-----BEGIN PGP SIGNED MESSAGE----- - - - Bank Fees and the E-cash Niche. Banks have gorged themselves on rocketing fees for the last five years. The result is that typical bank customer currently pays 150% of the amount of interest collected on accounts in a given year in the form of fees. My prediction, and my hope, is that e- cash will cut through the pretense upon which the rationalization of many of these fees is based, and even market itself on this point- Lower Fees. - - - New Fee Schemes "Overdraft Assistance" and the Myth That Only Irresponsible Bank Customers Bounce Checks or Overdraft. Banks have begun to implement policies intended to help the customer overdraft. They may, for example, cash the largest checks first such than an overdraft will hit with several small checks rather than one or two large ones causing multiple overdraft fees. Banks have begun to routinely delay crediting checks for 48 and 72 hours, and out of state checks for anywhere from 3-14 business days. ATM cash deposits are typically subject to 24-48 hours delay. The "Unofficial Credit." Many times the delays in crediting various transactions are hidden by the "unofficial credit." Most noticeable in ATM deposits, a credit is given but should demands on the account draw into the "unofficial credit" an overdraft will be posted on the rationale that an "official credit" has not yet been posted and the funds are thus not "officially" available, this despite the fact that the funds will appear available to ATM balance requests and statements. Of course the bank will profit from the "unofficial credit" to "official credit" interest float regardless of what overdraft fees might be charged. The "wire credit" and "official wire credit" are another example. Banks receive a wire transfer on Monday, send a "electronic payment advice" the same day, but post the credit to the account "officially" on Tuesday. The original intent is for the bank to be able to take advantage of the interest "float" between the receipt of funds and its credit to the account. The result is an additional overdraft potential. The Separate Wire Office Hours. Often times the bank's "wire" office will close hours before the branch closes. Wires received some hours before closing on Friday will not be credited until the following Monday. The ATM Processing Time Table. Many bank only begin processing ATM deposit transactions an hour before closing, crediting only as many deposits as can be processed in this time, the remainder are not processed until the next morning. ATM debits are, of course, processed all day. Check Processing Time Table. In a given day, debit checks are processed on an account before deposit checks are processed. Obviously, an account that overdrafts overdrafts only because of the order in which checks are processed. - - - The Created Convenience Fee A great many bank fees fall into what I call "created convenience fees." Really created convenience fees resemble airport customs bribes in third world countries. The customs officer makes what should be an easy passage terribly difficult, then demands a "fee" to make travel as easy as it should have been to begin with. The net effect is for the traveler to pay to dispense with a problem created by the party receiving the fee. Nigeria is a prime example. Upon arrival the average traveler will find him or herself embroiled with licensing deficiencies, visa fees, entry fees, the threat of quarantine, seizure of expensive equipment for "inspection" and other such invented requirements. Some hours into the "negotiations" the customs official will offer to "overlook" these transgressions for a "fee." This is a created convenience fee. Banks fall into this category by such programs as "overdraft insurance" whereby banks enact policies which, as we have seen, make it painfully easy to overdraft and then charge a monthly fee to avoid the overdraft charges. - - - The Result Bob is a sort of combination of my own experience and discussions with other bank customers in D.C. Bob has an account in Washington, D.C. with $1500.00 in it. Bob Receives a wire at 3pm Friday for $1700.00 Bob writes five checks on Friday, one for $1400.00, one for $200.00, one for $150.00 and two for $100.00. Totaling $1950.00. Bob deposits 4 checks totaling $2000.00 in the night depository Saturday. Bob deposits $50.00 in cash in an ATM on Saturday Night. Bob checks his ATM balance ($3250.00) and withdraws $50.00 from an ATM on Sunday Morning. Bob's wire arrives after the wire office has closed for the day - an "unofficial credit" is posted Friday before closing anyhow. Bob's bank processes the $1400.00 check first, leaving Bob's account with an "official" $100.00 and $1700.00 in "unofficial funds." Bob's bank processes the $200.00 check, notes a $100.00 overdraft, charges $25.00 for this check, refuses payment on the remaining three checks and drops a $25.00 overdraft fee plus a $10.00 "bad check" fee for each. Total charges: $130.00 Bob's bank processes the $50.00 ATM withdrawal, which overdrafts. $25.00 fee is posted. Total fees so far: $155.00. Bob's balance for the majority of Monday: -$255.00. Bob's bank begins to process deposits, notes all the checks for deposit, $1000.00 of which are out of state. No checks are credited. Bob's bank notes the ATM transaction at the end of the day on Monday, but does not credit it immediately despite the fact that it is cash. Bob's bank credits the ATM deposit to Bob's account on Tuesday. Bob's balance is now -$205.00 Middle of the day Tuesday, Bob's account has been below its required minimum $500 balance for 24 hours. A $50.00 fee is charged. End of the day Bob's wire is "officially" credited - a $10.00 fee is charged for receiving the wire. (No, I'm not kidding) Bob's bank credits the $1000.00 of in state checks on Wednesday Finally, on Friday, Bob's out of state checks are deposited. Bob will likely be liable for $50.00-$75.00 fees for each of his bounced checks as vendors will probably charge hefty fees. Telecheck will have Bob on the 10 most wanted list for $350.00 in bounced checks. Bob's check writing ability is about nil in D.C. for the month it will take him to clear it up. Bob gets a mailing a week later telling him of the advantages of his bank's newest "overdraft insurance" program. $150 a year. Bob, for what would literally be a series of very responsible transactions, is looking at over $215.00 in bank fees, and at least $150 in bounced check fees from vendors because of violation of technical rules the bank has designed to cause fees to be charged. - - - E-Cash I cannot believe that e-cash won't be able to solve some of these problems, and I hope it will limit its own fees to usage. To me this is a classic argument for small house e-cash shops. Citibank and Mastercard are going to fight for their fees. -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQEVAwUBMClJUS1onm9OaF05AQEhugf/T2FquzHdEhHp8dQI5FRYcuayTusig1F3 pHejUdry84F1MqLArSZukVGxEWtZVR0qh2xq4AiN/UwlW9ZKasFdbPPGJtbD6gpO aALJIhQaYJSTQkW4fmieejhcNPMf7e59YaerOl83LkKS/+1tFi9ib1Xz2ZnmXlph 0mWuJjONzH45tPylyJy8fyB9nrpk5WDCAiLhUSxqHRdVmA9nq6uIIZbdmz7sEpLq 82cHyHXKeufGKGvx26R4z3lu0o5Ykd/dGAWADpJ6OT2bhlWFinApF/HMJAA9mLvi w70StZZL/94ncQQWF7LU5vMhGu7/5WNsrpRTzZXG5A0EfFL0ZAdYPw== =ew58 -----END PGP SIGNATURE----- 00B9289C28DC0E55 nemo repente fuit turpissimus - potestas scientiae in usu est E16D5378B81E1C96 quaere verum ad infinitum, loquitur sub rosa - wichtig! *New Key Information* - Finger for key revocation and latest key update.