Patzer wrote:WairereRose wrote:I don't get why the banks want you to use the debit card.
In the US, there are two transaction processing systems that a debit card can use. If you use the PIN-based system, the merchant pays a small transaction fee. If you use the signature-based system (run it through like a credit card), the merchant pays a less small transaction fee. The transaction processing network gets part of the processing fee, and the bank gets part of the processing fee. Most of the jump-through-the-hoops requirements for good interest or free accounts in the US require you to make some number of signature-based debit card transactions per month. Guess which system gives the bank more money.
It's my understanding that the signature-based system is pretty much unique to the US, and that the rest of the world uses the PIN-based system. I have no idea how the transaction fees the merchants pay vary from one country to another, but I'd guess that the banks in New Zealand charge the account holder a fee . . . because they can. A bank in the US that did that would lose customers to banks that didn't.
I seem to recall that very many years ago some retailers would charge customers who wanted to withdraw cash with their debit card a fee. My sister was horrified when she heard that, because she said the retailers were not allowed to pass the fee on, so I think that the fee is charged to the retailer as well. Sounds like the banks are creaming it both ways.
A very long time ago, it used to be hard to find a bank that didn't charge a fee per check cleared. Then some banks started offering X checks per month, and then some banks started competing with free checking, and eventually it became hard for a bank to keep customers without offering a checking account that had no unavoidable fees. From your talk of monthly fees and transaction fees, I'd guess that competition has not played out the same way in New Zealand as it did in the US.
Patzer
If you have a mortgage over about $50,000 or with some banks $100,000 then you can get accounts with no fees at all. I believe savings of the same amounts would also qualify you for fee free banking. Children can get accounts with no fees, but no debit card either. Superannuitants who have their superannuation paid directly to that account can get a free account. There is a lot less competition here than in the US. We have about 5 trading banks, and 2 or 3 larger credit unions, and a few smaller credit unions that are generally only available through Union membership, so not publicly available.
