Australians are charged $2 billion worth of foreign transaction fees every year, with fees applied to:
- Converting money into a foreign currency;
- Transferring money overseas;
- The use of debit and credit cards overseas;
- Using debit or credit cards online to make purchases in a foreign currency; and
- Transferring money to a foreign currency on a prepaid travel card.
Evidence from the Productivity Commission suggests these fees are higher than other countries, costing Australians hundreds of dollars more than in other countries per year.
As a result, the 10.5 million Australians who travel abroad every year and the individuals and businesses who send money internationally every day deserve a better deal.
At the request of the Coalition Government, the Australian Competition and Consumer Commission (ACCC) will put these excessive fees under the microscope.
Given how widely foreign currency conversion services are used by consumers and businesses, reform in this area could make a real difference and put more money in the pockets of Australians.
A customer of an Australian bank who travels overseas and spends $5,000 on their credit card can expect to incur $140 in foreign exchange transaction fees.
If a customer was to transfer $1,000 overseas, it would cost an Australian on average around $80 in fees and exchange rate mark-ups, compared to around $60 for someone in the United States. This means Australian consumers are paying 30 per cent more than those in the US for the same service.
This inquiry is part of the Government’s commitment to boosting competition in financial services to ensure consumers are getting a fair deal.
A report from the ACCC is due to be delivered to Government early next year.