Bank bashing is a UK sport, isn't it?
Having worked for a major bank for 26 years, it's probably not surprising that I'm able to see things from 'the other side'. That's not to say that I don't have issues with some practices, but that's probably more to do with 'big business' than banks per se.
Now, this may surprise some of you, but bank notes do not magically materialise in bank branches. I'm being facetious, of course, but humour me
. Cash is a physical commodity. In much the same way that supermarkets order product lines based on demand, bank branches have to forecast the amount of cash they need based on trends. Tesco in Stow-on-the-Wold most likely has to order more of its
Finest range than my local store here in Quedgeley. Some bank branches will need to send cash to its holding centres, whilst others will need to order it in. The really lucky ones will have a balance between the cash paid in and that paid out.
The reason branches are only permitted to hold a certain amount of cash has much less to do with security and insurance (have you ever seen a bank strongroom? Anyone who gets into one deserves their prize) than it does with pure commerciality. Quite simply, it costs the banks a fortune to hold cash they're not using (the same as Marks and Spencer holding too much knicker stock). So, the argument that it's 'our money' is irrelevant. I find it frustrating when I want to buy a dress and they don't have my size, but I can accept that if a shop has sold all its stock of my size on a particular day that they can't get Scotty to 'beam one up'.
Now, on to the Visa charges. Firstly I need to explain the different layers in the transaction. Visa is a framework which allows the system to operate. It is owned by thousands of financial institutions. One of those institutions will be your card provider and it provides you with credit. You are a debtor in that company's balance sheet. It earns money from you in interest charges and it stands to lose if you fail to pay, or if your card is used fraudulently. Then there are card acquirers (known in the bank for which I work as merchant services). They provide the hardware (e.g. chip and PIN machines) and software to allow the retailer to process the transactions and receive payments from the credit card company. These are the people which charge the retailer for their services. For credit card transactions that tends to be a percentage, for debit card transactions it is a flat rate (pence per transaction, regardless of amount). The retailer can choose to treat this as a business overhead (and thus not pass it on to you), to pass on the expense to you (at cost), or to make a profit. Any
travel agent charging £62 from a Visa debit card transaction is choosing the profit option. In fact, the middle option is actually the smart option for the retailer. The transaction is cost-neutral, whereas accepting cash will cost them money - cash handling is a bank's biggest transactional expense and the customer will be charged more for paying in cash than for any other transaction. That's why businesses which deal in large volumes of cash (such as supermarkets) are so keen to give you 'cash back' - it hugely reduces their costs.
Hope it's been an education!
