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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 If cash is withdrawn from an overseas ATM, the total fees can be significantly higher.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.