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Swedish banks making wealth from hidden fees on credit and debit cards

Tuesday, 27 November 2012
Swedish banks are enjoying what monopolies and company operating in environments were they have little competition do best. They can make money on the backs of their consumers anyhow as they wish. Evidence for this is how they use debit cards as cash cow.

A new investigation has shown that Swedish banks have a new cash cow - making money from hidden charges on credit and debit cards. According to the Swedish Retail Institute (HUI) the fees paid by consumers for a debit card is just the tip of the iceberg. Banks make billions a years - estimated to be seven billion Krona per year on banks charges and fees - most of which are completely hidden from the consumer, reports Swedish daily, Dagens Nyeheter

"Banks are taking at least Skr1billion in profits, every year," said Bengt Nilervall of the Swedish Trade Federation, to the paper. The costs of card payments is Skr7 billion a year while banks make their profits estimated on it to stand at Skr1billion, writes Dagens Nyheter.

Consumers must use banks in Sweden for their daily financial operation and these the Swedish banks have seen as a way of making easy money through bank charges and fees. Owning a bank account Sweden is chargeable and then having a bank account plus debit card is a very expensive business.

Then added to this are hidden charges that the banks don't explain to customers meaning that the sum paid by the cardholder as hidden fees are many times larger than previously imagined, according to a new report from the Swedish Retail Institute, (HUI Research). The report is unique in its kind because for the first time it is possible to see what consumers are really paying as extra fees for credit card purchases.

The Swedish Payment Services Act which came into force in 2010 and forbade merchants to charge a fee to those who pay by card and this seemed to have been ignored. Prohibiting card payment over a certain amount is also not allowed. The result is that the merchant ultimately loads the charges on consumers in the form of higher prices for goods and services.

Calculated for the whole economy, it means that the total cost of card payments is estimated to reach Skr7 billion per year, or 1,500 per household, according to the HUI's report.

That is too high, according to representatives of the Swedish Trade Association, and the recent report states that banks earn at least Skr 1billion a year - too much on credit card payments - especially given that new technology has made card processing significantly cheaper.

"The banks have a monopoly on payment services and take an inordinate amount in payment. More players should be involved and increase competition," says Bengt Nilervall to Dagens Nyeheter.
by Scancomark.com Team

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