Beware of cheque payments
Thread poster: avantix

avantix  Identity Verified
Netherlands
Local time: 12:12
German to Dutch
+ ...
Jan 10, 2006

Recently I did a translation job for a French outsourcer. Total amount EUR 431.10 - which they paid by sending me a cheque. As usual, I delivered this cheque to my bank, together with the designated form, on which I had selected the option "under reserve", meaning that the amount will be credited to your account within one or two days, but that the bank reserves the right to reverse or cancel the entity if the countervalue cannot be collected. Cost of this transaction was normally approx. 10 - 12 EUR.
The second option to cash cheques has always been "on collection basis", meaning that you have to wait a couple of weeks until your bank has received the cheque amount before it is credited to your account. Apart from that, the cost for this type of transaction would be significantly higher, so that would only be a valid option if you had a cheque for such a high amount that it would be too risky for the bank to wait and see that the money eventually would not come in and you might have had a few weeks time to disappear with the amount already credited.
However, despite the selected "under reserve" option, this time I had to wait almost 3 weeks until the cheque was credited to my account and noticed that 431.10 French euros had been "converted" into 391.10 euros, and in addition to that my account was debited for 37.86 euros, being "collection provision", "postage" and "handling fee".

When I objected, I was told by my account manager:
1) that the 40 EUR represent the "collection fee" for my own bank and the 37.86 EUR represent the cost charged by the French bank.
2) that the Dutch banks recently had agreed to drop the "under reserve" option and that cheques now only could be handed in on collection basis "in order to disencourage cheque payments" and encourage the in the euro currency zone now "generally accepted" money transfers with IBAN and SWIFT codes.
3) that this new policy also will be applied to cheques originating from countries outside the euro currency zone.
4) that all banks in other euro currency countries had agreed to do the same or follow suit very soon.

I have not had the opportunity yet to check whether 4) is true, but I know for sure that from now I have to urge my clients all around the world to either pay by (wire) money transfer or else pay through PayPal or Moneybookers.

It would be interesting to see if colleagues in other euro currency countries already had a similar experience.

Herman de Kruyff


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Rosa Maria Duenas Rios  Identity Verified
Local time: 06:12
Something similar happened to me recently Jan 11, 2006

avantix wrote:
2)
that cheques now only could be handed in on collection basis "in order to disencourage cheque payments" and encourage the in the euro currency zone now "generally accepted" money transfers with IBAN and SWIFT codes.
[...]
4) that all banks in other euro currency countries had agreed to do the same or follow suit very soon.

I have not had the opportunity yet to check whether 4) is true, but I know for sure that from now I have to urge my clients all around the world to either pay by (wire) money transfer or else pay through PayPal or Moneybookers.

It would be interesting to see if colleagues in other euro currency countries already had a similar experience.

Herman de Kruyff
[/quote]

Hi Herman,
I have an excellent bank in the US: they do not charge me anything for exchanging cheques in US dollars or euros, I just have to wait to make sure that funds are available (well, with the cheques in euros I guess their fee is probably included in the rate of exchange, but it is still a very practical way of doing busines to me). That is why I encourage most of my clients to pay me with cheques.

However, I have a client in Germany whom recently requested my bank's info to make a deposit. Before I started working with this client, I indicated that my preferred method of payment was a cheque (in US or euros), and that I did not want to be responsible for any bank transfer fees. Since I did not hear from them, I thought they had agreed to this.

When the time came to pay me, they mentioned exactly what you point out in Nos. 2 and 4: namely that banks (and businesses) in the EU are discouraging the use of cheques, and encouraging money transfers. The problem is that such money transfers have a cost of between 25 and 40 US dollars!!!!

I have now written to my client to ask him for reimbursement of such fees. Needless to say that I am extremely disappointed at the prospect of having to loose $40 US from every invoice I send them. Either they accept to pay the fee, or accept me to include it in my invoice, or a raise in price so that I can cover such expenses, or I will cease working with them.

I would really regret to stop collaborating with this client, since I like the organization, the subject of the translations, and the money I make but, IMHO, the translator should not be punished with the payment of such fees. There is no other professional that I know of that has to accept to pay a "fee" in order to get paid!!!!

[Edited at 2006-01-11 00:20]


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Heinrich Pesch  Identity Verified
Finland
Local time: 13:12
Member (2003)
Finnish to German
+ ...
Why did you except cheques Jan 11, 2006

It is understandable that banks do not encourage people to use cheques in Europe. Anyone can easily transfer money from France to other EU-countries by online banking without any fees.

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Steffen Pollex  Identity Verified
Local time: 12:12
English to German
+ ...
EXcept? Jan 11, 2006

Hi Heinrich,

I guess you wanted to say ACcept?


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oscar mojon saa  Identity Verified
Local time: 12:12
French to Spanish
+ ...
Bank fees Jan 11, 2006

Dear Herman,

I live in Spain and I regularly go to my local bank office to cash checks, mostly in euro but also in other currencies like USD and GBP. My experience is that if the check is worth less than 1,000 euro, the bank fees applied are 6.01 euro, and if the check is worth over 1,000 euro, the bank fees are 12.02 euro.

Regards,

Oscar


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Peter Bouillon  Identity Verified
Germany
Local time: 12:12
French to German
+ ...
The French love cheques for some strange reason Jan 11, 2006

Heinrich Pesch wrote:

Subject: Why did you accept cheques?

It is understandable that banks do not encourage people to use cheques in Europe. Anyone can easily transfer money from France to other EU-countries by online banking without any fees.


This is exactly what I was wondering about in December last year, too. So I asked some French collegues on another forum about that. They replied that the French love cheques, their love for innovative technology notwithstanding.

And this seems to be true: if you buy books at Amazon.fr, for example, one of the payment options is sending them a cheque, of all things!

I had some trouble getting an agency in Paris agree to pay me by virement bancaire; this seems to be very unusual for them.

P.

[Edited at 2006-01-11 09:17]


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Peter Bouillon  Identity Verified
Germany
Local time: 12:12
French to German
+ ...
Strange... Jan 11, 2006

avantix wrote:

When I objected, I was told by my account manager:
) that the Dutch banks recently had agreed to drop the "under reserve" option and that cheques now only could be handed in on collection basis[/quote]

I don't know about the Dutch way of business, but this sounds very strange to German ears. When I buy a pair of sandals from a merchant, they can't reply that they don't sell sandals any more so they simply send me a pair of military boots instead.

If you tell your bank to convert a cheque and specify explicitly that you want the "under reserve" option, the bank has no business in my opinion to silently change that to something else and then ask for eight times the fee after the deed is done. They ought to have refused to cash in the cheque or they ought to have asked beforehand whether you agree to the change.

P.

[Edited at 2006-01-11 09:18]


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RobinB  Identity Verified
Germany
Local time: 12:12
German to English
EU cross-border payments Jan 11, 2006

Herman,

I can confirm that cheques are being phased out for cross-border payments in the euro zone. At some point in the foreseeable future, banks will be informing their customers that they will only accept cross-border electronic payments using the beneficiary's IBAN and BIC. The financial penalties attached to cheques will be sufficient to discourage their use. It stands to reason: cheques are inherently expensive and insecure for all parties involved.

The only German customer I can recall sending us cheques in the recent past was (ironically) a bank. We certainly refuse to accept cheques from customers outside Germany (and only ever pay our own suppliers by electronic transfer).

My suggestion is that you insist on electronic payment from all customers, including the French. Apart from anything else, it will be cheaper and safer for you, and you'll no longer have to worry about whether funds are going to clear or not. If a client insists on paying only by cheque, you might consider dropping them, as it's likely they're relying on the cheque taking 10 to 14 days to clear, in effect gaining interest over that period.

If you regularly receive payments in e.g. USD, you may wish to consider setting up a separate USD-denominated bank account. But even there, you should insist on SWIFT payments.

Robin


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Heinrich Pesch  Identity Verified
Finland
Local time: 13:12
Member (2003)
Finnish to German
+ ...
egrea Jan 11, 2006

Steffen Pollex wrote:

Hi Heinrich,

I guess you wanted to say ACcept?


I loked at the word, it seemed a bit strange.


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avantix  Identity Verified
Netherlands
Local time: 12:12
German to Dutch
+ ...
TOPIC STARTER
So far you're right Jan 11, 2006

Heinrich Pesch wrote:

It is understandable that banks do not encourage people to use cheques in Europe. Anyone can easily transfer money from France to other EU-countries by online banking without any fees.


Heinrich, you ask me why I did accept cheques. Why not - I've always done and never had problems. I agree that it's understandable that banks in Europe want to promote online banking. I'm doing that myself for approx. 10 years now and it's easy, fast and cheap.

I don't see a major problem in convincing European clients to pay this way in future. But what to do with clients from outside the EU currency zone, where cheque payments are common use? As I see it, the only way out would be PayPal or Moneybookers. Or, perhaps, opening an account with a US- or other-country-based bank to get my cheques cleared. But whatever solution - it makes life more complicated.


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avantix  Identity Verified
Netherlands
Local time: 12:12
German to Dutch
+ ...
TOPIC STARTER
You're lucky Jan 11, 2006

oscar mojon saa wrote:

Dear Herman,

I live in Spain and I regularly go to my local bank office to cash checks, mostly in euro but also in other currencies like USD and GBP. My experience is that if the check is worth less than 1,000 euro, the bank fees applied are 6.01 euro, and if the check is worth over 1,000 euro, the bank fees are 12.02 euro.

Regards,

Oscar



Hi Oscar,
You're lucky... as long as it lasts. As I pointed out, according my account manager the banks in other EU currency countries are expected to follow suit soon, if they have not already done so.


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avantix  Identity Verified
Netherlands
Local time: 12:12
German to Dutch
+ ...
TOPIC STARTER
Already have Jan 11, 2006

RobinB wrote:


If you regularly receive payments in e.g. USD, you may wish to consider setting up a separate USD-denominated bank account. But even there, you should insist on SWIFT payments.

Robin


Hi Robin,
I already have a EUR and a USD bank account with the same bank. But as I was told, the same rules will apply to the USD-account.


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avantix  Identity Verified
Netherlands
Local time: 12:12
German to Dutch
+ ...
TOPIC STARTER
The last word has not yet been spoken Jan 11, 2006

Peter Bouillon wrote:

If you tell your bank to convert a cheque and specify explicitly that you want the "under reserve" option, the bank has no business in my opinion to silently change that to something else and then ask for eight times the fee after the deed is done. They ought to have refused to cash in the cheque or they ought to have asked beforehand whether you agree to the change.

P.

[Edited at 2006-01-11 09:18]


Hello Peter,

I fully agree an the last word has not yet been spoken. I have sent a letter to he bank's head-office about that and can only hope that they will react in a (for me) positive way. But if not, what could I do? Start legal procedures? The cost would be much higher than the amount involved and it might affect my as yet good relationship with this bank.


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