MoneyHub welcomes inquiry into currency conversion fees
MoneyHub Welcomes Australian Competition and Consumer
Commission (ACCC) inquiry into foreign currency conversion
fees, challenges New Zealand Government to do the
same
October 9, 2018
The ACCC’s announcement of an
inquiry into foreign currency conversion fees will put
Australian banks under the microscope and seeks to get a
fairer deal for Australians. The inquiry will cover fees
applied to:
1. Converting money into a foreign
currency
2. Transferring money overseas
3. The use of
debit and credit cards overseas
4. Using debit or credit
cards online to make purchases in a foreign
currency
5. Transferring money to a foreign currency on a
prepaid travel card
MoneyHub argues a similar inquiry is
needed in New Zealand, with bank customers currently paying
up to 2.80% on currency conversion fees when using a debit
or credit card.
MoneyHub’s Senior Researcher Christopher
Walsh said “Transaction fees charged by banks on
ordinary credit and debit card purchases in foreign
currencies range from 1.85% to 2.80%, with most banks
hovering around 2.50%. While this doesn’t sound like much,
the fees add up over the course of a holiday or when buying
something from outside of New
Zealand”.
“Despite debit and credit
card currency conversions being provided by Amex, Mastercard
and Visa who convert each purchase into NZD using their own
FX rates, banks are hungry for their cut of each transaction
too.
"In a simple example, a customer
of a New Zealand bank who travels overseas and spends the
equivalent of NZ$2,000 in local currency using their credit
card can expect to incur around $50 in foreign exchange
conversion fees charged by their bank. If cash is withdrawn
from an overseas ATM, the total fees can be significantly
higher. Some banks charged up to $7.50 per withdrawal plus a
2.50% commission, meaning that taking out NZ$200 overseas
would cost as much as $12.50 in bank fees, which seems very
high”.
“Customers don’t need to
travel overseas to incur these fees. The boom in online
shopping means anyone ordering items from overseas using a
debit or credit card will be charged the same currency
conversion fees by their bank as if they were physically in
the country”.
“MoneyHub researched the credit card foreign currency conversion fees charged by Kiwibank, BNZ, ANZ, ASB, Westpac, TSB, the Co-operative Bank and SBS Bank. Kiwibank and ASB offered the best value, with a 1.85% and 2.10% fee respectively on the transaction value when using a credit card, compared to ANZ, TSB and Westpac who charge 2.5%. Debit card fees were generally higher than credit cards, with a range of 2.1%-2.8%”.
MoneyHub’s dedicated guide to the Best Debit & Credit Cards for Foreign Currency would be updated on an ongoing basis, with research into Prepaid Travel Money cards, Foreign Currency Exchange and Visa vs Mastercard FX rates currently underway.
More: Foreign Currency Conversion Fees and ACCC Media Release
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