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Why are wire transfers in Canada so expensive compared to Europe? The simple answer I've seen is because bankers are crooks, but I find that this oversimplifies the situation — I don't believe bankers in Europe are particularly nicer than their colleagues in Canada. To transfer money between my Swedish and Dutch bank accounts, I pay nothing. I pay a small monthly fee for my Swedish credit card, and of course I pay nothing to simply obtain information through internet banking. By comparison, an the Royal Bank of Canada, outgoing wire transfers within Canada start at 20 CA$, and fees for Alterna, include 30 CA$ for a wire transfer, 5 CA$ for an ATM inquiry, and Search for items, deposits, names, accounts... is 5 CA$/item (although I'm not quite sure what that means). It's not cheaper in other credit unions, such as the Finnish Credit Union or The Energy Credit Union.

Why does it cost so much, and where does the money go?

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gerrit
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  • I've also heard credit unions are generally cheaper. While they don't have the profit imperative like a big corporate bank would, perhaps some CUs aim to subsidize basic banking services with revenue from more specialized services? Thus I wouldn't expect everything to be cheaper across the board. Plus, services that require dealing with other institutions (e.g. a customer's use of non-CU-owned ATMs) are likely at a higher cost to the CU than any bank. – Chris W. Rea Jan 17 '14 at 14:49
  • @ChrisW.Rea My understanding until now basically boils down to what littleadv describes in this answer: Why? Because they can. There's no real competition over consumers, and the consumers themselves are not educated or sophisticated.. Having a basic understanding of the principles of a credit union, I'd expect that customers actively choosing one are better educated, and since they own the bank, could together decide to innovate. If it's not the bank or credit union keeping 30$ for a Canadian wire transfer, who is? – gerrit Jan 17 '14 at 15:03
  • I'd expect the average Canadian cares less about a bank's wire transfer fee and more about ATM withdrawal fees, account fees, and the lack of decent interest. Moving money in Canada between people and accounts is easy & relatively cheap. Those who need to use a wire transfer are probably sending money to another country. I'd expect the average Canadian rarely does that. Perhaps in Europe it is needed & common enough that competition has driven down the cost? – Chris W. Rea Jan 17 '14 at 19:44
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    It's not only competition, but also regulation in Europe. For example, IIRC wire transfers between euro countries are not allowed to be more expensive than domestic transfers (which have been free for a long time), at least for amounts up to 50.000 EUR. See for example this page: http://europa.eu/youreurope/citizens/shopping/banking/faq/index_en.htm – Pieter Naaijkens Jan 17 '14 at 20:45
  • @ChrisW.Rea Pardon my ignorance — I only know wire transfer as a way to transfer money between people, domestically /or/ internationally, that or Paypal. If I owe my remotely located friend 20$, how would I pay him? Perhaps the niche filled by wire transfers in Europe is filled by other techniques in Canada? Oh, and wouldn't there be quite some financial traffic between Canada and the US? – gerrit Jan 17 '14 at 22:11
  • Future visitors to this page might be interested in this follow-up question: In Canada, how can I most easily/cheaply send money to a friend online? – Chris W. Rea Jan 18 '14 at 19:55
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    Related question -- a comment to its answer suggests it may, in part, be due to confusion in terminology and that "wire transfer" in Europe is more equivalent to ACH (in the USA -- not sure about Canada). – TripeHound Jun 16 '17 at 09:00
  • Could it be that different banks get their money different ways? I don't know about Netherlands or Sweden, but my bank in Spain also doesn't charge for electronic transfers. But if I pay my rent in cash via a teller, there's a two-euro fee. And the monthly fee for having an account is much higher than typical fees in U.S. banks. (My two U.S. banks currently do not charge me an account maintenance fee.) – WGroleau Jun 19 '17 at 17:26
  • @WGroleau I always thought banks mostly made their money by investing the deposits of their customers, which is why we have fractional reserve banking and low or zero fees for bank accounts and ATM cards, despite the high cost of keeping ATMs stocked with cash. – gerrit Jun 19 '17 at 17:36
  • @gerrit: I think you are correct that they get most of their profit that way. But it's still true that the answer to the question could be that bank A charges so much more than bank B for service X because bank B chooses to get their extra funds from service Y. – WGroleau Jun 19 '17 at 17:57
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    This question is old but I wanted an interesting tidbit that I just discovered - With Canadian banks (I can confirm this is true with at least RBC and Scotia): Creating an INTERNATIONAL wire transfer can be done online and costs roughly $15. But creating a DOMESTIC transfer (to the bank down the street for example), costs $45 and must be done in person. Surely the costs and risks associated with domestic transfers are not higher.... so that leaves only one conclusion. We are getting ripped off. – Mark Thomson Oct 01 '18 at 16:06

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I don't believe there is any particular structural or financial reason that outgoing wire transfers cost so much in Canada, their costs are no higher than other countries (and lower than many). Wires seem to be an area where the Canadian banks have decided people don't comparison shop, so it's not a competitive advantage to offer a better price.

The rates you quoted are on the low side: $80 for a largish international wire is not unusual, and HSBC charges up to $150!

There are several alternative ways to transfer money domestically in Canada.

If the recipient banks at the same bank, it's possible to go into a branch and transfer money directly from your own account to their account (I've never been charged for this). The transfer is immediate. But it couldn't be done online, last time I checked.

For transfers where you don't know the recipients bank account, you can pay online with Interac E-Transfers, offered by most Canadian banks. It's basically e-mailing money. It usually costs $1 to $1.50 per transfer, and has limits on how much you can send per day/week.

Each of the banks also have a bill-pay service, but unlike similar services in the US (where they mail a paper check if the recipient isn't on their system), each Canadian bank has a limited number of possible payees (mostly utilities, governments, major stores).

Rob Hoare
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  • Interac is really the way to transfer money within Canada. It's fast and easy. – Foliovision Oct 12 '17 at 20:14
  • I'd say there is a structural/historical reason: Interac and before that cheques are the usual (and cheap) way to transfer money in Canada, and wire deposits likely considered a speciality with corresponding fees. At the same time, wire deposits were and are the usual and cheap way to transfer money in Europe, and cheques a special service with fees comparable to what domestic wires cost in Canada (I remember a private person filling in a cheque in Germany in the 80s, and I've received less ≈3 cheques in Europe in my whole life) – cbeleites unhappy with SX Sep 11 '23 at 07:13
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"because bankers are crooks" is a very close answer. Just accept the truth that financial industry is the only service industry that could turn into giant parasite chopping pieces from real economy. I am not anti-financial, because greed is not banker's fault, but just one significant part of human nature. Every human being has greed and fear built in it.

But financial industry is the only one which is built on exploiting greed and fear.

Governments are throwing gasoline canister into that fire in desperate extinguish attempts, trying to "regulate" but only making it worse. With all that "counter-cybercrime", "counter-terrorism" and "counter-everything" efforts, ordinary people will be hurt as always.

sanaris
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  • What is different in Europe, then? Are European bankers not crooks? Are Eurpean banks more or less regulated? All I can see is a tirade about banks and regulations, and I do not see how this answers the question in any way. – elaforma Oct 24 '22 at 20:48
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Transaction fees are part of the income for banks, and as we know they are profit making corporations just like any other Company. The differene is that instead of buying and packing and Selling groceries, they buy and package and sell Money. Within the rules and the market they will try to maximize their profit, exactly like Apple or GM or Walmart and so on.

Sweden and Holland are part of the European union and the leaders of the union has defined (by law) that certain types of transactions should be [start edit] with the same fees as national transactions [end edit]. In order to transfer Money from your Swedish account to the Dutch account you do what is called a SEPA transaction, which should be done in one day [start edit] with the same cost as a national payment (currently zero in Sweden) [end edit] to you as a customer.

[Addition] Possibly your Swedish account is in swedisk krona SEK and will incurr a cost for Exchange into Euro.

Reference: https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

Gunnar

ghellquist
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    Nope, SEPA transactions don't need to be free. The SEPA outbound payment may not be more expensive than a dometisc (i.e. Swedish) outbound payment, and the SEPA inbound payment may not be more expensive than a domestic (i.e. Dutch) payment. It just so happens that the Swedish bank has free outbound payments, and the Dutch bank has free inbound payments. – MSalters Jun 16 '17 at 15:23
  • I stand corrected. It shows how a little knowledge can be dangerous. /Gunnar – ghellquist Jun 18 '17 at 06:17
  • Interac (10 free per month with a premium account, $1.50 per transaction after that) are no more expensive than our SEPA transactions. Your answer is a bit too pro-EU, anti-Canada. – Foliovision Oct 12 '17 at 20:16
  • @MSalters Also additionally, banks are allowed to charge fees for FX if the accounts are in different currencies. – Robin Salih Aug 29 '19 at 09:51