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Comment by lacker | Hacker News Reader

I've noticed recently more of the food truck or farmers' market type businesses aren't officially cashless, which is illegal in California AFAIU. They just don't have change for a $20.

It's a real problem that some people cannot afford the fees on a bank account, but I would prefer that we find some way to provide everyone with minimum banking services. Like a no-fee government-provided debit card.

I know, the government doing things is bad, but Wells Fargo, Citibank, etc are so heavily regulated, they are essentially a wing of the government now anyway. Maybe in exchange for being "too big to fail" they could be required to provide all American citizens with a standard, transferrable, no-fee debit accounts.

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>> It's a real problem that some people cannot afford the fees on a bank account, but I would prefer that we find some way to provide everyone with minimum banking services. Like a no-fee government-provided debit card.

The government shouldn’t even need to get involved here. In the UK accounts have no standard charge and come with free debit card. There’s no reason banks in the US can’t offer this other than the fact people think paying for an account is normal so they can get away with it. Do the “app” banks like Revolut and Monzo offer free accounts in the US? Curious if they’re bringing some competition that could force change.

> The government shouldn’t even need to get involved here. In the UK accounts have no standard charge and come with free debit card.

Well, in the UK, fee-free basic bank accounts are the result of government regulation(1).

It was part of the UK's implementation of Directive 2014/92/EU (2), which mandated access to basic bank accounts across the EU (of which the UK was then a part).

(1) https://www.gov.uk/government/news/fee-free-bank-accounts-la... (2) https://europa.eu/youreurope/citizens/consumers/financial-pr...

Thank you for the funniest comment and reply I've ever seen here.

The libertarian version of the I Made This meme.

'Fee-free' accounts existed way before this regulation. If you actually read the link it talk about fee-free in the sense of no charges for failed transactions.

No, the relevant part of the article is basic bank accounts.

The change (and the Directive) was the result of banks withdrawing fee-free basic banks across the bloc as a cost-cutting measure in the wake of the 2008 financial crisis.

There is some nuance here in that accounts without a standard charge and a free debit card were common before 2016.

The 2016 change seems to be about fully fee-free accounts, i.e. no overdraft charges or similar fees.

The change (and the Directive) was the result of banks withdrawing fee-free basic banks across the bloc as a cost-cutting measure in the wake of the 2008 financial crisis. The Directive reverse that and made basic bank accounts universally available across the bloc.

I worded my message badly. When I said 'the government shouldn't need to get involved' I meant in a direct way. Either I've misread the parent comment or they've edited it but I thought they proposed the government offering accounts - that I thought was unnecessary. Regulation I'm fine with.

There are plenty of free bank accounts that come with free debit cards in the US. People who have paid bank accounts didn't shop around at all. I have no idea how or why these banks continue to do business when there's free alternatives that are usually better in basically every other way as well.

There are thousands of such establishments in the US. They are called credit unions. And many banks too. Yes, I have a US Revolut account, but not for that reason, but because US banks generally don't know how to send money internationally. For them, civilization ends at the US border :)

> They just don't have change for a $20.

Malicious compliance is fun.

Besides, having to have change is the really big cost of cash handling. Almost all your customers come in with big notes from an ATM and leave with smaller notes or coins, so you have to keep getting change from the bank. Just rebrand "not giving change" as "mandatory tipping" and it's even a pro-worker move!

> Just rebrand "not giving change" as "mandatory tipping" and it's even a pro-worker move!

rounding-up to avoid handling change is the norm when paying cash in "tippable" situations like at restaurants or farmer's markets.

Is it normal in the US to tip at a farmers market?

"Tip" probably isn't the word anyone here would use, because they're not calculating a specific percentage. In practice, though, "keep the change" is something you'd be likely to hear at one.

No.

afraid of change?

leave it here!

Big problem is AML and KYC related legislation - this is expensive to do for people who are statistical outliers. I.e. people with low income. So it'd have to be government subsidised banking.

I would love to see analysis on the trade offs with KYC and AML. How much does it actually help in fighting crime? Vs. all of the lost opportunities due to all of the red tape and regulatory blockers for legitimate business models.

Very very hard to get a number on this.

From experience I can say that it reduces crime, but it does create massive issues too.

Problems are current regulations aren't risk based, which results unproportional compliance costs.

Perhaps the free government accounts could be exempted from that red tape, and be capped to a maximum turnover amount such that it isn't attractive to money launderers. Once your turnover exceeds that cap, you have to "upgrade" to a regular account with all the KYC stuff.

Yep, that'd be the solution. The issue comes with the fact that these regulations are based on the "guidelines" set by FATF - which is a political organization and they make really idiotic decisions.

To some extent I believe the larger financial institutions lobby for these regulations in order for them to not have to serve low income customers.

I find it hard to believe it is expensive to do AML and KYC for customers whose balances never cross 5 figures. It seems they would almost never go over any thresholds that require reporting.

From that you should infer that your guess is wrong, there is no such threshold for some requirements

Yes, that post was ridiculous "dog whistle" to discriminate against low income people. How can you work your way out of poverty if you cannot keep a bank account? Ridiculous.

    people who are statistical outliers. I.e. people with low income

Unbelievable, this one. Some people are blind to their privilege here.

I'm not sure how you interepreted my comment as being rude towards some group of people, I was merely describing why things are the way they are.

Here's a longer description:

KYC and AML costs are fixed. I.e. identifying someone is a one time cost (if done virtually, around 5-25 USD, more if done in person).

AML costs are ongoing, but can be automated to a great degree to save on costs. Usually this is done via various heuristic and statistical methods. These work great for the customer types you have a lot of, but for those you have less of you have less training data and your models will cause more alerts than necessary. Alerts that need to be looked at manually.

Most of these occur from rich people doing stupid shit, but you also get the same happening on the other end of the spectrum. Poor people usually are very creative with their money, and this causes them to hit AML checks. (Think crypto, remittances, romance scam victims and the like).

Rich people aren't a problem, they have so much money in the bank that their compliance costs are offset by the profit the bank earns on them.

The average customer usually isn't a problem either, there's a lot of them so a few being unprofitable doesn't really matter.

But low income people will incurr more AML and KYC costs that the bank can't offset --> these customers aren't profitable and the bank will do as much as they legally can to annoy them until they leave.

This phenomena is called de-risking (it happens to companies, too) and is hugely damaging and is a side-effect of the increasing AML and KYC regulations (Which are shit).

AML / KYC regulations desperately need exceptions for people who aren't moving a lot of money. And, conversly, those who DO move a lot of money need to be put under stricter regulations. A) Because it is financially possible and B) they're the guys who do the really damaging money laundering.

This is precisly the issue, there are no exemptions to AML and KYC regulations for those not moving a lot of money around.

> It's a real problem that some people cannot afford the fees on a bank account

Plenty of banks offer no minimum checking accounts. Whenever this gets dug into, the fees they supposedly can’t afford are when their balances go negative, which is harder to justify being free.

For plenty of banks that's not the case. For ex Wells Fargo charges $10/month if your balance is less than $500[1]. That's a big deal for some people.

Ally Bank offers no minimum, but they're online only and reimburse for (some) ATM fees rather than it being free upfront.

Many ordinary people who try to get an ordinary bank account at an ordinary bank they take the bus and the walk to end up paying fees.

[1]: https://www.wellsfargo.com/checking/everyday/monthly-service...

Capital One has no minimum checking and $5 minimum savings.

And those fees are usually egregious and do the most harm to low income people. Why can't these account refuse to go negative during withdraw or spend via debit? It seems simple to me, but then banks could collect fewer fees. I weep for their profits.

Overdraft "protection" was opt-out for several years, and is now opt-in.

https://www.consumerfinance.gov/rules-policy/regulations/100...

I have a lot of experience with low-income people and people not great with money (and the overlap between them). The problem is most want this feature. They would not want the transaction declined. They know they don't have any money.

Can someone explain to me fees on American banks? And the % card surcharges other comments are talking about? As someone from the UK I've never heard of banking fees except on debt facilities and the only surcharges I've seen are minimum spends or 50p charges on cards in small shops, which almost never happens anymore.

The card fees are on the merchant side and are priced into the overall price in the same way that VAT (usually) is. The customer never sees them.

The fees exist in the UK but the UK never had the cash culture that the US does so very few consumers made a fuss about it. Plus the UK has a much longer history of debit card use than the US.

The US banking sector is less regulated than the UK sector so can get away with adding fees. The UK banks would love to move to the same model but would get strung up by the public and regulators.

like what European Union did with the basic bank account

I understand those are more expensive than normal accounts on commercial basis, bad value for the money. It's only that the bank cannot refuse to open a basic account because they don't like the customer's business. I doubt a debit card is included. Those accounts are needed because all wages and even social benefits are only paid by bank transfer in most EU countries.

Disclaimer: Haven't checked the details now.

> Disclaimer: Haven't checked the details now.

Well that's dumb. The UK version is fee-free and of course it includes a debit card; how would you use the account otherwise? Passbook account like the 1970s? They don't want you tying up valuable cashier time.

I assume the motivation was that banks don't have to offer free service and make losses on it, they can charge "a reasonable" price.

In practice they charge less "for good customers", i.e. where they do or at least assume to make more money by selling other products or by paying a non-competitive interest rate on higher balances.

A quick Web search brings up a ruling that a German bank was ordered by court to pay back the fee difference between a commercial account and a basic account. But I understand the practice continues more or less hidden. Few of the basic account customers would claim their rights.

I would guess most basic accounts come with an ATM card.

    I doubt a debit card is included.

Is it possible to get a bank account now without a debit card? ATM card only must be incredibly rare. Plus, the bank makes more money on debit card purchases than cash (that was withdrawn from ATM).

> Is it possible to get a bank account now without a debit card?

Absolutely. I have one myself.

I have the had the account for nearly 30 years and maybe I should completely close it. But for "historic reasons" some senders know only that account and some direct debit is still active there. But I have cancelled my cards a decade ago when I intended to close the account.

The government doing things is good, actually.

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