"The total for both of us was $55, so you owe me $27.5."
"OK, here is some random bank's ATM which charged me $44 to get $40 (2 x $20) out, and now you say you don't have $12.5 in change on you ... well, shit." ... "What will you prefer: GWallet or FB ?"
"OK you say you owe me a beer from last week so here's a $20 and we're even"
"Oh you need the full $27.50 because your life will collapse due to a lack of $7.50 in cash although nobody uses cash, well, there's an ATM in the lobby thats free on my network, I'll spot you $30 on the $27.50 and you owe me a can of soda next time"
The problem with a bazzilion services all trying to extort small transactional fees either short term or long term is the marketing about their fee can't avoid mentioning that the fee is really small and we're discussing fairly small amounts of money.
There is absolutely no fee on Venmo/Square Cash/PayPal as long as you use debit card/bank account.
I am okay with rounding off amounts with my close friends. But with other people there is that social angle with being comfortable enough when I tell them I will buy you soda next time. Plus consider this "buying soda next time" with 10 people at the same time in either direction. The question is not about $2.50 being a small amount. I like being exact about money and so do lot of my friends. May be I am from a different background where $2.50 is still money that should be cleared.
He got 40€ out and paid 4€ in fees. Thats not uncommon in Germany, where different bank groups (eg Deutsche Bank, the Raiffeisen cooperative association and the Sparkasse) charge nothing for withdrawals but other bank customers get charged. Couple of years ago it was introduced that the fees had to be displayed prior to withdrawal but they're still high.
"$44 to get $40" => $4 in fees for using another bank's ATM. This is very much within the ballpark range for USA at least.
Sidenote: Usually such fees are O(1), i.e., independent of the actual amount being withdrawn (and even applies to non-monetary transactions, such as balance inquiry).
"You owe me $20" "Ok, hold on, let me get into my car, drive down the street, look for parking, get out of my car, wait in line, pay an extra $1-4, drive back down the street, look for parking, exit car, then hand you your $20 that just cost me about $30 in time, effort and gas."
But maybe I'm cynical because I'm in Austin and driving anywhere is just miserable.
When you get used to something like Venmo, and a critical mass of friends are using it, it's amazing how effortless it is. Take a cab somewhere, one person pays with their credit card, the other people settle up in the next 30 seconds. Done.
It's the critical mass of friend's that key though. Hell, Paypal is just as effortless once that critical mass is hit, and that's has been around since 1998.
Paypal's UX has changed to be simpler, but I don't think they even had a mobile app for the longest time. It was also several inputs, such as choosing the type of transaction to make sure you don't get charged a fee for sending money to your friend.
I'm not going to go home and remember to paypal on my desktop when I could just use the venmo app to send you money right after you paid.
"Oh wait, that's not my bank's ATM. I don't want to be charged a $4 fee. Oh well, I'll get you next time." ATM's are not a good solution. I don't want to pay $24 to give someone $20 because of ATM fees. Or wait in a long line (assuming you are at a busy location/area) to get the money.
Or - here's this "checkbook" thing I have sitting in my bag, I'll write you a $20 check, and you open up your banking app and deposit it immediately, and keep the paper check just for a receipt.
People walk around with checks? I cringe on the rare occasions I have to write one to the local water utility (they refuse to provide any recurring payment solution - I suspect because low margins, and they like the late payment fees).
It depends on a lot of things. Some banks charge to withdraw from other banks' accounts. Some banks join "networks" and don't charge for others in the same network. Some ATMs are set up inside stores, and they charge money that goes to the store instead of a bank.
I hear it's pretty common in the US. I guess it has to do with the question who operates the ATM. In Germany it exists too if you use an ATM from a bank that's not partnering with your bank (which is ~50% of all ATMs and straightforward to figure out).
