Banks earn money by holding transferred amounts for a few days, while the amount has already been debited to the client. By applying this trick to all transfers, banks earn tens of millions extra every year through currency exchange. Valuation is prohibited as of November 2009. Not all banks validate by making transfers a few days later. One of the banks that does it is ABN Amro. Most private individuals will not be too concerned about it because most transfers concern small amounts, but business customers have more problems with it. They often transfer larger amounts, on which they miss out on interest income. In addition, it is also a problem for amounts that have to be paid at short notice. It takes an unnecessarily long time for amounts to reach the recipient. The banks try to make extra money through currency exchange. By retaining standard amounts for longer, the bank has additional capital, namely the amounts that are in transit.
Earnings through valuation
Every day, many millions of euros are in transit from one bank account to another. In 2007, insurance actuary Edard Bastiani set up a foundation to combat currency devaluation. The Bank Interest Foundation entered into a battle with ABN Amro to recover income from currency exchange. He lost a court case about this. According to an article in the Telegraaf, he does not accept this and wants to take further action against the bank. According to his calculations, ABN Amro alone has earned 5.5 billion from valuation since 2002. If the other banks are also included, he estimates that this will amount to approximately 20 billion.
Is Valuation Legal?
According to the Ministry of Finance, it is simply one of the pricing instruments that banks have at their disposal. The NVB (Dutch Banking Association) states that most banks no longer use currency and they understand the criticism that customers have. This will come to an end as of November 2009. The abolition is caused by European regulations to simplify payment transactions within Europe.
Date of processing of the transfer
As soon as you instruct the bank to transfer an amount to another bank account number, the bank will debit the payment from your account within one working day, this is the booking date. From that moment on, the amount disappears from the payer’s bank account. Due to currency valuation, the amount remains floating between two bank accounts for one or a few days from that moment on. By holding the amounts for one day when debiting, and also holding onto the amounts for one day when crediting, the bank has an additional two days of the amount.
Why do banks currencyize?
Banks earn little from checking accounts. In recent years they have started charging more and more money for it and the service has deteriorated. The banks are educating customers to do more and more themselves via the internet and are closing bank branches. Banks try to partially reduce costs by, among other things, charging high costs for overdrafts and by currency exchange. Banks such as Rabobank, Triodos Bank and Postbank (when it still existed) did not value values. Now that it is no longer allowed, other banks must also look for alternative income.