Chapter 15: SAMPLE BANK FEES

CHAPTER 15

Sample Bank Fees

BANK FEES FOR DOCUMENTARY credits and documentary collections vary from country to country and from market to market within a country. Fees also vary depending upon the relationship a company has with its bank. EXAMPLE : Bank fees in Hong Kong are low because of the widespread use of such payment methods there. On the other hand, they are quite high in Europe where such payment methods are not in as much favor. Prices in the United States are about in the middle.

Within large and geographically diverse markets like the United States, however, there is a great variance in bank fees. These are dependent on local market considerations. For example, in some markets documentary credits are considered to be “commodity services” meaning that customers generally know what they are buying, consider it to be virtually the same from every source, and buy based on price rather than service.

Finally, larger commercial banking customers who use documentary credits and collections on a regular basis will pay less than small firms who only use them infrequently. In our survey of bank fees, several bankers reported that processing a single documentary credit for a first-time customer results in a loss to the bank; so much time is spent educating a customer who may be using a documentary credit for the first and last time.

Bank fees for documentary credits and documentary collections are not charged on a package basis, but rather on an individual, or “à la carte,” basis. Everything you order adds to the bill. The fees listed on the following pages will give you a range of typical charges. The examples will give you a more concrete idea of what individual transactions cost.

DISCLAIMER It is always awkward to list sample fees in a book with international distribution. Fees vary wildly from market to market and change from time to time within given markets. The structure of a bank’s rates may vary as well.

Although bankers and traders from several countries were interviewed, your company situation, banking market, and local government regulation may produce rates different from those listed below.

Import Documentary Credit Fees

The range of banking fees listed below relate to importers. Lowest fees are generally for electronic issuance.

All figures are expressed in US dollars, min = minimum, qtr = quarter, mo = month, ba = by arrangement.

LOW HIGH Issuance 1/8%, $50 min/qtr 1/4%, $105 min/qtr Amendment to Increase Value $40 1/4%, $80 min/qtr Amendment w/out Increase in Value $40 $80 Negotiation 1/8%, $60 min 1/4%, $100 min Acceptance 2% per annum, $90 min2% per annum, $100 min Deferred Payment ba, $90 min ba, $100 min Transfer 1/4%, $100 min 1/4%, $150 min Assignment 1/8%, $85 min 1/4%, $200 min Discrepancy $40 $60 Steamship Guarantee $75/qtr $100/mo Air Waybill $50 $75 Expiry/ Amount Unused $30 $40 Cancellation $50 $75

EXAMPLE 1: An import documentary credit issued for US$10,000 with one amendment and one document discrepancy might be subject to the following fees: 1) Issuance fee (minimum charge) US$100.00 2) Cable charge 50.00 3) Negotiation fee (minimum charge) 100.00 4) Amendment fee 70.00 5) Discrepancy fee60.00 TOTAL US$380.00

EXAMPLE2: An import documentary credit issued for US$100,000 with two amendments might be subject to the following fees: 1) Issuance fee (1/8%) US$125.00 2) Cable charge 70.00 3) Negotiation fee (1/8%) 125.00 4) Amendment fee, 2 @ 70.00140.00 TOTAL US$460.00

Obviously, the smaller the credit issued the greater the total fees as a percentage of the total credit.

Export Documentary Credit Fees

All figures are expressed in US dollars, min = minimum, qtr = quarter, mo = month, ba = by arrangement.

Low High Pre-advice $30 $50 Advice $35 $100 Confirmation 1/10%/qtr, $100 min 1/4%/qtr, $100 min Amendment $45 $75 Amendment–confirmed DC 1/8%/qtr, $85 min 1.5%/annum, $125 min Negotiation to same bank account 1/8%/qtr, $85 min 1/2%/qtr, $165 min Negotiation to other account 1/8%/qtr, $85 min 1/8%/qtr, $115 min Documents sent unexamined $65 $115 Acceptance ba, $90 min 3%/annum, $125 min Reimbursement $65 $70 Deferred payment/confirmed DC 2% annum, $75 min 3% annum, $90 min Deferred payment/unconfirmed DC $50 $75 Discrepancy $40 $60 Transfer 1/4%/qtr, $100 min 1/2%, $200 min Assignment–pay proceeds 1/4%, $150 min 1/2%, 150 min

EXAMPLE 3: An export documentary credit issued for US$50,000 might be subject to the following fees: 1) Advice fee (minimum charge) US$60.00 2) Confirmation 125.00 3) Negotiation fee 115.00 4) Amendment fee 70.00 TOTAL US$370.00

Sample Documentary Collection Fees

The range of banking fees listed below relate to both importers and exporters using documentary collections (D/A and D/P terms). All figures are expressed in US dollars, min = minimum, qtr = quarter, mo = month, ba = by arrangement. Low High Usance $80 $105 Sight $60 $80 Direct Collection Letter $40 $50 Amendment $20 $30 Tracer $15 $25 Maintenance 30 days free, $25/mo. Protest $25 $250 plus expenses Bill of Lading Guarantee 1/4%/qtr, $60 min Air Waybill Release $50 $75/qtr

Miscellaneous Fees

All figures are expressed in US dollars, min = minimum, qtr = quarter, mo = month, ba = by arrangement. Low High Short Telex/SWIFT $30 $40 Long Telex/SWIFT $65 $70 Fedwire $20 $25 Mail Domestic $5 min $10 min Courier Domestic $20 Courier International $35 min $40 min Fax Domestic no charge $5/document Fax International $10/document $15/document Wire Remittances —Inward

Credit to account holder Free $20

Payment to non-account holder $20 $50 —Outward

Domestic $10 $20

Overseas $30 $35

Tracer/Cancellation/Stop Payment $20 Credit Reference Inquires $30 plus foreign charges$50 plus foreign charges