Why does my bank not charge a fee for small amounts?

Question

I work abroad in a SEPA country and send money to my non-SEPA home country regularly. In the foreign country I have a euro bank account and in the home country - a non-euro bank account.

My foreign bank account does not have any fees for sending money, however my home bank has significant fees for receiving money (10 euros + 0.5% of the transferred amount).

I discovered that my home bank does not have any fees if the money received is less than 50 euros.

To avoid the fees, I simply send 49 euros weekly instead of 200 euros every month. Using a different bank would not be better, because all but one bank in my home country have this reception fee.

My question is why does my home bank have a policy like this? How is handling 200 euros any different than handling 50 euros? What does the bank do behind the scenes to warrant this policy?

This seems like an inconvenience both for me and the bank itself, as we both have to do the same thing 4 times a month instead of once a month to get the same result.

Answer 1

I am going to speculate here, which isn't great on Stack Exchange.

If they charges 10 euro plus 0.5%, on a transfer of 49 euro. then that is effectively a 20% Fee. That is outrageous, and people would complain about the bank to friends and on social media. Which would be really bad marketting, and worst case senario may end up with something the bank really doesn't like, such as politicans currying favour by passing reactionary laws against "punnative" fees.

So they just quietly do not charge them. (But I'm assuming that do not advertise this fact widely.)

The point of the fees are not to make money off people transfering 200Euro a month. Or even 2000 euro a month (2000 euro is the point at which the 0.5% fee is 10 euro). They are really only interested when people are transfering say 10,000 euro. At which point the customer doesn't care so much about the fees, as it is not a huge portion of the money they are moving. And it is also not worth the customer's time to break that up into 205 seperate transactions. (Since said custom's time is probably worth a fair bit per the hour.)

The actual per transaction cost to the bank is probably extremely low. Quiet likely it is basically nothing per transaction, as they accumulate a certain amount of forign money then clear (exchange it) it every day (or so) in bulk. And there costs are really associated with then they exchange it. What they are likely worried about is the exchange rate changing in between the time which they give you the money, and then clearing it all in bulk. Thus the 0.5% fee.

This is all speculation though.