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Australian government to crack down on banks' currency conversion fees

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Staff Writer | October 3, 2018
The Australian government has launched an inquiry to crack down on banks' hidden foreign exchange fees worth up to 2 billion Australian dollars (1.4 billion U.S. dollars) every year.
Josh Frydenberg
Australia   Treasurer Josh Frydenberg
The inquiry, launched by Treasurer Josh Frydenberg on Tuesday evening, will investigate whether the banks are gouging customers via foreign currency conversion fees on overseas debt and credit card fees, which are worth one billion Australian dollars (718 million U.S. dollars) to the industry every year.

The Australian Competition and Consumer Commission (ACCC) will also investigate hidden foreign exchange "mark ups" charged by banks on funds transferred to foreign bank accounts, which are believed to be worth an additional one billion Australian dollars (718 million U.S. dollars).

"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," Frydenberg said in a statement.

"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 Australian dollars (3,594 U.S. dollars) on their credit card can expect to incur 140 Australian dollars (100.6 U.S. dollars) in foreign exchange transaction fees."

Frydenberg said that Australians were spending 30 percent more on the transaction fees than U.S. travellers.

Australians spent 32 billion Australian dollars (23 billion U.S. dollars) in foreign currencies on credit and debit cards in the 12 months to July 2018. At the typical 3 percent charge levied on purchases in foreign currencies, Australian banks made 960 million Australian dollars (690 million U.S. dollars) off those transactions.

The ACCC will deliver its report in May 2019.