Cash cows

Even the pro-business FDP, which forms the coalition government together with the Christian Democrats, has raised concerns about the huge rise in cash machine charges revealed by a new study published Thursday. The survey showed that some banks now charged a minimum of 10 euros ($14) to withdraw cash from unaffiliated accounts.

FDP consumer protection spokesman Hans-Michael Goldmann said, "A simple thing like a cash withdrawal should not become a trap for consumers."

The study, carried out by the financial advice company FMH, found that the average cash machine fee had risen from five euros to 5.64 euros in the last six months, an increase of 13 percent. Goldmann told the Bild newspaper on Friday, "It is a bad development. The banks won't win back any trust like this. The customer needs to be better protected from scams."

Goldmann said that the FDP's parliamentary group will use the latest findings to call a consultation with the parliamentary committee for Food, Agriculture and Consumer Protection. Representatives from various banks and other financial institutions will be called to answer questions on the fees before the committee.

Following these hearings, a decision will be taken whether the government should take action against the banks. But it is not yet clear whether the question falls to the German government, or whether it is within the remit of the European Union's competition authorities.

"The big banks and large credit unions like Sparkasse have all the power," FMH boss Max Herbst told Deutsche Welle. "They decide more or less everything that happens on the market, and they're turning the screw."

"When the smaller banks get charged extra for each transaction," Herbst said, "they aren't able to simply swallow the extra costs, so they have to pass them on to the consumer."

Competition rules

Consumer protection groups have lined up to criticize the banks following the publication of the study's results.

"This is a service that is free from normal competition," said Manfred Westphal, financial expert of the Federation of German Consumer Organizations (VZBV).

The German Federal Cartel Office also reported that it had received a number of complaints about the issue.

The VZBV pointed to two new developments that had left bank customers increasingly disadvantaged. One was that it has become increasingly difficult to ascertain the actual amount of cash machine fees. The costs no longer have to be displayed at the machine itself, and banks make the amount dependent on the card-holder's bank.

Also, according to FMH, many bank employees are themselves not certain how much their banks charge for the use of cash machines.

Cash machine cows

The second new development was that banks are apparently beginning to see their cash machines as lucrative sources of revenue, with fees apparently being set independently of the costs to the bank or the agreements made among the banks. On average a transfer that follows the use of an unaffiliated cash machine costs a bank less than a euro.

According to Westphal, the competitive relations between banks mean that some financial institutions even charge twice - once for the use of the cash machine, and once for the transfer.

The FMH study revealed that banks are charging each other ever-increasing fees for the use of their cash machines, and that these costs are often, but not always, passed on to the consumer. Some German credit institutions, like ING-Diba, have vastly fewer cash machines than others, and their rivals are not coy about making life as difficult as possible for them. Some institutes demand as much as 20 euros per withdrawal from ING-Diba for the use of their machines, of which ING-Diba customers pay five euros.

But Herbst remained pessimistic that the parliamentary committee hearings would make a difference. "The big bank lobbies are much too powerful," he told DW. "They will just point out that 95 percent of their customers don't go to any other cash machines, because they don't have to, and so argue that it doesn't matter for most people."

Ben Knight/Reuters/AFP/apn
Editor: Rob Mudge