The profit banks earn from the refugee crisis − in numbers

On Friday, September 13, 2019, Thomas Mavrofidis was at a branch of Alpha Bank in Lesvos, where he lives and works as a professor of System Theory & Informatics at the University of the Aegean. He observed three refugees having a hard time with a transaction at the ATM.

“They were between 25 and 35 years old,” he tells Solomon MAG, adding that he often sees refugees, either from the Moria camp or other shelters, at the bank. “The money is deposited into their account on a particular day. The ATM instructions are in English and because most of them don’t speak English, you often see whole groups of refugees around an ATM. The one in the group who does speak English, is the one who takes each person’s card and helps them withdraw their money from the ATM.”

The three refugees he saw that day did not speak English. As he waited behind them in line, and he realized that they were unable to complete their transaction, Mavrofidis decided to intervene. He saw that they were trying to withdraw €90 each – the amount that they were told each could withdraw. The ATM, however, warned that a transaction would cost €2.50. That was why they could not withdraw the amount they wanted.

After some time and several attempts using hand gestures and ‘sign language’, Mavrofidis was able to make them understand that in order to withdraw their money, they had to choose the option of withdrawing €80 euros. All three men left after completing their transactions.

The UNHCR financial assistance program

From the early months of the refugee crisis, when it became clear that refugees would remain in Greece, there was interest in creating a financial support framework.

The purpose was twofold: On the one hand, with some money at their disposal, refugees could use it to meet their own needs, while maintaining their autonomy and dignity, however this meant that they would have an alternative and could avoid the poor quality of food available to them at the shelters. On the other hand, the local communities adjacent to the refugee shelters could make a substantial financial gain from the goods purchased by refugees. Finally, the Refugee Financial Assistance Program began in April 2017, with an initial beneficiary of 33,000 refugees for that month.

The financial assistance is part of the ESTIA program, funded by the European Union’s Humanitarian aid and Civil protection and implemented by the UNHCR, with the participation of its partners active in Greece, in cooperation with the Ministry of Migration Policy. At the same time, contrary to the fake news which is occasionally circulated, the program’s resources come entirely from Commission funds and do not burden the Greek state budget.

As noted by the UNHCR after contacting Solomon MAG, since launching the program “cards have been distributed to approximately 65,000 households, covering the needs of more than 128,000 people”. Regarding the amount of time it takes for a person to start receiving the benefit, “UNHCR is working to ensure that eligible beneficiaries participate in the program as soon as possible. Depending on the region and level of new arrivals, this process can take from one to two months” for each new refugee arriving in Greece.

October 2017 is the first month for which published data is available. During that month, a total of 15,153 cards were issued to support 33,595 refugees, and the total amount of funding allocated was €3,300,000. Since then, the number of beneficiaries, cards and amounts available each month has been steadily increasing.

In January 2018, the beneficiaries had reached 39,233, the number of cards distributed was 17,903 and the total amount of aid for that month was €3,900,000. In October 2018, the beneficiaries were 56,674, the number of cards 27,377 and the total amount reached €5,700,000. Based on this past August’s figures, the last month for which data is available, the numbers appear to have more than doubled compared to the beginning of the program.

For August, there were 74,349 beneficiaries, 37,325 cards distributed and a total of €7,600,000. Since October 2017 a total of € 27,550,000 has been dispensed.

How the cards are distributed

Each refugee who is considered eligible for financial aid receives €150 per month if there is no food provided at the shelter where they live, and €90 if food is provided. For families, a representative is appointed, who receives the card, which includes the amount that corresponds to the entire family according to its size. In the case of a family residing at a facility with food included, the corresponding amount is €190 for a three-member family, €290 for a five-member family, and €330 for a family of seven or more. If no food is provided, respectively, the money is €340 for a family of three, €450 for a family of five, and € 550 for a family of seven or more.

A prerequisite for the refugees to continue receiving the benefit is that they must reside in Greece, as if they attempt to use the card abroad, the card is automatically blocked and deactivated. As the UNHCR points out, this card, which is blue and bears the UNHCR and Mastercard logo, is neither affiliated with a specific bank nor with a specific account. What does this actually mean? Refugees cannot, for example, deposit any money on the card.

At the same time, refugees who are beneficiaries of the program tell Solomon MAG that they are able to use ATMs at any bank they wish. UNHCR does not charge a fee for the transactions. However, the banks do charge a fee, a fact which seems to be known to the UNHCR. In reply to our question, UNHCR confirms:

“We have information from beneficiaries that some (sic) ATMs charge a fee.” And, as we shall see, the amounts that banks receive each month via the refugee transactions are by no means insignificant.

Banks earn at least €100,000 a month

Regarding the issue that has arisen with the refugee transaction fees, we have been told by UNHCR that they were informed of it at the beginning of the summer. According to what we were told, they were in contact with the provider and Mastercard in order to find a solution and for the cards to not be issued as international cards, so there would be no transaction fee.

“However, this has not been possible and we are now in direct contact with the Greek banks, in an effort to find a solution soon,” a representative of UNHCR stated to Solomon MAG.

The fee charged for each withdrawal varies by bank. At the end of July 2019 the fee for international transactions at the ATMs of Greek banks increased, with banks now charging from €2.50 for withdrawals (Alpha Bank, Eurobank) to €2.60 (National Bank) or €3.00 (Piraeus Bank).

How much money does the bank end up earning from the refugee transactions each month? Taking into account the 37,325 cards made available to refugees in August, one can see that the minimum income earned by Greek banks for August, even if each card was used for a single withdrawal, reaches €100,000. Therefore, under the current circumstance, (if it continues), within a year the minimum amount that banks will gain from the money allocated to refugees will exceed €1,200,000.

At the same time, the situation at refugee shelters located on the Greek islands − where populations have multiplied and continue to surpass capacity levels − remains tense. There, the risk of having the money you withdrew from the ATM stolen, is very real. “Here, they’ll kill you for €20,” a refugee living on Samos told us. Thus, refugees are often forced to make frequent and small withdrawals in order to minimize the risk of having all their money stolen.

For example, a beneficiary receiving €90 can make three or four withdrawals within a month, with the actual amount given to him being limited to € 80 at best (if any balance is left on a beneficiary’s card, he can use it the following month). Therefore, the amounts that end up in Greek banks are even more significant, especially since many of the families (who receive a larger benefit) choose to make multiple withdrawals per month.

So, if a card is used twice a month for withdrawals, the minimum monthly amount that the Greek banks earn from fees is €200,000, which can be even higher. With an average of three withdrawals per card, which is not unlikely given the high number of large families, the minimum amount gained by banks reaches €300,000 per month.

Could it have been done differently?

The circumstance created by charging refugees a transaction fee is important for two reasons. On the one hand, as this is perhaps the largest humanitarian crisis of our time, one would expect that there might have been a pre-devised plan in order to avoid transaction fees for each withdrawal (or at least a certain number of transactions per month) that refugees make with the cards.

On the other hand, unlike any individual who has a bank account, the beneficiaries of the program are not able to choose the ATM of a bank which doesn’t charge a transaction fee. Thus, they have no choice but to be charged for each transaction they make.

Recently, refugee arrivals on the islands have risen, with more than 13,000 people arriving in Greece in July and August 2019. In other words, more than half of those arriving in general in 2019. The amount to be earned by Greek banks from increased refugee transactions, is projected to be even greater.

Could it have been done differently? What matters is that in 2016, UNHCR conducted an international tender to contract the project, in accordance to the criteria and provisions governing the equivalent awards of UN bodies. Greek banks were also interested in this competitive selection process.

The UNHCR, however, awarded the tender to a UK-based provider whose bid was judged to be the most suitable.