12th Oct 2018
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ACCC investigating banks fee-gouging Aussie travellers
ACCC to fight unfair fees

Australian travellers are being “ripped off”, says Treasurer Josh Frydenberg, who has told the competition watchdog to investigate dodgy banks charging Aussies the third highest rates in the world for foreign transactions.

According to the Australian Competition and Consumer Commission (ACCC), Australia is the third most expensive G20 country from which to send money overseas. The fees charged by banks for international credit card purchases and foreign currency conversions have been described by the Treasurer as “excessive”, totalling around $2 billion a year.

The ACCC has been asked to investigate foreign transaction fees charged by the banks.

“Millions of Australians are travelling overseas, buying things on their visa card, transferring Australian dollars into foreign currency and the banks are charging them too much,” said Mr Frydenberg.

“So we want to stop the rip-off.

“When you look around the world, people pay less — [for example] in the United States and Europe. And the question must be asked, why is it not case in Australia?” he said.

ACCC chief Rod Sims said Australia is the third most expensive G20 country from which to send money.

“If you send $1000 overseas from Australia, on average you'll pay $9 more than if you sent an equivalent amount from the United Kingdom, and $23 more than if you sent it from the United States,” said Mr Sims.

“Given the amount of funds Australians remit, these higher charges can amount to hundreds of millions of dollars each year across the economy.

“We will be examining why major companies in Australia, including the big four banks, seem to be able to consistently charge high prices.”

The issues investigated in the ACCC inquiry will include:

  • pricing of foreign currency conversion services
  • costs to supply foreign currency conversion services
  • the nature and extent of competition between suppliers
  • how prices are communicated and factors limiting the ability of consumers to effectively compare prices.

The Productivity Commission (PC) has also recommended that the ACCC and ASIC investigate “what additional disclosure methods could be used to improve consumer understanding and comparison of fees for foreign transactions”.

A PC report found that many financial institutions left a gap between the exchange rate offered to customers and the actual exchange rate at which they purchased the currency. The same report noted that credit card foreign transaction fees had increased threefold from the early 2000s to now.

According to the report, “While financial institutions are free to set their own prices on foreign exchange, it is clear that consumers struggle to understand and compare the different types of prices charged.

“If consumers do not respond to price signals, it affects competition in foreign transactions.”

Mr Frydenberg has asked the ACCC to report back with its findings early next year.

Do you think it’s expensive to use your credit or debit card when you travel?

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    COMMENTS

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    Cowboy Jim
    13th Oct 2018
    7:57am
    Found that out when I went to Europe last month. Checked here about the Euro rate and asked my sister over the phone what she could get for A$ at the railway stations. The difference was 4c in every dollar. Took with me $5000 in cash and changed them over there. Inconvenient maybe but 5000 x 4c was better in my pocket. If you change the stuff in two goes you do not even need to leave a trace (no ID required).
    Could have sent the money to my sister's account from my account here but the costs (as your report states) were just too high.
    MICK
    13th Oct 2018
    10:12am
    This story is a beat up Jim and those who get stung have caused their own problem because they have not investigated the means of avoiding high forex fees.
    I suggest you get a debit or credit card which does NOT charge high fees and we have NEVER paid the rip off fees many travellers seem to accept.
    My suggestions on how to do this:

    1. Get a Citibank debit card. You load up the card before you depart and the conversion fee is around 0.5%. That's 50 cents in the dollar. Fantastic! We've used this card for 8 years and love it.
    2. ANZ recently removed ALL overseas charges if you use their credit card. Have not used it yet but the thing to check is the conversion rate. I suspect it will be about the same as the Citi card as the competition may be forcing ANZ to fall in line or lose business. To be checked out.
    3. The third is a credit card named '28 degrees'. Similar deal to the Citi card. We could not get one of these because the income required to get the card was higher than what we earn. It was a good product though.

    As always do the research. Without that people get stung. Never much changes. Good luck.
    Cowboy Jim
    13th Oct 2018
    12:22pm
    Thanks for the tip Mick, wife has a Citibank debit card. I am sure you meant 50 cents in a hundred dollars!! I shall check that one out. I do have an ANZ basic credit card but have not used it for a while overseas.
    Micko
    13th Oct 2018
    2:09pm
    I agree with the other Mick. I've needed to travel several times a year to Europe, US, Asia for work for the past 20 years, and over the whole time I've used a Citibank Debit Card. The exchange rate it much better if you withdraw your money overseas. About 50% of ATMs globally accept them (look for Cirrus or MasterCard logo). Before I leave I check where is the ATM in the airport I am landing, and start from there. Also, Citi is in more countries than any other bank (over 100) so you can always walk into a branch in the city if needed, but I have never needed to. In some developing countries there is a small fee by the bank that owns the ATM (eg. some in Vietnam will charge about 20c) but you have the option of accepting or not). I also carry a Citibank Credit Card which gives the same good exchange rate and saves me going to the ATM as often. I also travel with a backup Aust bank debit card which I keep separately, and carry US$50 in small notes just in case as it is universally accepted. Happy travels.
    Ted Wards
    6th Nov 2018
    11:21am
    Oo thanks for the info Mick, I am off overseas next month and wasn't aware ANZ had removed the fees! Quandary solved!
    VeryCaringBigBear
    13th Oct 2018
    8:03am
    Unfortunately one needs more than one card when overseas. The trick is not to use cash but plastic for the best currency conversion rates.
    1984
    13th Oct 2018
    11:02am
    It's just not travellers that get stung but those that send money into an overseas account like sending money to a loved one or even into an account you have set up overseas etc.
    Westpac charge $10 / transaction but then gouge around another 4-5% on the exchange rate then a further fee is charged for processing by the overseas bank at their end. Using my Westpac visa overseas I don't pay any fee but again the exchange rate is 4-5% lower than the current rate
    You are better off taking cash ($10k limit) & changing it over there as no fees & far better exchange rate. If sending money overseas into a foreign account then use a company like Transferwise who charge a sliding % based on amount transferred and use the current average exchange rate. They are upfront with the total charges & exchange rate & will also give you a comparison against the major banks.
    Australia has a reputation of gouging wherever possible, not just money when overseas but also when we buy products from retailers etc in Australia selling overseas manufactured goods.
    Cowboy Jim
    13th Oct 2018
    12:27pm
    Noticed that $10k limit on the immigration form coming back in, did not have one going out, used to be green going out and brown coming back. They seem to have done away with the departure card. Since I travel with a partner that limit never bothered me.
    Bob
    13th Oct 2018
    7:07pm
    Yes, this has been a scandal - legalised theft - for decades. I always use a 28 Degrees Mastercard overseas in lieu of my NAB Visa, because 28 Degrees uses honest exchange rate conversions. Mind you, Travelex is worse even than the Aussie banks.
    George
    13th Oct 2018
    11:33pm
    Absolutely an area which is crying out for action - has been going on for a long time. Individuals may get around the issues with their own solutions, but the majority are being ripped off and action is sorely needed - the sooner the better.
    Cosmo
    6th Nov 2018
    1:38pm
    Another major overseas travel rip-off is Australian telcos and roaming fees. When small overseas telcos can organise sensible roaming rates with over a hundred countries, its inconceivable that Telstra can't be bothered to do the same.


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