Greece to Cap Bank Fees on Money Transfers and Eliminate Consumer Bill Pay Charges

Greece is taking steps to ease the financial burden on consumers by capping banks’ money transfer fees and eliminating charges for bill payments.

Prime Minister Kyriakos Mitsotakis announced these measures on Sunday (Dec. 15), emphasizing that current efforts by banks to reduce administrative costs have been insufficient. He outlined plans to cap fees at €0.50 ($0.52) for money transfers up to €5,000 ($5,249), while ensuring that consumers will no longer face additional charges when paying their bills.

Pressure for Reform

This move comes amid growing public demand for greater control over bank fees, following Greece’s prolonged debt crisis. The crisis necessitated a $67 billion government intervention to stabilize the banking sector.

According to data from Greece’s central bank, the country’s banks generated over $1 billion in net fee income during the first half of 2024, a 16% increase compared to the same period in the previous year. The rise in fee income has fueled calls for more consumer-friendly banking policies.

Banks to Support Community Development

In addition to fee caps, Greek banks will contribute $104 million to rebuild old schools or construct new ones. They will also face a doubling of property taxes on the real estate they manage.

“Budget means, above all, realism,” Mitsotakis said, as Greece prepared to vote on its upcoming budget.

Global Parallels in Banking Fees

The issue of banking fees is not confined to Greece. In the United States, regulatory action on overdraft fees has sparked legal challenges. A coalition of trade organizations recently filed a lawsuit against the Consumer Financial Protection Bureau (CFPB), claiming the regulator overstepped its authority with a new rule on overdraft services.

The CFPB’s rule, set to take effect in October 2025, mandates that banks and credit unions with assets exceeding $10 billion must adhere to one of three options:

1. Cap overdraft fees at $5.
2. Limit fees to cover actual costs and losses.
3. Comply with standard lending laws.

The CFPB aims to close what it described as an “outdated overdraft loophole” in lending laws. However, critics argue that the regulation could inadvertently harm consumers by increasing operational costs for financial institutions.

Opportunities for Neobanks

Meanwhile, the shifting dynamics of traditional banking fees present an opportunity for neobanks to capture market share. A PYMNTS report earlier this year noted that as conventional banks scale back “free” services, neobanks could attract customers by developing innovative business models.

However, success will depend on how well neobanks navigate a landscape where consumers are increasingly cautious about their spending and selective about where they allocate their financial resources.

Conclusion

Greece’s decision to cap money transfer fees and eliminate bill pay charges underscores the growing demand for consumer-friendly financial services. As banks adjust to these new measures, the reforms could set a precedent for other nations grappling with similar challenges in balancing profitability and consumer protection.