Country You Go, Banking You Find

If you have been following this blog for a long enough time, you probably know I “enjoy” writing about banks, or at least I end up doing that quite a lot, whether I enjoy it or not. Part of that it’s because I still find myself reason about money the way I did when I had my own company, and part of that because, well, I have opinions of what good banking looks like to me. Part of the reason why I have that opinion, is that I have seen a lot of what good banking is not, and it gives me material to keep writing.

Of course, I’m also lucky because I have at this point seen how banking works (or fails to) in multiple countries, and I can at least compare the point of view of an user in those contexts. I don’t have any idea how this works from the other side of the fence of course, as I have (thankfully) never worked for a financial institution. Not that I haven’t considered that (hey, I live in London after all), but then I remember that I would probably be finding that things are even more screwed up than I can see from the outside, and decide to put my savings into gold bullions — as it stands, I just keep getting depressed by everything tech, and been considering turning to opening a coffee store and bakery.

And I do mean it, when I say that different countries have… pretty much nothing in common when it comes to banks and banking — costs, services, expected behaviour and contacts. Some of it appears to be so entrenched culturally, that suggesting changing something would be probably considered heresy.

Italy

In Italy it is (or at least was) common for current accounts to have a monthly fee, although somewhat nominal, and this usually doesn’t include much more than a bank card. I used to have a cheques book — but only because at the time, my family used to use those for a lot of things. I think I only ever used once, and I’m not remembering what for.

Outbound wires were expensive back when I was using them, raising in price over time, and differed whether I would be wiring to the same bank or to a different one. Cashing in cheques was free, as long as they were in the same currency, while receiving inbound wires depended on both currency and source of the wire — when I was a contractor working for Google on ChromeOS, the invoice payments arrived in dollars, but from within Europe, and they didn’t cost me enough “to notice”; when I received the payments from another customer, they dropped hundreds of euro on the bank’s coffers — which is why I am happy that TransferWise exists now.

While Italy had early federated ATMs that allows you to access your money at any time, there is one thing that I have noticed is not common elsewhere: accessing ATMs outside of your bank’s own is generally a paid option. And I don’t mean that in the USA sense (that I’ll get to later) of ATMs that charge you a fee to use them — I mean that the bank will charge you a fee to use an ATM of a competitor. This got to the ironic part where, when visiting Italy after moving to Dublin, it was cheaper for me to use an Irish debit card to get some cash out of a machine, because my Italian bank didn’t have any ATM in an easily-reachable place for me to use. This might be annoying to me, but it’s a significant pain for people like my mother who don’t drive, and that need to be driven to another town to find a free machine.

Another interesting note about Italian bank cards is that, up until very recently, were not usable online. I think nowadays most banks have at least a paid option to give you a normal Visa or MasterCard debit card, but for a long time you ended up with cards that couldn’t be used online at all — even when they had 19 digits on them for the Maestro circuit. Indeed, back when I hit these issues I did ask whether I should have gotten a VPay (Visa’s answer to Maestro, before Visa Debit), but I was told that that would have been less accepted in Italy itself.

Credit cards are still uncommon — before bank cards could be used online, the vast majority of people I knew who made purchases on eBay would be using pre-paid cards (Visa Electron or MasterCard Debit), that you topped up for a fee. The most common one at least back then was issued by the Italian post (Poste Italiane), under the name PostePay — it was also one of the biggest scam targets for many, as many eBay sellers would pretend that the PostePay logo appearing on the announcements meant that they would pay directly to a pre-paid card, rather than through PayPal – a great scam, since eBay can’t see the money changing hands, and won’t protect you from fraudsters. At least they seem to have abandoned chip’n’sign.

On the other hand, direct debits have been a thing for a long while… although that became an issue when SEPA Direct Debit became a thing. Indeed, the old Italian direct debit system was advanced enough (and similar enough to the SEPA DD Core specifications) that it appears most banks and operators just re-used the same infrastructure, just changing the size of the fields used as parameters. This worked well as long as you were not trying something as silly as direct-debiting an Italian utility to an Irish bank account or vice-versa. And I know that because I tried.

To be honest, though, not everyone is using direct debits still. Before my parents split up and I started being the one paying for the bills, my father insisted on not using direct debits at all, and instead paid the bills at the post office — and since a number of times the bills arrived past due, we ended up paying quite a lot of money in interests. The pay-to-the-post-office thing is also a fairly standard concept of Italian culture, at least up to the ’90s. I don’t think any of my age-peers are doing that anymore, particularly because post offices are pain to get to: in many town you can only get to them in the morning, and not over the weekend.

Indeed we got to the point that a lot of banks offer (or at least used to offer) a postal payment service so you could put in your request for a postal payment online… and then receive the paper receipt by snail mail, because what they pretty much did was forwarding the request to a local post office, with batch-printed money order forms!

Ireland

Given the fact that Ireland is part of the EU, and thus SEPA, you may think that things are mostly the same between Ireland and Italy. You would be wrong.

First of all, bank accounts in Ireland are a mess to choose from, because none provides any decent service. The one account I was given when I landed, through Google on AIB, was one of the most commonly used one, and required €2500 in the account at every single day of the quarter, or otherwise it would charge you for each operation you took… including received wires. Note that this is a daily minimum and not an average-over-the-quarter, like the equivalent would be in Italy. And goes without saying that it’s a no-interests account, so you need to put some money “to sleep” to avoid being charged through the nose.

The last account I settled on was an Ulster Bank premium service account at €36/month. It actually paid for itself in terms of a lot less time spent dealing with straightening things out (after a horrible situation with KBC, I really wanted someone that could do that stuff for me). And it came with a secondary Sterling account (via Ulster Bank Northern Ireland — I still have that account!), as well as a savings account and credit card.

Thankfully, Ireland abandoned the country-limited bank card system called Laser before I immigrated, in favour of using more standard Visa Debit cards. With the exception of KBC that, as far as I know, was the only issuer of MasterCard Debit bank cards. A number of other non-bank services issued MasterCard Debit cards: Revolut, Curve, and An Post’s money exchange services — the latter being ironic given that An Post was the only place I knew of that did not accept MasterCard Debit cards, only Visa Debit.

As far as I know, none of the big banks issue bank cards that have fees to take money out of a non-bank-owned ATM, to the point that I never bothered to go anywhere else but the two Spar supermarkets around my place, when I needed cash.

Direct debit is the norm, although some system of postal payment is still present, and a number of bills would have the details printed on the bottom. Ironically, it’s because of that, that once I leaked my own credit card number. Overall, the Irish banking system appears to me fairly straightforward, with most payment being executed electronically, and widespread card acceptance.

An interesting note about direct debits is that, despite nominally being part of the SEPA Direct Debit Core system, they appear to be vastly region-locked. I had to threaten Tesco Bank (before they sold their business to AvantCard) to bring it up with the regulator when they refused to let me direct debit an account with a non-Irish IBAN, and Ulster Bank (Ireland) didn’t budge even then. A few of the utilities, also, appear to still be unable to change the direct debit dynamicall: you instead choose how much you want to pay, and then they will issue you a statement to show how much in credit/debit you are.

What I would say is still Ireland’s biggest problem when it comes to banking is the lack of competition. It’s the reason why Revolut actually works well there: there is no high-street competition and those who are used to different level of service will go straight to FinTech offers. My impression is that the reason for the lack of competition is that it relates to the way folks stick to the bank their parents used, something that I have encountered in Italy a lot as well.

England

I nearly titled this section United Kingdom, but then I realized that there are a few things that don’t quite work the same way throughout the country. Which is something that became very apparent when I transfered from Dublin to London: in the Workday interface, when it asked me for a “UK bank account”, I provided an Ulster Bank (NI) account number, and that had me wait for another two weeks (with a roundtrip to payroll to change my account on file), because Northern Irish bank accounts are not compatible with most English payment systems, it appears.

On the bright side, the competition between banks is fierce, although there are a number of “branded” accounts that consumers don’t always notice are operated by the same institution. There are also free-by-mandate bank accounts made available by a number of well-known banks, although that is becoming an increasingly limited space.

In my experience, this is one of the most consumer-friendly banking system, with payments between accounts, whether private or business, being free or nearly free, and direct debits being ubiquitous. The best of all is that so-called “Faster Payments” transfers appear on the credited accounts nearly instantaneously, in a matter of minutes if not seconds, without any surcharge. Italy does have similar fast payments, but in their case, it usually comes at an additional cost.

Otherwise, the English system looks a lot like the Irish one, at least for now. Bank cards are issued usually on the VISA network, although I know of at least one bank issuing Mastercard debit cards. More recent ones stopped providing the embossed digits for the fully-offline usage, which is fair as the only place that I saw using those in the past few years has been a hotel in Tokyo.

Credit cards are an intersting story here. They are not expensive, honestly, but they are very, shall we say, selective. If you just moved into the country, you’re not going to get a credit card for a number of months, which is again similar to Ireland, although I did manage to get one relatively fast with American Express (which, of course, is not cheap by itself). Once you’re allowed to get a card, the price of it is usually recovered by cashback. Or you may choose to get one of the cards that cost nothing but don’t get a cashback at all. Personally, I decided to get two cards: Santander’s with generic cashback, and Amazon’s (by NewDay) with Amazon-only, points-based cashback; the former is paid back by the regular payments we have on it, and the latter was free, and adds up a few scores of pounds a year.

Compared to the time I spent there, the one thing that England appears to have that Ireland missed (and, as far as I know, so does Northern Ireland), is the concept of “retailer offers”. For those unaware of these, many banks include “selected offers” with their bank accounts or credit cards, which you usually need to explicitly opt into. The way you do that, is usually through their normal mobile banking app (or website), although I think a couple of banks have separate apps for those.

These offers are usually in the form of anything between 2% and 10% cashback for purchases over a certain amount up to a maximum. Depending on the bank, these are offered either in actual cash, additional “points”, or separate “rewards balance”. This is where things get interesting and complicated, because you end up having to keep in mind which card/account has a certain offer, and you end up then deciding which one to use to pay at a certain place depending on that.

To make the calculation more complicated, the rules are also different between these. My bank (Santander) has a single set of offers on the account, which applies to debit and credit cards alike. And if the offer is for “one-time”, it is consumed as soon as either me or my wife use the card for an eligible transaction. On the other hand, American Express applies the offers on the card, so both of us need to check our app for valid offers, and one-time offers can be used once per card (very useful for offers that instead of a percentage, give you back a fixed amount, like the yearly “Shop Small” week — fun fact: in the beforetimes, it confused a lot of waiters when we would decide to split the bill, particularly when our wedding rings are clearly visible). But at the same time, the banks’ offers can be combined with Airtime Rewards, so you win some, lose some.

Direct debits are another area that includes some calculation space, and some similarities with Ireland. The number of utilities using fixed direct debits is significantly lower, but it’s not entirely uncommon either. On the other hand, a few banks (including Santander) do apply cashback to (certain) direct debits. Or they may decide to give you perks as long as you have direct debits set up. This provides a gameable system: particularly when accounts suggest you can get perks as long as you have two direct debits, you can take a look at your periodic payments and, if they do allow PayPal, you can use then turn a periodic payment into a direct debit. For instance, you may have Spotify and Netflix as those direct debits.

My short version of an impression of the English banking system is of one that is perfect if you are a fan of strategy games or RPGs where you can spend a day just calculating the possible weapon/armor/enhancement combos. You can then decide to squeeze all possible combining offers, get the best exchange rate for each purchase, and so on. If you are not into these trickeries and calculations, well, you can still get a pretty much no frills account and be happy knowing that they are not really mugging you of a lot of money.

What is possibly the most annoying thing, is that the security of logging into the online banking options is fairly horrible. England (and Ireland too) is the home of “Please give us your 3rd, 7th, 38th character of your password” requests, which are horrible security theatre, and add nothing in terms of security, since transparent phishing proxies are not uncommon at all.

United States

For this country, I only have a passing knowledge of the banking system, since I have never lived there proper, but I do have a bank account, so I have experienced some of the workflows, and I can compare notes with a few people I know that have lived there.

The first thing everybody will tell you about US banking system, is that it still heavily relies on paper cheques. Yes, the same cheques that had the main spotlight in movies such as Catch Me If You Can (which in my opinion is a great movie, by the way). What has changed since the time of that movie is that there’s a lot of “virtual process” around cheques in the USA, something that I don’t think other countries have done, for good or bad.

So for instance, I have received myself a few US cheques (mostly as rebates for goods I bought in the USA); to cash them I didn’t have to wait for my next trip to the country: my bank (Chase) allows me to scan the cheques front and back with their mobile phone app and they consider that good enough that I don’t have to present the original to any one at all. I could literally take the cheques and frame them, if they had an emotional meaning for me (they don’t, and I didn’t). And I’m told that on the other hand, you can ask your bank to print out a cheque for you via their online banking, and they will post it out for you just fine. I’m sometimes scared by this strange paradox of still using cheques, but beside being reminded of the William Gibson quote («The future is already here, it’s just not very evenly distributed»), I can only shake my head and thank the luck that “my” banking system doesn’t require me to deal with this.

Electronic payment in stores appear to be also unevenly distributed. While I had no issue with paying by card in most places I’ve been to, in either California, Pittsburgh, or New York, there appears to be still a lot of services that are cash only. One of them, ironically, in Mountain View: Dana Street Coffee Roaster serves really good coffee, but I don’t usually keep cash at hand (except if I’m going to The New Mongolian Barbeque), which is why I usually just hang out at Red Rock unless I’m with a local.

There is also the elephant in the room, that only recently the United States have introduced chip-and-pin for points of sale around the country, and the last time I was there, a lot of them still didn’t support it. The reason for that appears to be related to the way point of sale devices are handled in the USA, where a lot of vendors actually bought the terminals, rather than renting them from a bank or payment processor. This is unlike Europe, where as far as I know, most banks will sign you up as a customers and provide you a leased terminal, which they take responsibility for updating and replacing as needed, which allowed the deployment of new technologies such as chip cards (with either PIN or signature) and NFC payments in a much shorter order than across the pond.

Payments, particularly consumer to consumer, are a mess. The whole concept of direct bank transfers is not something you can consider in the USA, with wire transfers costing $25 at both ends of the transaction (depending on banks and other rules). This may give a bit of context on why Silicon Valley appears to want to reinvent payments every year, with new methods to “attach money” through all kind of messaging platforms, and why people still attach themselves at the idea of bitcoin solving problems related to instantaneous transfers among peers.

On the other hand, online banking systems appear to be a lot more sensible when it comes to login security than European banks. Chase even supports proper password managers in their login both on the website and on the mobile app, which is unheard of in the countries I lived in here in Europe. And they even will use email for OTP rather than the silly SMS. It also appears that retailer offers exist in the USA as well. Chase is always trying to sell me a Dropbox subscription, with a 15% off (and TurboTax, although I don’t actually owe taxes in the US so that would not be particularly useful).

Conclusions

This is by no means a complete and detailed comparisons of all these banking systems. It is most definitely biased and partial, particularly given, as I said, I have not lived in the United States, but only experience it as a passerby.

I have not covered the different credit score systems of these countries (among other things because I do not have a credit score in the USA at all), nor I have talked about how to get loan or mortgages (the latter of which, I never tried getting anyway). All of these are extremely important components of a banking system and they, more than the services to consumers, should be considered when debating its health.

I just find this particular field interesting, and I think that reading more about other countries banking systems might get people to pay more attention to the horrible technological solutions they come up with. Nobody cares about cryptocurrencies for money transmission in Europe because SEPA means you can transfer money for fees that are pretty much nothing by comparison with your average crypto transaction. Noone had more than a passing interest in “attaching money to Gmail” outside of the USA.

I honestly open that in the future I’ll get to know more banking systems. It would mean indeed moving again, but I think it would be interesting to see different parts of the world, too.

I finally have my first Irish credit card, here’s why

Living on Credit Cards
Photo credit: Images_of_Money

Almost exactly 18 months after moving to Ireland I’m finally bound to receive my first Irish credit card. This took longer than I was expecting but at least it should cover a few of the needs I have, although it’s not exactly my perfect plan either. But I guess it’s better start from the top.

First of all, I have already credit cards, Italian ones that as I wrote before, they are not chip’n’pin which causes a major headache in countries such as Ireland (but UK too), where non-chip’n’pin capable cards are not really well supported or understood. This means that they are not viable, even though I have been using them for years and I have enough credit history with them that they have a higher limit than the norm, which is especially handy when dealing with things like expensive hotels if I’m on vacation.

But the question becomes why do I need a credit card? The answer lies in the mess that the Irish banking system is: since there is no “good” bank over here, I’ve been using the same bank I was signed up with when I arrived, AIB. Unfortunately their default account, which is advertised as “free”, is only really free if for the whole quarter your bank account never goes below €2.5k. This is not the “usual” style I’ve seen from American banks where they expect that your average does not go below a certain amount, it does not matter if one day you have no money and the next you have €10k on it: if for one day in the quarter you dip below the threshold, you have to pay for the account, and dearly. At that point every single operation becomes a €.20 charge. Including PayPal’s debit/credit verification, AdSense EFT account verification, Amazon KDP monthly credits. And including every single use of your debit card — for a while, NFC payments were excluded, so I tried to use it more, but very few merchants allowed that, and the €15 limit on its use made it quite impractical to pay most things. In the past year and a half, I paid an average of €50/quarter for a so-called free account.

Operations on most credit cards are on the other hand free; there are sometimes charges for “oversea usage” (foreign transactions), and you are charged interests if you don’t pay the full amount of the debt at the end of the month, but you don’t pay a fixed charge per operation. What you do pay here in Ireland is stamp duty, which is €30/year. A whole lot more than Italy where it was €1.81 until they dropped it on the floor. So my requirements on a credit card are to essentially hide as much as possible these costs. Which essentially mean that just getting a standard AIB card is not going to be very useful: yes I would be saving money after the first 150 operations, but I would be saving more to save enough to keep those €2.5k in the bank.

My planned end games were two: a Tesco credit card and an American Express Platinum, for very different reasons. I was finally able to get the former, but the latter is definitely out of my reach, as I’ll explain later.

The Tesco credit card is a very simple option: you get 0.5% “pointback”, as you get 1 Clubcard point every €2 spent. Since for each point you get a €.01 discount at end of quarter, it’s almost like a cashback, as long as you buy your groceries from Tesco (that I do, because it’s handy to have the delivery rather than having to go out for that, especially for things that are frozen or that weight a bit). Given that it starts with (I’m told) a puny limit of €750, maxing it out every month is enough to get back the stamp duty price with just the cashback, but it becomes even easier by using it for all the small operations such as dinner, Tesco orders, online charges, mobile phone, …

Getting the Tesco credit card has not been straightforward either. I tried applying a few months after arriving in Ireland, and I was rejected, as I did not have any credit history at all. I tried again earlier this year, adding a raise at work, and the results have been positive. Unfortunately that’s only step one: the following steps require you to provide them with three pieces of documentation: something that ensures you’re in control of the bank account, a proof of address, and a proof of identity.

The first is kinda obvious: a recent enough bank statement is good, and so is the second, a phone or utility bill — the problem starts when you notice that they ask you for an original and not a copy “from the Internet”. This does not work easily given that I explicitly made sure all my services are paperless, so neither the bank nor the phone company sends me paper any more — the bank was the hardest to convince, for over an year they kept sending me a paper letter for every single wire I received with the exception of my pay, which included money coming from colleagues when I acted as a payment hub, PayPal transfer for verification purposes and Amazon KDP revenue, one per country! Luckily, they accepted a color printed copy of both.

Getting a proper ID certified was, though, much more complex. The only document I could use was my passport, as I don’t have a driving license or any other Irish ID. I made a proper copy of it, in color, and brought it to my doctor for certification, he stamped and dated and declared, but it was not okay. I brought it to An Post – the Irish postal service – and told them that Tesco wanted a specific declaration on it, and to see the letter they sent me; they refused and just stamped it. I then went to the Garda – the Irish police – and I repeated Tesco’s request; not only they refused to comply, but they told me that they are not allowed to do what Tesco was asking me to make them do, and instead they authenticated a declaration of mine that the passport copy was original and made by me.

What worked, at the end, was to go to a bank branch – didn’t have to be the branch I’m enrolled with – and have them stamp the passport for me. Tesco didn’t care it was a different branch and they didn’t know me, it was still my bank and they accepted it. Of course since it took a few months for me to go through all these tries, by the time they accepted my passport, I needed to send them another proof of address, but that was easy. After that I finally got the full contract to sign and I’m now only awaiting the actual plastic card.

But as I said my aim was also for an American Express Platinum card. This is a more interesting case study: the card is far from free, as it starts with a yearly fee of €550, which is what makes it a bit of a status symbol. On the other hand, it comes with two features: their rewards program, and the perks of Platinum. The perks are not all useful to me, having Hertz Gold is not useful if you don’t drive, and I already have comprehensive travel insurance. I also have (almost) platinum status with IHG so I don’t need a card to get the usual free upgrades if available. The good part about them, though, is that you can bless a second Platinum card that gets the same advantages, to “friends or family” — in my case, the target would have been my brother in law, as he and my sister love to travel and do rent cars.

It also gives you the option of sending four more cards also to friends and family, and in particular I wanted to have one sent to my mother, so that she can have a way to pay for things and debit them to me so I can help her out. Of course as I said it has a cost, and a hefty one. Ont he other hand, it allows you one more trick: you can pay for the membership fee through the same rewards program they sign you up for. I don’t remember how much you have to spend in an year to pay for it, but I’m sure I could have managed to get most of the fee waived.

Unfortunately what happens is that American Express requires, in Ireland, a “bank guarantee” — which according to colleagues means your bank should be taking on the onus of paying for the first €15k debt I would incur and wouldn’t be able to repay. Something like this is not going to fly in Ireland, not only because of the problem with loans after the crisis but also because none of the banks will give you that guarantee today. Essentially American Express is making it impossible for any Irish resident to get a card from them, and this, again according to colleagues, extends to cardholders in other countries moving into Ireland.

The end result is that I’m now stuck with having only one (Visa) credit card in Ireland, which had feeble, laughable rewards program, but at least I have it, and it should be able to repay itself. I’m up to find a MasterCard card I can have to hedge my bets on the acceptance of the card – turns out that Visa is not well received in the Netherlands and in Germany – and that can repay itself for the stamp duty.