coverage is not perfect particularly in a city like London), in addition to me knowing my access code, having my bank card with me, and knowing its PIN.

At the end of the day I decided that Barclays is not the bank for me, and applied to open an account with Fineco which is Italian and appears to have Italian expats in the UK as their target market. Will keep you posted about it.

But I found out just the other day that the new virtual cards from Revolut are actually VISA Electron, rather than MasterCard. This makes a difference for many airlines as VISA Electron are often considered debit cards, due to the “Electronic Use Only” limitation. I got myself a second virtual card for that and will see how that goes next time I book a flight.
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Opening a bank account in the UK

As I foretold in the post where I announced my move, here is the first of the rants with the problems of moving to the UK.

The banking system of the UK, which is already a complicated pain in most countries, appears to be even more complicated. One of the problem is that almost all debit and credit cards have a nearly 3% foreign transaction fee. For those wondering what foreign transaction fees are, they are fees levied on payment executed using a currency different from the “native” currency of the card/account. The term “foreign” is often a misnomer in Europe since within Eurozone transactions may be “foreign” but there is no fee connected, since it’s a single market. Of course this does not apply for UK accounts, as the Sterling is only used in the one country.

This makes it worse than the equivalent 1.75% foreign transaction fee of my Tesco Credit Card, since that would not apply for any expenses incurred in most of the European continent. So I really need to find a good alternative to that.

Of course, there already is Revolut, which I spoke of before. This provide a bank account equivalent and a prepaid MasterCard that has no foreign transaction fees. Unfortunately this has a couple of limitations. The first is that this is a prepaid card, rather than a credit card. And this matters.

In particular, hotels and car rentals (though I don’t have a license, which means I don’t use the latter) generally require you to use a credit card, because they pre-authorize a higher amount of money than you’re meant to pay at the end. if you were to do that with Revolut, you’ll end up with more money locked in for a number of days until the complete charge happens. Since at least in one case I had multiple hundreds euro locked in a pre-authorization of a credit card for two weeks, it’s not the kind of experience I would like to repeat out of habits. Most hotels would allow you to provide a different credit card for deposit and payment, that would mean I could use a normal credit card at check-in time, and then just settle the account with Revolut, but you can imagine that this is not really very handy, particularly at busy hotels during conferences, or if I’m checking out in a hurry because I’m late for my flight.

So I started looking for various options of 0% foreign transaction fee cards, and I identified two cards in particular that fit my requirements, one from Barclays and one from NatWest. Both are premium cards that cost extra money, or require you to have a more expensive bank account, but a quick calculation shows me that I will probably make up the difference in price reasonably easily. And between the two, I focused on the NatWest, because it is part of the same group (RBS) as my current Irish bank, and I was hoping that they would make signing up for it easier.

I couldn’t be more wrong. Even though I’m a customer of Private Banking at Ulster Bank (ROI), they couldn’t help me to set up a UK account at all. It took them one full month to find the name of a colleague of theirs I could contact in London, who then pointed me at the Global Employees service that was supposed to help me. A month after that, I still have no bank account in London, because the process requires my employer to provide a document stating not only my transfer salary, but in no irrevocable terms that the transfer will happen, and how much time I’m meant to spend in the UK.

This is clearly impossible. First of all, since my employer does not own me, I can always change my mind, and leave the company before my transfer finalizes, so they will never declare that there is no chance I would do that (despite the fact that I don’t want to do that and I want the transfer to go through). Secondly, nobody can tell how much time I’ll be spending in the UK. It may be that I’ll live there for the rest of my life, or it may be that I will leave before the two years from Article 50 terminate, because they would make my life impossible, or the crashed economy would make it infeasible for me to keep living in the country.

Both declarations are not really possible to provide, and the fact that the assigned contact has been contacting my HR department multiple times even though they told her twice at least that I’m the only one who can request that information have at the end ticked me off enough that I might try once to escalate this to a supervisor, but otherwise will just stop considering NatWest a feasible banking option, because the last thing I want to do is dealing with drones.

Europe and USA: my personal market comparison

While I have already announced I’m moving to London, I don’t want to give the idea that I don’t trust Europe. One of my acquaintances, an eurosceptic, thought it was apt o congratulate me for dropping out of Europe when I announced my move, but that couldn’t be farthest from my intention. As I said already repeatedly now, my decision is all to be found in my lack of a social circle in Dublin, and the feelings of loneliness that really need to be taken care of.

Indeed, I’m more than an Europeist, I’m a Globalist, in so far as I don’t see any reason why we should have borders, or limitations on travel. So my hope is not just for Europe to become a bigger, more common block. Having run a business for a number of years in Italy, where business rules are overly complicated, and the tax system assumes that you’re a cheater by default, and fines you if you don’t invoice enough, I would have seriously loved the option to have an “European business” rather than an “Italian business” — since a good chunk of my customers were based outside of Italy anyway.

This concept of “European business”, unfortunately, does not exist. Even VAT handling in Europe is not unified, and even though we should have at least a common VAT ID registration, back when I set up my business, it required an explicit registration at the Finance Ministry to be able to make use of the ID outside of Italy. At the time, at least, I think Spain also opted out to registering their VAT IDs on the European system by default. Indeed that was the reason why Amazon used to the run separate processes for most European business customers, and for Italian and Spanish customers.

Speaking of Amazon, those of you reading me from outside Europe may be surprised to know that there is no such thing as “Amazon Europe”, – heck, we don’t even have Amazon Ireland! – at least as a consumer website. Each country has its own Amazon website, with similar, but not identical listings, prices and “rules of engagement” (what can be shipped where and for which prices). For the customers this has quite a few detrimental effects: the prices may be lower in a country that they may not usually look at the store of, or they may have to weight the options based on price, shipping restrictions and shipping costs.

Since, as I said, there is no Amazon Ireland, living in Dublin also is an interesting exercise with Amazon: you may want to order things from Amazon UK, either because of language reasons, or simply because it requires a power plug and Ireland has the same British plug as the UK. And most of the shipping costs are lower, either by themselves, or because there are re-mailers from Northern Ireland to Dublin, if you are okay with waiting an extra day. But at the same time, you’re forced to pay in GBP rather than Euro (well, okay not forced, but at least strongly advised to — Amazon currency conversion has a significantly worse exchange rate than any of my cards, especially Revolut) and some of the sellers will actually refuse to send to Ireland, for no specific reason. Sometimes, you can actually buy the same device from Amazon Germany, which will then ship from a UK-based storehouse anyway, despite the item not being available to send to Ireland from Amazon UK. And sometimes Amazon Italy may be a good 15% cheaper (on a multiple-hundreds euro item) than Amazon UK.

So why does Amazon not run a global European website? Or why doesn’t an European-native alternative appears? It looks to me like the European Union and its various bodies and people keep hoping to find European-native alternatives to the big American names all the times, at least on the papers, probably in the hope of not being tied to the destiny of American with what comes down in the future, particularly given how things have gone with the current politics on all sides. But in all their words, there does not appear to be any option of opening up opportunities for creating cross-Europe collaboration on corporations.

The current situation of the countries that make up Europe and the States that make up the USA, is that you are just not allowed to do certain types, or levels of business in all the countries without registering and operating as a company in that country. That is the case for instance of phone operators, that get licenses per country, and so each operates independent units. This becomes sometimes ludicrous because you then have Vodafone providing services in about half of Europe, but with such independent units that their level of competence for instance on security and privacy is extremely variable. In particular it looks like Vodafone Italy still has not learnt how to set up HTTPS correctly, and despite logging you in a TLS-encrypted connection, it does not set the cookie as secure, so a downgrade is enough to steal authentication cookies. In 2017.

If you remember, when I complained about the half-baked roaming directive results, I have suggested that one of my favourite options would be to have a “European number” — just give me a special “country code” that can be replaced by any one member’s code, and the phone number is still valid, and appears local. This is important because, despite the roaming directive allowing me to keep my regular Irish (for now) SIM card on my phone while travelling to either UK or Finland, it prevents me from getting a local phone number. And since signing up for some local services, including sometimes free WiFi hotspots from various cafes and establishment, relies on being able to receive a local SMS, it is sometimes more of an hindrance than a favour.

Both Revolut and Transferwise, as well as other similar “FinTech” companies have started providing users with what they call “borderless” accounts: Euro, Sterling and Dollar accounts all into one system. Unfortunately this is only half of the battle. Indeed, while I welcome in particular Revolut’s option of using a single balance that can provide all the currencies in a single card is a great option. But this only works to a point, because these accounts are “special” — in particular the Revolut Euro account is provided with a Lithuanian IBAN, but a UK BIC code, which makes a few system that still expect both throw up. And this is not even going into how SEPA Direct Debit just does not work: my Italian services can only debit an Italian bank, my Irish services can only charge an Irish bank, and my one French service can only charge a French bank. Using credit cards via VISA has actually better success rate for me, even though at least Vodafone Italy can only charge a specific one of my credit cards, rather than any of them. Oh yeah and let’s not forget the fact that you just can’t get your salary paid into a non-Irish bank account in Ireland.

Banks in Europe end up operating as country-wide silos, to the point that even Ulster Bank Republic of Ireland cannot (at least, can no longer) provide me with an Ulster Bank Northern Ireland bank account — or to be precise, cannot act on my already-existing foreigner bank account that is open in Northern Ireland. And because of all these things happening, the moment I will actually move to London I’ll have to figure out how to get a proper account there. I’m having trouble right now opening an account there already not because I don’t have the local tax ID but because they need proof of employment from a UK company, while I’m still employed by the Irish company. Of the same multinational. Oh my.

You could say that banks and telcos are special cases. They are partial monopolies and there are good reasons why they should be administered on a country-by-country basis. But the reality is that in the United States, these things are mostly solved — plenty of telco stuff is still pretty much local, but that’s because of network access and antitrust requirements, as well, to a point, the need of building and servicing local infrastructure (a solution to this is effectively splitting the operation of the telco from the provider of physical infrastructure, but that comes with its own problems). But at the very least, banking in the US is not something that people have to deal with when changing State, or having to work with companies of other states.

These silos are also visible to consumers in other forms, that may not be quite obvious. TV, movie and similar rights are also a problem the same way. Netflix for instance will only show a subset of the programming they have access to depending on the country you’re currently located in. This is because, except for the content they produce themselves, they have to acquire rights from different companies holding them in different countries, because different TV networks would already have secured rights and not want to let them broadcast in their place.

I brought up this part last, despite being probably the one most consumers know or even care about, because it shows the other problem that companies trying to build up support for Europe, or even to be started as Europe-native companies, have to deal with. TV networks are significantly more fragmented than in the USA. There is no HBO, despite Sky being present in a number of different countries. There is nothing akin to CNN. There are a number of 24-hours news channels that are reachable over more-or-less freeview means, but the truth is that if you want to watch TV in Europe, you need a local company to provide you with it. And the reason is not one that is easy to solve: different countries just speak different languages, sometimes more than once.

It’s not just a matter of providing a second channel in a different language: content needs to be translated, sometimes adapted. This is very clear in video games, where some countries (cough Germany cough) require cutting content explicitly, to avoid upsetting something or someone. Indeed, video games releases for many platforms, in the past at least including PC, but luckily it appears not the case nowadays, end up distributing games only in a subset of European languages at a time. Which is why I loathed playing Skyrim on the PlayStation 3, as the disk only includes Italian, French and German, but no English, which would be my default option (okay, nowadays I would probably play it in French to freshen up my understanding of it).

For American start-ups – but this is true also for open source project, and authors of media such as books, TV series or movies – internationalization or localization are problems that can be easily shelved for the “after we’re famous” pile. First make the fame, or the money, then export and care about other languages. In Europe that cannot possibly be the case. Even for English, that in the computer world is still for now the lingua franca (pun intended), I wouldn’t expect there would be a majority of users happy to use a non-localized software, particularly when you consider as part of that localization the differences in date handling. I mean, I started using “English (UK)” rather than the default American for my Google account years ago because I wanted a sane date format in Gmail!

All of this makes the fragmented European market harder for most projects, companies, and even ideas to move as fast as the American or (I presume, but have not enough detail about it) the Chinese market, in which a much wider audience can be gained without spending so much effort to deal with cross-border bureaucracy and cross-culture porting. But let me be clear, I do not think that the solution is to normalize Europe onto a single language. We can’t even do that for countries, and I don’t think it would be fair to anyone to even consider this. What we need is to remove as many other roadblocks as it’s feasible to remove, and then try to come up with an easier way to fund translation and localization processes, or an easier way to access rights at a Union level rather than on a country-by-country basis.

Unfortunately, I do not expect that this is going to happen in my lifetime. I still wish we’ll end up with a United Federation of Planets, at the end of the day, though.