Australians lost $2.14 billion in overseas card fees in 2018 alone, with a new travel card now waging war on the incumbents.
The combination of overseas card transaction fees, ATM withdrawal fees, hidden exchange rate markets and card ownership fees have long hit travelling Australians’ hip pockets, with new research by Capital Economics finding that transaction fees on travel and prepaid cards have more than doubled to $174 million in the last five years.
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At the same time, Australian travellers paid $188 million in exchange rate mark-ups alone.
For international money transfer company, TransferWise, the high rates were an opportunity to break into the market.
The Richard Branson-backed company today launched two debit cards targeting travellers, expats, businesses and freelancers with no monthly, transaction or sign up fees and a pledge to let travellers spend at the real exchange rate - which TransferWise defines as the rate seen on Google.
“Aussies are known the world-over for being prolific travellers. Working and living overseas is a right of passage for many, so we think it’s unfair that your bank punishes you simply for wanting to spend your own money abroad,” Kristo Käärmann, CEO and co-founder, TransferWise said.
“We’ve made it incredibly cheap and transparent to spend money internationally with our card, even if you don't have the right currency. If you have the balance of the currency for the country you're in, it will simply deduct the amount from that.”
“If you don't have any of the domestic currency, the card will automatically convert the currency for you at the same rate you see on Google.”
How much are we spending on fees?
Research conducted by Alderson Consulting (Bristol) Ltd found a family holidaying in Europe would - on a regular travel card - stand to lose around $300 in fees when spending $5,000.
Someone spending $1,000 in New Zealand would spent up to $46 in fees.
So how much could I save with this new travel card?
According to the Alderson Consulting research, travellers spending $5,000 in the USA would save up to $240.96 on travel fees.
And, confirming many travellers’ long-held suspicions, dedicated travel cards often don’t result in much greater savings than travel cards issued by the banks, with the Travel Money Currency Pass costing travellers an average $240.62 for a $5,000 spend in America, compared to the $156.51 on an ANZ Travel Card, or $143.12 on a Travelex money card.
However, the research found that a TransferWise account would charge a significantly lower $26.14 for the same spend.
“TransferWise’s aim is to bring fairness into the finance sector and we’ve designed an innovative, smart debit card packed with lots of features, so you can enjoy more of your own money whether you’re going overseas on a holiday, are an expat, a digital nomad or using it for business,” Käärmann concluded.
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