The five euro cut

What is it with five euro cut in Italy?

This month I have encountered the notion too often to think of it as coincidences and certainly to often for a healthy personal budget.

First come the five euro commission to exchange currency at bank (regardless of amount). And then I was told that everybody who has a bank account will have to stay goodbye to their five euro every six month to pay government tax. By the way, the fee for the bank to take care your account is (about ) 5 euro every two month (regardless of amount) and one euro for every over-the-counter transaction. This morning, I lost another five euro to pay service fee of buying pre-paid credit (for purchase of of 10 euro and lower the cut is “only” 2 euro) for my mobile phone.

My bank in Amsterdam, Singapore and Jakarta (excep my Citibank USD account) never take any service fee for such ordinary transactions. Why should they? After all they keep my money and lend it to other people and gain interest. It is the bank that should give me a share of their profit. There are also no service fee to top up mobile phone credit (actually I got more than the stated amount in Jakarta).

Financial services and telecommunication sector in Italy are certainly used to this kind of easy money. My inovate when you can simply extort? But this kind of practice also limit their growth prospective since other country in Europe is more efficient. Unsurprisingly, banking system in Italy are very fragmented with numerous brands of local banks. Italy has yet to see a massive banking consolidation as common in many others.

But they may not see the day. Not often I wish the coming of capitalism wave but proper competition is certainly in need here. It is better to have tight competition and good services than have quasi-monopolist and bad services (plus high price).

The only thing stopping other more efficient banks in the world to buy excess-profit-and-deficient-service Italian banks are nationalistic-but-less-than-truly-honest (see this article ) banking authority. Once the corrupt officials are thrown away and EU common market directives for services are agreed and in play then the time for buy-out (especially from UK, Netherlands and US firms) is coming.

Remember, you read it here first.



picture from kaoz-kreationz.de