As an entrepreneur, you battle away on several fronts and focus all your energy into making your business perform. It often means you don’t have the time to examine every line of your bank statements. Yet, anyone who does put each itemized cost under the microscope can sometimes find some nasty little surprises.
We’re talking about the small amounts, those hidden fees that don’t catch your eye. Add them all together, though, and you’ll notice that their sum total is worthy of your full attention.
Holders of business accounts with traditional ‘High-Street’ banks are the most affected by bank fees that are far from transparent.
So, what are these common, concealed costs? Why are you paying them? And what can you do to avoid them?
Join us as we take a look at the murky world of banking fees.
1. The fees you can expect when opening a business account
Opening and maintaining a business account inevitably generates standard fees and, in general, payment institutions and High-Street banks alike are open and transparent in presenting them. You’ve factored these costs into your plan and it’s no surprise to see them appear on your bank statements.
A. Annual bank card fees
You’ll usually have to pay an annual fee to have a business account card, like Visa or Mastercard, which can be anywhere between €40 and €140 per year, depending on the type of card and options chosen. This fee is usually paid on a monthly basis.
💡 Good to know: choose the card that best matches the needs of your company. Pay particular attention to payment and withdrawal limits, as some banks charge extra fees if you decide to change these limits.
B. Payment fees when abroad
Most banks charge a fee for payments and withdrawals made overseas. These usually concern:
- Payments made by card outside of the eurozone
- Cash withdrawals from ATMs made abroad
For non-eurozone payments, banks apply the following:
- Fixed fees (between one and four euros)
- Variable fees corresponding to a percentage of any given transaction (between one and three percent).
As a rule of thumb, you should expect to pay €1.61 in fees for a €50 purchase. The fees can exceed €20 for a €1,000 purchase.
C. Fees for using an Electronic Payment Terminal (card machine)
Paying by card is the most common payment method in many European countries, so many shops and companies cannot really go without an Electronic Payment Terminal (EPT) to do business. However, they do have a cost:
- EPT rental: between €15 and €80 per month, depending on the model of card-reader machine and options chosen
- Processing fees for each transaction: between 1.5% and 2.75%
2. The hidden fees that traditional banks charge
Hidden bank fees usually find a way of sneaking into your bank statement. You may be surprised to see them there, as High-Street banks don’t always communicate these costs as clearly as they could. Here’s a quick look at some examples.
A. Recurring hidden fees
1. Account maintenance fees
Most banks will charge you a fee for managing or maintaining your account. What exactly this “maintenance” entails is not always clear. Or at least, banks don’t go to great lengths to explain exactly what these fees pay for.
Generally speaking, these fees go towards paying for the human and material costs required to keep your account going. These include things like generating bank statements and sending cheque books.
These account management fees vary greatly from one bank to another but you should expect them to be in the ballpark of €30 per year.
2. Transfer fees
Transfer fees are charged by the bank for outgoing transactions in their entirety. In other words, everything you pay for with your business account (salaries, subscriptions, expenses etc.) is subject to a transfer fee.
There are some exceptions:
- Credit repayments;
- Banking fees;
- Internal transfers between two accounts held at the same bank.
The transfer commission varies between 0.06% and 2%. These are not negligeable amounts, especially for companies that make a large number of transactions.
It’s also worth knowing that some banks apply a minimum fee when it comes to transfers, anywhere between €5 and €15. These fees will be charged to you regardless of the amount of the outgoing payment.
Let’s illustrate that with an example:
Marie and Martin are entrepreneurs and have business accounts at the same bank. This bank applies a transfer fee of 1% and a minimum fee of €10 per month.
* Marie owns an SME and the total amount of her monthly outgoing payments (salaries, social charges, taxes etc.) comes to €12,000.
€12,000 x 0.01 = €120. Marie will pay €120 in transfer fees for the month.
* Martin is a freelance developer. Being self-employed, he works alone and his monthly outgoings are much less, amounting to €500.
Given the bank’s commission, his transfer fees come to €5 for the month (500 X 0.01 = 5).
However, this is below the minimum threshold fixed by the bank at €10, which is the very least that Martin will have to pay. So, Martin will have to pay €10 in transfer fees, which is 2% of his outgoing payments.
3. Online access fees
Take something as simple as checking your balance on your smartphone or transferring money via your mobile app. These are everyday habits for many self-employed workers. And yet, even in the year 2021, some banks still charge you a fee for accessing your accounts online.
What’s worse is that you often find yourself paying for low-quality, clunky, unintuitive interfaces. There may be no way to manage your payment limits freely, for instance, or get a statement dating back more than 30 days. You’d certainly hope for more, considering that you’re paying between one and five euros per month for the service.
💡 Good to know: these fees may appear on your bank statement as “remote banking fee.”
B. Fees associated with payment incidents and irregularities
It’s not uncommon for cash-flow issues or non-forecast expenses to drag an account into overdraft and see bank payments refused. These “payment incidents” incur a fee, and sometimes those fees can be quite steep indeed.
Among the most recurring bank fees are intervention commissions and charges for direct debits and cheque payments that are rejected due to lack of funds.
1. Intervention Commissions
An intervention commission is a fee a bank charges when:
- Your account is overdrawn and you do not have an overdraft facility;
- You exceed your overdraft limit.
The amount of an intervention commission is fixed by French law at €8 per operation and €80 per month. In most banks, the commission amount is set at the maximum legal limit.
2. Payments rejected due to lack of funds
Unfortunately, an intervention commission is not the only fee you risk seeing for a payment incident.
Perhaps you’ve paid by cheque but the payment has been rejected. Some banks fix their penalties for cheque incidents as follows:
👉 €30 for a cheque less than or equal to €50;
👉 €50 for a cheque for an amount over €50.
Maybe you’ve tried to wire money but the transfer was refused due to a lack of funds. Again, you’re likely to face substantial bank fees. Banks can charge up to €20 for an incident involving wire transfers and direct debits.
C. Other little-known bank fees that are added to your bill
On top of the bank fees we’ve already mentioned, there are other costs that banks commonly charge their customers. Here is a non-exhaustive list:
- Card replacement fees. If you lose your card or have it stolen, most banks will charge you to get it replaced. On average, this costs around €12 per card.
- Card seizures. If you forget your PIN code or type it in incorrectly and, as a result, an ATM swallows your card, expect to pay a card seizure fee. It is typically around €40, even with some online banks. And, of course, don’t forget the card replacement fee you’ll need to pay on top of that.
- PIN code re-issuing fees. All you want to do is change your PIN code but, you've guessed it, the bank charges you. It’s around €9 on average in most traditional High-Street banks.
- Card limit modification fees. If you want to change your payment or withdrawal limits, that could cost you up to €5.
3. Handy tips to get around unreasonable bank fees
The examples above show how numerous extra fees can worm their way out of your accounts and onto your bank statements. To help you avoid them, we’ve put together some advice that will spare you those little costs that add up to a big cost.
Research the tariff grid before committing
All banks must provide a tariff grid that sets out all of their fees. It’s always worth contacting several establishments and comparing their tariff grids.
A complete list of your bank’s fees will also appear in your contract. Take the time to read it thoroughly before committing.
Study your bank statements and annual fee declaration
If you’ve signed up for a business account and you suspect you’ve been hit with hidden fees, have a good look through your bank statements. You may be surprised by what you find.
Also, banks are under obligation to send you an annual, exhaustive list of all their fees. This is a very useful document as it details all the fees you’ve been charged over the course of the year.
Negotiate fees with your bank
Some fees are negotiable, notably the following:
👉 Account maintenance fees;
👉 Transfer fees;
👉 Bank card commissions;
👉 Overdraft limits.
Try business accounts such as Qonto
The majority of payment establishments and players in the fintech industry have a transparent fee policy.
With Qonto, there are no nasty surprises. No transfer fees, maintenance fees or other hidden costs Everything is included in the subscription. The only possible extra charges are these:
- €6 (without tax) for the creation and postage of a replacement card if you lose your physical payment card. That’s half the price of a replacement card from a traditional bank.
- Exchange commissions may be applied for payments outside the euro zone. These rates are 2% with a One Card and 1% with a Plus Card. We’ll waive your fee if you’re an X Card holder.
- A 1% fee for outgoing transfers sent abroad via SWIFT.
- According to your subscription, fees may apply to cheque deposits.
If you wish to read up on these points in more detail, feel free to visit our tariffs page.
So, that’s what you need to know about hidden bank fees! Take a look at your bank statement when you find a moment and see what you can find when you read between the lines.
Sources: MoneyVox.fr, LeLynx.fr, Hoggo.com, economie.gouv.fr