The Hon Josh Frydenberg MP
2 September 2019
ACCC FINDS CONSUMERS ARE PAYING TOO MUCH IN FOREIGN TRANSACTION FEES
The Coalition Government has today released the final report of the Australian Competition and Consumer Commission’s (ACCC) Foreign Currency Conversion Services Inquiry.
This is the first report of its kind released by the ACCC that finds Australians are paying too much for foreign currency conversion services, particularly for international money transfers, and the main beneficiaries are the major banks.
In October 2018, the Government commissioned the ACCC to hold an inquiry into the supply of foreign currency conversion services in Australia. Of the more than $40 billion in foreign currency transactions that take place in Australia each year, the ACCC’s report finds that;
- Prices are difficult to compare
- Customer inertia is limiting the growth of smaller providers and new entrants
- Loyalty to the big four banks costs consumers
- Payment cards are generally cheaper than foreign cash, travel cards and international money transfers
- De-banking is a significant threat to competition in the supply of international money transfers
The ACCC report also found that currency conversion rates vary substantially between different providers. By way of example, a customer transferring A$10,500 to the United States could save up to A$550 by using the cheapest provider.
The ACCC’s report also highlighted that Australian consumers are paying higher fees than consumers in other countries. The ACCC found that in some circumstances Australian consumers are paying 30 per cent more than those in the US for the same service.
In response to these findings, the Government strongly supports the ACCC’s recommendations to increase competition and lower transaction fees. The ACCC has released a “Guide for Consumers” on their website including the following advice to consumers:
- How to shop around to get a better total price
- Suppliers offer better retail rates online
- Cash is more expensive at the airport than other locations
- When using a credit or debit card overseas, consumers should avoid the option of paying in Australian dollars as this is usually a more expensive option
The ACCC will now assess industry’s implementation of the recommendations and report back to Government within 12 months to ensure that action has been taken. If the ACCC finds industry is not complying with these recommendations, or that the implementation of these recommendations has failed to address the concerns that have been identified, the Government will consider taking further action to ensure that consumers are properly informed and not being taken advantage of.
The Government also agrees with the ACCCs proposal to urgently conduct further work on the issue of de-banking, where third party providers are denied access to banking services by the major banks, who are also their competitors.
The Government will establish a taskforce to consult with all relevant stakeholders and report back with further reform options, ensuring that compliance with Australia’s anti-money laundering and counter-terrorism laws does not unnecessarily stifle competition.