accc.gov.au
July 2019
Final report
Foreign currency
conversion services
inquiry
Australian Competition and Consumer Commission
23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601
© Commonwealth of Australia 2019
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ACCC 07/19_1550
www.accc.gov.au
iii
Foreign currency conversion services inquiry—Final report
Contents
Abbreviationsandglossary 
Foreword
ExecutiveSummary 
Guideforconsumers 
 Overviewofforeigncurrencyconversionservices 
 Abouttheinquiryservices 
 Abouttheinquirysuppliers 
 Thepricingoftheinquiryservices 
 Substitutingbetweeninquiryservices
 Competitioninforeigncurrencyconversionservices 
 PricecompetitioninthesupplyofIMTs 
 Competitiononnon-pricefactorsforIMTs
 NewentryischangingthecompetitivedynamicforIMTs 
 NewIMTsuppliersfacebarrierstoentryandexpansion 
 Pricecompetitioninforeigncashtravelcardsandpaymentcards 
 Challengesfacingconsumers 
 Despitethesavingsavailablesomeconsumersdonotswitch 
 Pricesarediculttocompare 
 UncertaincorrespondentbankingfeesforIMTs
 Unexpectedfeeswhenshoppingonline 
 UncertaintyaboutIMTpaymentsecurity 
AppendixA NoticetotheACCC
AppendixB Datacollection 
AppendixC Regulationapplyingtoinquirysuppliers 
AppendixD TheNewPaymentsPlatformandtheBulkElectronicClearingSystem 
AppendixE VisaandMastercard 
Foreign currency conversion services inquiry—Final report
Abbreviations and glossary
ABS AustralianBureauofStatistics
ACCC AustralianCompetitionandConsumerCommission
ADI Authoriseddeposit-takinginstitution
AFSL AustralianFinancialServicesLicence
AmericanExpress AmericanExpressCompany
AMLCTF Anti-moneylaunderingandcounter-terrorismfinancing
AMLCTFAct Anti-MoneyLaunderingandCounter-TerrorismFinancingAct
ANZ AustraliaandNewZealandBankingGroupLimited
APRA AustralianPrudentialRegulationAuthority
ARCPA AustralianRemittanceandCurrencyProvidersAssociation
ASIC AustralianSecuritiesandInvestmentsCommission
ATM AutomatedTellerMachine
AUSTRAC AustralianTransactionReportsandAnalysisCentre
Australianbanks AustralianADIsthatusetheterm‘bank’inrelationtotheirbanking
business
BECS BulkElectronicClearingSystemBECSmanagestheexchangeand
settlementofbulklow-valuetransactionsbetweenparticipants
Benchmarkrate AnexchangeratesuchastheWMReutersbenchmarkratewhich
isindicativeofthewholesaleexchangerateatwhichfinancial
institutionsandcentralbankstradeverylargevaluesandvolumes
offoreigncurrency
Bigfourbanks ANZCBANABandWestpac
Cardissuer AnADIorotherfinancialinstitutionthatisresponsibleforissuinga
travelcreditordebitcardtothecardholderThecardissuermakes
thepaymentforthecardholder’spurchasesandcashwithdrawals
providedtherearesucientfundsavailableinthecardaccountto
completethetransaction(includingfundsavailableundertheline
ofcreditinthecaseofcreditcards)
CCA CompetitionandConsumerAct
CFR TheCouncilofFinancialRegulators(CFR)isthecoordinatingbody
forAustralia’smainfinancialregulatoryagencieswhichaimsto
contributetotheeciencyandeectivenessoffinancialregulation
andpromotefinancialstabilityTheCFR’smembersincludethe
RBAAPRAASICandtheDepartmentoftheTreasury
Foreign currency conversion services inquiry—Final report
Chargecard Chargecardsaresimilartocreditcardshoweverunlikecredit
cardswhichareassociatedwitharevolvinglineofcreditcharge
cardsrequirethecardholdertopaytheiroutstandingbalanceinfull
atsetperiods(typicallymonthly)
CommonwealthBankor
CBA
CommonwealthBankofAustralia
Consumerquestionnaire The‘Foreignexchange—consumer&smallbusinessquestionnaire’
conductedviatheACCCwebsitefromOctoberto
October
Correspondentbank Abankthatispartofacorrespondentbankingnetwork
Correspondentbanking
fee
AfeechargedbyacorrespondentbankforanIMTThefeemaybe
deductedfromtheamounttransferred
Correspondentbanking
network
Anarrangementunderwhichbanksoperateasagentsforeach
othertofacilitatethetransferoffundsfromonecountrytoanother
Creditcard Atypeofpaymentcardthatallowstheconsumertodrawona
lineofcredituptoacertainamountfromthecardissuertomake
purchasesorwithdrawcashForthepurposesofthisinquiry
referencestocreditcardsincludechargecards
Currencyconversionfee Afeethatischargedwhenatravelcardisusedforatransactionin
acurrencyforwhichthereisnovaluestoredonthetravelcard
DCC DynamicCurrencyConversion(DCC)isaservicethatprovides
anoptionforconsumerstousetheirowncurrency(forexample
Australiandollars)whenmakingacardpaymentforanoverseas
transaction
De-banking ThepracticeofanADIwithdrawingbankingservicesfromor
refusingtosupplybankingservicestoacustomer
Debitcard Atypeofpaymentcardthatislinkedtoaconsumer’sdeposit
accountandallowstheconsumertousetheirownmoneywhen
makingpurchasesorwithdrawingcash
ESA ExchangeSettlementAccountAnaccountheldattheRBAby
financialinstitutionstosettlefinancialobligationsarisingfromthe
clearingofpayments
EU EuropeanUnion
Fees Includesfeescommissionsorchargespayablebyaconsumerfor
aninquiryserviceFeesareseparatefromandmaybepayable
inadditiontotheretailexchangerateappliedtotheamountof
foreigncurrencybeingpurchased
Foreigncashservice Thesupplyofforeigncashtoaconsumer
FSG FinancialServicesGuideAguidethatcontainsinformationabout
theentityprovidingaconsumerwithfinancialadviceItshould
explainthefinancialserviceoeredthefeeschargedandhowthe
entityprovidingtheservicewilldealwithcomplaints
FXservices ForeigncurrencyconversionservicesTheseareservicesthat
involvetheexchangeofonecurrencyforanotheratanagreed
exchangerateorprice
Foreign currency conversion services inquiry—Final report
IMT Internationalmoneytransfer
IMTservice ThetransferofmoneyfromasenderinAustraliatoanoverseas
recipientAspartoftheservicethemoneytransferredis
convertedfromAustraliandollarstothecurrencyofthedestination
countryoranotherforeigncurrency
Inquiryservices IMTservicesforeigncashservicespaymentcardFXservicesand
travelcardservices
Inquirysuppliers ANZCBANABOFXTransferWiseTravelexWesternUnionand
Westpac
InstaReM InstaReMPtyLtd
InternationalATMfee Afeeappliedforwithdrawingcash(debitcard)orobtainingacash
advance(creditcard)atanoverseasATM
Internationalcardscheme Acardpaymentnetworkthatenablescardholderstomake
transactionsinmorethanonejurisdictionExamplesinclude
AmericanExpressMastercardandVisa
Internationaltransaction
fee
Afeeappliedwheneverthecardissuerandthemerchant(or
thefinancialinstitutionprocessingthecardtransactionforthe
merchant)areindierentcountries
IssuesPaper TheInquiryintoforeigncurrencyconversionservicesIssuesPaper
publishedbytheACCConOctober
Kioskoperator SupplierofFXservicesfromaphysicaloutletsuchasakioskor
storelocatedinairportsorotherlocationsSomekioskoperators
augmenttheirphysicaloutletswithanonlineservicesuchasthose
allowingconsumerstoorderforeigncashonlineandcollectitfrom
akioskorstore
KnowYourCustomer
(KYC)
AnAMLCTFobligationthatrequiresbusinessestoperform
certaincustomeridentificationchecksandduediligenceforall
customerspriortoprovidinganydesignatedservicetothem
Mastercard MastercardIncorporated
Merchant’sacquirer Thefinancialinstitutionthatprocessescreditdebitorpre-paid
cardpaymentsonbehalfofamerchant
Monolineormono-line Afinancialentitythatdealsinonlyoneparticularsegmentofthe
financialindustrysuchasIMTservicesorforeigncashservices
NationalAustraliaBankor
NAB
NationalAustraliaBankLimited
NPP NewPaymentsPlatformTheNPPprovidesclearingand
settlementinfrastructurethroughwhichfinancialinstitutionscan
providefastpaymentservicestotheircustomers
NPPA NPPAustraliaLimitedNPPAownsandoperatestheNPP
OFX OzForexLimitedtradingasOFX
Originatingbank ThebankthatsuppliestheIMTservicetotheconsumerandfrom
whichtheIMToriginates
Paymentcard Debitorcreditcard
Foreign currency conversion services inquiry—Final report
PaymentcardFXservice Theforeigncurrencyconversionthatoccurswhenaconsumer
usestheirdebitcardorcreditcardforaninternationaltransaction
includingtopurchasegoodsandservicesinaforeigncurrencyor
withdrawforeigncashwhileoverseas
PayPal PayPalAustraliaPtyLtd
PDS ProductDisclosureStatement
Peer-to-peerarrangement AnarrangementthatinvolvesasuppliermatchingIMTsthatflowin
oppositedirectionsfortwocurrenciesForexamplethesupplier
usesthefundsreceivedfromthesenderofthefirstIMTtomake
paymenttothebeneficiaryofthesecondIMTinonejurisdiction
and
usesthefundsreceivedfromthesenderofthesecondIMT
tomakepaymenttothebeneficiaryofthefirstIMTinthe
otherjurisdiction
Whenthefundsinonejurisdictiondonotmatchthefundsneeded
intheotherjurisdictionthesupplierwillbuytherelevantcurrency
tomakeuptheshortfall
Price Thecombinationoftheretailexchangerateappliedtotheamount
offoreigncurrencybeingpurchasedandanyfeesincluding
correspondentbankingfeeswheretheyapply
Pricedatacollection TheACCCengagedaconsultanttocollectpricedataonthe
inquiryservicesDatawascollectedoverfivebusinessdays
fromFebruarytoFebruaryonthetwokeyprice
componentsforeachservicetheretailexchangerateandfees
Pricedatacollection
period
FebruarytoFebruary
RBA ReserveBankofAustralia
Receivingbank ThebankoftherecipientofanIMT
Receivingbankfee AfeechargedbythereceivingbankforanIMTThefeeistypically
deductedfromtheamounttransferred
Retailexchangerate Theexchangerateoeredtoconsumersbysuppliersof
FXservices
Retailmargin Themarginormark-uponthewholesaleexchangeratethat
suppliersofFXservicesincludetoformtheretailexchangerate
Reviewperiod Referstotheperiod
JulytoNovemberduringwhichtheACCC
reviewedthepricingandstrategiesadoptedbytheinquiry
suppliersand
FebruarytoFebruaryduringwhichtheACCC
conducteditspricedatacollection
SMEs Smalltomedium-sizedenterprises
Supportedcurrency Acurrencythatcanbeloadedontoatravelcard
Foreign currency conversion services inquiry—Final report
SWIFT SocietyforWorldwideInterbankFinancialTelecommunicationa
cooperativeorganisationthatoperatesanetworkfortheexchange
ofpaymentandotherfinancialmessagesbetweenfinancial
institutions
SWIFTgpi SWIFTglobalpaymentsinnovation
TransferWise TransferWiseAustraliaPtyLtd
Travelcard Atravelcardisastoredvalueorpre-paidcardthatcanbeused
overseastowithdrawcashfromATMsormakepurchasesamong
otherusesValuecanbeloadedontoatravelcardinoneor
moreoftheforeigncurrenciesoeredbythesupplier(knownas
supportedcurrencies)orinsomecasesAustraliandollars
Travelcardservice Theforeigncurrencyconversionthattakesplace
atthetimeaforeigncurrencyispurchasedforloadingontothe
travelcardor
whenthetravelcardisusedforatransactioninacurrencythat
isnotloadedonthecard
Travelex TravelexLimited
UK UnitedKingdom
Unsupportedcurrencyfee Afeethatischargedwhenatravelcardisusedforatransactionin
acurrencythatisnotasupportedcurrency
US UnitedStates
Velocity VirginAustralia’sfrequentflyerprogram
Visa VisaInc
WesternUnion WesternUnionFinancialSolutions(Australia)PtyLtdand
orWesternUnionBusinessSolutions(Australia)PtyLtdThe
referencestoWesternUnioninthisreportprimarilyrelate
toWesternUnionFinancialSolutions(Australia)PtyLtdas
theWesternUnionentitythatprovidesservicestoindividual
consumersRelevantlyforthepurposesofourinquiryWestern
UnionBusinessSolutions(Australia)PtyLimitedprovidesservices
tosmallbusinesses
WestpacorWBC WestpacBankingCorporation
Whitelabelarrangement Aserviceprovidedbyafirmtoanotherfirmwhothenprovidesthe
servicetocustomersunderitsownbrand
Wholesaleexchangerate TheexchangerateatwhichsuppliersofFXservicesacquireforeign
currency
Foreign currency conversion services inquiry—Final report
Foreword
OnOctobertheTreasurerapprovedtheAustralianCompetitionandConsumerCommission
(ACCC)holdinganinquiryintothesupplyofforeigncurrencyconversionservices(FXservices)in
Australia(theinquiry)AcopyofthenoticeapprovingtheinquiryisatappendixA
The focus of the inquiry
TheinquiryfocusedonthefollowingFXservices
internationalmoneytransfer(IMT)services
foreigncashservices
paymentcard(creditordebitcard)FXservices
pre-paidtravelmoneycard(travelcard)servicescollectivelytheinquiryservices
TheACCChasfocusedonFXservicesinvolvingtheconversionofAustraliandollarstoforeigncurrency
AllfiguresandtableswhichcontaindataincludingpricedataareonthisbasisInthecaseofIMTswe
havenotincludedreceivingbankfeesinouranalysisofpricesassupplierswillnottypicallybeableto
influencethefeesthatthereceivingbankmaydeductfromtheamounttransferred
ThematterstheACCCconsideredinthecourseoftheinquiryincludedbutwerenotlimitedto
thepricingofandcostsassociatedwithsupplyingtheinquiryservices
thenatureandextentofcompetitionbetweensuppliersoftheinquiryservices
theexistenceandextentofanybarrierstoentryorexpansion
whethertherewerefactorslimitingtheabilityofconsumerstoeectivelycompareinquiryservices
andprices
WhiletherearemanyusersoftheinquiryservicestheACCChasfocusedthisinquiryonindividual
consumersandsmalltomedium-sizedenterprises(SMEs)Individualconsumersarethefocusofthe
figuresandtablesreportingdataprovidedbyinquirysuppliers
Conduct of the inquiry
TheACCCreleasedanissuespaperonOctobercallingforsubmissionsInresponsewe
receivedsubmissionsfromconsumerssuppliersofFXservicessmallbusinessesandamixofother
stakeholdersSixtysubmissionsarepublishedontheACCC’swebsitewwwacccgovauabout-us
focus-areasforeign-currency-conversion-services-inquirysubmissions-receivedThreesubmissionsare
unpublishedastheywereacceptedonaconfidentialbasis
TheACCCuseditscompulsoryinformationgatheringpowertoobtaindocumentsanddatafrom
suppliersNoticeswereissuedtothebigfourbanks
OzForexLimitedtradingasOFXTransferWise
AustraliaPtyLtd(TransferWise)TravelexLimited(Travelex)andWesternUnion
collectivelytheinquiry
suppliersAnoticewasalsoissuedtoPayPalAustraliaPtyLimited(PayPal)
Thenoticesrequiredthe
productionofdocumentsanddatafortheperiodJulytoNovember
 ThebigfourbanksareAustraliaandNewZealandBankingGroupLimited(ANZ)CommonwealthBankofAustralia(CBA)
NationalAustraliaBankLimited(NAB)andWestpacBankingCorporation(Westpac)
 TheACCCissuednoticestoWesternUnionFinancialSolutions(Australia)PtyLtdandWesternUnionBusinessSolutions
(Australia)PtyLimitedThereferencestoWesternUnioninthisreportprimarilyrelatetoWesternUnionFinancialSolutions
(Australia)PtyLtdastheWesternUnionentitythatprovidesservicestoindividualconsumersRelevantlyforthepurposes
ofourinquiryWesternUnionBusinessSolutions(Australia)PtyLimitedprovidesservicestosmallbusinesses
 UnlessotherwiseindicatedPayPalisnotincludedintheACCC’sanalysisofdataandinformationprovidedbytheinquiry
suppliersThisisbecauseweconsiderthatcomparedwiththeotherinquirysuppliersPayPal’sservicesarefundamentally
dierentinnatureandthereforeanycomparisonwouldnotbelike-for-like
Foreign currency conversion services inquiry—Final report
Inresponsetothesenoticeswereceivedarounddocumentswiththemajoritybeingproducedby
thebigfourbanks
TheACCCalsoengagedaconsultanttocollectpricedataoninquiryservicesFurtherdetailonthe
collectionofpricedatacanbefoundinappendixB
Weconsultedontherecommendationsmadeinthisreportwith
governmentagenciesincludingtheAustralianTransactionReportsandAnalysisCentre(AUSTRAC)
theDepartmentofForeignAairsandTrade(DFAT)theDepartmentoftheTreasurythe
DepartmentofHomeAairstheAustralianPrudentialRegulationAuthority(APRA)theAustralian
SecuritiesandInvestmentsCommission(ASIC)theReserveBankofAustralia(RBA)andtheOce
oftheNewSouthWalesSmallBusinessCommissioner
FXservicessuppliersthebigfourbanksOFXTransferWiseTravelexandWesternUnion
internationalcardschemesMastercardIncorporated(Mastercard)andVisaInc(Visa)
theAustralianRemittanceandCurrencyProvidersAssociation(ARCPA)
Foreign currency conversion services inquiry—Final report
Executive Summary
ThisisthereportoftheACCC’sinquiryintothesupplyofforeigncurrencyconversionservices
(FXservices)inAustraliaIthighlightsimportantcompetitionandconsumerissuesandmakes
recommendationstoaddressthem
Wehavefoundsignsthatrecentcompetitionfromnewentrantsisdeliveringbetterconsumer
outcomesthroughlowerpricesandimprovedservicesHoweverweseescopeformorerobust
competitionparticularlyinthesupplyofinternationalmoneytransfers(IMTs)
Ourrecommendationsaimtoprotecttherecentgainscompetitionhasdeliveredforconsumerssofar
andpromotefurthercompetitioninthesupplyofFXservicestoenhanceconsumeroutcomesand
marketeciencyTherecommendationsincludemeasuresaimedat
reducingakeybarriertoentryandexpansionfornon-banksuppliersofIMTsand
makingthepricesofFXservicesmoretransparentforconsumers
Weconsiderimprovingpricetransparencywillsupportpricecompetitionbymakingiteasierfor
consumerstoseekoutthecheapestsuppliers
TheactionwehaverecommendedisimportantFXservicesaresignificanttotheAustralianeconomy
andtothelivesofindividualAustraliansAustralianconsumerspurchasetheequivalentofover
AUDbillioninforeigncurrencyeachyearandfurthercompetitioninthesupplyofFXserviceshasthe
potentialtodeliversignificantsavingsforconsumersinrelationtothosepurchasesbothinaggregate
andforindividualconsumersForexample
weestimatethatindividualconsumerswhousedthebigfourbankstosendIMTsinUSDandGBP
during–couldhavecollectivelysavedaboutAUDmillioniftheyhadinsteadusedthe
lowestpricedIMTsupplier
customersofthebigfourbankssendinganIMTforGBPtotheUnitedKingdom(UK)in
FebruarycouldhavepaidapricethatwasoverpercenthigherthanthecheapestIMT
supplier’sprice
ThesavingswillbeparticularlysignificantforthosewhouseFXservicesfrequentlyorfor
largertransactions
The focus on international money transfers
ThereportfocusesitscompetitionanalysisonIMTsIMTsaresignificantforanumberofreasons
FirstpricesinAustraliaarehighbyglobalstandards
andIMTsareasignificantoutlayforAustralians
anestimatedAUDbillioninpersonalIMTsaresentfromAustraliaeachyear
Secondtheaverage
transactionsizeforIMTsismuchlargerthantheotherinquiryservices(foreigncashtravelcardsand
paymentcards)ThirdIMTsaregenerallynotsubstitutableforotherservicesforexamplethereisno
substituteinquiryserviceforaconsumerwishingtosendmoneytoanotherpersonoverseasFinally
IMTsareregularlyusedbyvulnerablegroupssuchasmigrantsandtemporaryworkers
IMTshavealsobeenapolicyfocusoftheAustralianGovernmentwithstepsbeingtakentoreduce
thepriceofIMTsparticularlythepriceofsendingremittancestodevelopingeconomiesinourregion
AustraliaisamemberoftheGGlobalPartnershipforFinancialInclusionwhichiscommittedto
 TheaveragepriceofsendingmoneyfromAustraliaishigherthanboththeaverageGpriceandglobalaverageprice
SeeTheWorldBankRemittancePricesWorldwideIssueMarchhttpsremittancepricesworldbankorgsites
defaultfilesrpwreportmarchpdfviewedApril
 WorldBankBilateralRemittanceMatrixAprilhttppubdocsworldbankorgen
bilateralremittancematrix-Aprxlsx
FortheconversionofUSDintoAUDwehaveusedanexchangerateofasreportedbytheRBAasat
DecemberReserveBankofAustraliaExchangeRates—Daily—tohttpswwwrbagovaustatistics
tablesxls-hist-xls
Foreign currency conversion services inquiry—Final report
reducingthepriceofremittancesglobally
TheAustralianGovernmentalsofundstwocomparison
websitesSendMoneyPacific
andSaverAsia
whichcompareIMTpricesinkeyremittancecorridors
Competition in international money transfers
Newernon-banksuppliershavechangedthecompetitivedynamicforIMTsbyoeringlowerpricesand
somebetterservicefeaturesthanthebigfourbanksInresponsethebigfourbankshavereducedtheir
pricesandimprovednon-priceaspectsoftheiroeringincludingimprovingeaseofuseandproviding
fastertransferspeedsThesechangesoftenfocusedondigitalchannelsincludingonlinebankingand
mobileapplicationswherenewerentrantsmostlyoperateWhilethebigfourbankshavereducedtheir
pricesthosepricesremainsignificantlyhigherthanmanyothersuppliers
Thepotentialgainsfromincreasedcompetitionmaybelostifnon-bankIMTsuppliersareunableto
accessbankingservicesNon-bankIMTsuppliersoftenrelyonobtainingbankingservicesfromtheir
verticallyintegratedcompetitors(banks)tocompeteforthesupplyofIMTs
Somenon-banksuppliershavebeendeniedaccessorfindaccesstobankservicesunderthreatThe
needtocomplywithAustralia’santi-moneylaunderingandcounterterrorismfinancing(AMLCTF)
lawshasbeenafactorinthebanks’decisionstowithdrawaccesstobankingservicesfornon-bank
rivals(knownasde-banking)Toaddressthisissuewerecommendaschemethroughwhich
IMTsupplierscanaddresstheduediligencerequirementsofthebanksincludinginrelationto
AMLCTFrequirements
Price information presented to consumers
ItcanbechallengingforconsumerstomakeinformeddecisionsaboutFXservices
pricesarecomplexThetotalpriceoftheFXservicesisdrivenbytwocomponentstheretail
exchangeratewhichtypicallyincludesaretailmarginormark-upandfeesServicesthatappear
tobecheapwhenconsideringonlyfeesortheretailexchangeratecanturnouttobethemost
expensiveoptionbasedonthetotalpriceSomesupplierspossiblyinrecognitionofconsumers’
aversiontofeesdonotchargeanup-fronttransactionfeeandinsteadearnrevenuethroughthe
mark-upontheretailexchangerateServicesadvertisedas‘nofee’cangivetheillusionthattheprice
islowerthanitreallyis
pricesarepresentedindierentwaysForexamplesomesuppliersdisplaytheexchangerate
andnotethatfeesmayapplyOthersquantifythefeesbutleavethecalculationofthecurrency
conversionandtotalpricetoconsumers
priceslacktransparencyInquirystakeholdersnotedthattherewasinadequatedisclosureofprices
bysomesuppliersandconsumershaveexpressedconcernthattheydonotalwaysknowwhatthe
totalpriceforanFXservicewillbeup-frontOurinabilitytoeasilycollatecompletepriceinformation
frompubliclyavailablesourcesdemonstrateshowdicultitisforconsumerstocompare
totalprices
 GlobalPartnershipforFinancialInclusionFinancialInclusionActionPlanhttpwwwgpfiorgsitesgpfifiles
documentsGFinancialInclusionActionPlanfinalpdfp
 SendMoneyPacifichttpswwwsendmoneypacificorgviewedMay
 SaverAsiahttpswwwsaverasiacomviewedMay

Foreign currency conversion services inquiry—Final report
Insomecasesthewaypricesarepresentedmaymisleadconsumers
Consumerswhousepaymentcardsparticularlyforonlinetransactionsaresometimescharged
unexpectedinternationaltransactionfeesThiscanhappenwherethewebsiteisanAustralian
‘comau’URLandadvertisespricesinAUDbutthepaymentisprocessedoverseasConsumers
oftenhavenobasistosuspectthattheyarecompletinganinternationaltransactionuntiltheyreceive
aninternationaltransactionfeechargedtotheiraccount
SometimesconsumersdonotknowthetotalpriceforanIMTserviceuntiltherecipientreceivesthe
IMTandthecorrespondentbankingfeesdeductedwhiletheIMTwasintransitbecomeapparentIn
anextremecaseanAustralianconsumerhastoldtheACCCtheysenttheequivalentofAUDtoa
recipientinRomaniaandonlyAUDarrivedinthedestinationafterallfeeswerededucted
– We note there are developments occurring in the industry to make correspondent banking fees
more certain for both IMT suppliers and consumers. There are also moves by some suppliers to
absorb the correspondent banking fees after the consumer pays an up-front fee.
TheACCCwillbeexaminingtheseissuesfurtherandwillconsiderenforcementaction
whereappropriate
Suppliers respond to consumers shopping around
InourviewconsumerscanacttoconstrainmoreexpensivesuppliersTothatendweprovide
guidanceto
consumerstohelpthemshoparound
suppliersonhowtopresentpricessothattheyareeasiertocompare
WearebeginningtoseesomesuppliersrespondtocustomersswitchingawayThebigfourbanksin
particularhaveloweredtheirpricesimprovedtheirservicesandareimprovingthetransparencyoftheir
pricesWeconsiderthisisbotharesponsetonewentryandtoinformedconsumerswhoarewillingto
switchawayfromtheirtraditionalsupplier
Ourmoredetailedfindingsandrecommendationsaresetoutbelow
Findings
 Pricesarediculttocompare
ConsumersneedtobeabletocomparethetotalpriceoeredbysuppliersofFXservicestoensure
theygetthebestdealbutthiscanbedicultforanumberofreasons
pricesarecomplex
pricesarepresentedindierentwaysbydierentsuppliers
priceslacktransparency
ItcanbetemptingforconsumerstofocusonfeesBasedonthepricedatawecollectedsupplierswith
thelowestup-frontfeesweremoreexpensivethanothersuppliers
 Customerinertiaislimitingthegrowthofsmallerprovidersandnew
entrants
AnumberoffactorscontributetosomeconsumersnotswitchingtocheapersuppliersofFXservices
suchasdicultycomparingpricesandswitchingcostsincludingtheperceptionofthosecostsThat
someconsumersuseFXservicesforlow-valuetransactionsorinfrequentlyappearstofurtherdeter
somefromswitchingeveniftheyknowtherearecheaperalternatives

Foreign currency conversion services inquiry—Final report
 Loyaltytothebigfourbankscostsconsumers
ThebigfourbankswereconsistentlymoreexpensivethansomeothersuppliersforIMTsandforeign
cashForcommoncurrenciessuchasUSDandGBPtheywereneverthecheapestoptionbasedon
pricedatawecollected
ConsumersshouldbeawarethatalternativesuppliersoercheaperpricesfortheseservicesToputthe
potentialsavingsintoperspectiveaconsumersendinganIMTforUSDcouldsaveoverAUDby
selectingthecheapestIMTsupplierratherthanthemostexpensivebigfourbank
 Paymentcardsaregenerallycheaperthanforeigncashtravelcards
andIMTs
ForeigncashtravelcardspaymentcardsandIMTscanbeusedfordierentpurposesForexamplea
consumertravellingoverseasmayuseoneormultipleFXservicesincludingforeigncashtravelcardsor
paymentcardsAbusinessbuyinggoodsfromoverseascanuseapaymentcardorIMTHoweverthere
isoftennosubstituteserviceforaconsumersendingmoneytoanotherpersonoverseasthatconsumer
willtypicallyneedtouseanIMT
Paymentcards(creditanddebitcards)weregenerallycheaperthanIMTsforeigncashandtravelcards
foroverseaspurchases
Pricesforforeigncashweresubstantiallyhigherattheairport
Furthersomefinancialinstitutionsoerpaymentcardswithnointernationaltransactionfeeswhich
makesuchpaymentcardsanevencheaperoptionforoverseaspurchasesTheyalsoavoidtheproblem
ofunexpectedinternationaltransactionfeesConsumerswhotravelfrequentlyorbuygoodsonline
fromoverseasregularlycouldsavesignificantamountsbyusinganinternationalfee-freepaymentcard
 De-bankingisasignificantthreattocompetitioninthesupplyofIMTs
De-bankingandtheprospectofde-bankingraisecostsfor
newentrantsseekingtosecurethoseservicesThesecostsortheinabilitytosecurebanking
servicescanactasabarriertoentryandthereforethreatencompetition
non-bankIMTsupplierswhichbanksdonotfaceTheseincludepotentiallyhighcompliancecoststo
maintainaccesstobankservicesTheseadditionalcostscanhampernon-bankIMTsuppliers’ability
topriceservicescompetitivelyandwincustomers
Recommendations
Duediligenceschemeforaccesstobankingservices
TheAustralianGovernmentshouldformaworkinggrouptaskedwithconsultingonthedevelopment
ofaschemethroughwhichIMTsupplierscanaddresstheduediligencerequirementsofthebanksor
providersofpaymentsysteminfrastructureincludinginrelationtoAMLCTFrequirements
TheWorkingGroupshouldbeginapublicconsultationprocessonthemeritsanddesignofsucha
schemebyDecemberandconcludethatprocessbyJuneTheWorkingGroupshould
consideranyalternativesolutionstoaddresstheissueofde-bankingthatareraisedbystakeholders
duringthepublicconsultationprocess
ByDecembertheschemeshouldbeoperationalortheWorkingGroupshouldhavesetout
anyalternativeapproachitwillinitiatetoensurethatnon-bankIMTsuppliersareabletoobtainecient
accesstothebankingandpaymentservicestheyneedtocompeteinthesupplyofIMTservicesto
Australianconsumers

Foreign currency conversion services inquiry—Final report
Measurestoimprovehowpricesarepresentedtoconsumers
Up-frontcorrespondentbankingfees
IMTsuppliersshouldtakethenecessarystepstoinformtheircustomersup-frontofthetotalpriceofan
IMTincludingcorrespondentbankingfees
Onlinecalculator
SuppliersofIMTsandforeigncashshouldoerdigitaltoolsontheirwebsitestocalculatethetotalprice
forthoseservicesforconsumers
Foreigncashpricesonrateboards
Foreigncashsuppliersshouldensurethattheyprovidepriceinformationthatwillenableanin-store
consumertounderstandthetotalpriceofforeigncashtransactions
Disclosureofinternationaltransactionfees
MerchantsoeringgoodsandservicesonlinetoAustralianconsumersshouldinformconsumersifthey
arelikelytobechargedaninternationaltransactionfeeMerchantsshouldprovidethisinformation
prominentlyandclearlybeforeacustomerentersintoatransactionIfconsumersarechargedan
unexpectedinternationaltransactionfeetheyshouldcontacttheirbankorcardschemetorequesta
refundofthefee
Consumerguidance
TheGuideforConsumersfollowingtheExecutiveSummarycontainsinformationandadvicefor
consumersaboutusingtheinquiryservicesgenerallyandoneachofthethreemainusesoftheinquiry
serviceswhichare
sendingmoneyoverseas
travellingoverseas
shoppingonline
TheGuideforConsumerswillalsobepublishedontheACCCandASIC’sMoneySmartwebsites
ACCC action arising from this report
TheACCCwill
 monitortake-upofourrecommendationsandassesswhetherfurtherresponseisneededeitherby
theACCCorgovernment
 ifthegovernmentdecidestoproceedwithaduediligenceschemeonthebasisrecommendedin
thisreporttheACCCwillbepartoftheWorkingGrouptaskedwithconsultingonthedevelopment
ofthescheme
 monitornon-bankIMTsuppliers’accesstobankingservicesandpaymentinfrastructureand
investigatewherethedenialorwithdrawalofthoseservicesraisesconcernsundertheCCA
 publishguidanceontheACCCwebsiteonhowconsumerscansavemoneywhenusingFXservices
 whereappropriatetakeenforcementactionagainstbusinesseswhomisleadconsumersaboutthe
leveloffeesforFXservices

Foreign currency conversion services inquiry—Final report
Guide for consumers
Guidance for all foreign currency services
Comparethetotalprice
Whencomparingpricesofservicesandsuppliersitisimportantthatyouconsiderallcomponentsof
thepriceincludingtheexchangerateandanyfeesJustbecauseaserviceisadvertisedas‘feefree’
doesnotmeanitwillbethecheapestoption
Exchangeratesvaryacrosssuppliersandarerarelythesameastheexchangeratesreportedonthe
newsTheexchangeratesoeredbysuppliersaretypicallylessfavourablethanthosereportedonthe
newsThatisbecausetheyincludeamarginormark-up
Foranaccuratecomparisonyoushouldcomparethepricesofservicesatthesametimeonthesame
dayPricesaregenerallyadvertisedonsuppliers’websitesSomesuppliersmayoerdiscountso
thoseadvertisedpricesespeciallyforlargeorrepeatedtransactions
Ifyouuseacommercialcomparisonwebsitebeawarethatsomesitesmaynotbeindependentand
suppliersmaypayfortheirservicestobepromotedbythesesitesYoushouldalsobeawarethat
comparisonwebsitesmaynotincludeallavailableservices
Therearetwogovernment-fundedcomparisonwebsitesforinternationalmoneytransfers(IMTs)
wwwsendmoneypacificorgandwwwsaverasiacomwhichcomparepricesofIMTservicesavailableto
anumberofSouth-EastAsianandPacificIslandcountries
Shoparound
UsingthesamesupplieroutofloyaltycouldcostyouOurinquiryfoundthebigfourbanksare
consistentlymoreexpensivethanmanyothersuppliersforbothforeigncashandIMTsForcommon
currenciessuchasUnitedStatesdollars(USD)orGreatBritishpounds(GBP)thebigfourbanksare
rarelythecheapestoption
Itmayfeellikealotoftimeandeortisinvolvedinshoppingaroundandswitchingsuppliersbut
switchingmaysaveyoumoneyparticularlyifyouaremakinglargeorregulartransactions
Ifyouaremakinglargeorregulartransactionsitisworthaskingwhetheranydiscountsareavailable
Whereyoumakeyourpurchasematters
LookatwhetheryoucanmakeyourpurchaseofIMTsforeigncashandtravelcardsonlineasmany
suppliersoerbetterretailexchangeratesandlowerfeesforcurrencypurchasesmadeonlineForeign
cashismoreexpensiveatairportlocationsthanatotherlocations
Sending money overseas
ItisparticularlyimportanttoshoparoundforIMTorremittanceservicesWefoundsignificantprice
dierencesacrossIMTsuppliers
Switchingsupplierscouldsaveyoumoneythesesavingscouldbesignificantifyouregularlytransmit
large-valuetransactionsthroughanIMTserviceForexamplewefoundthatconsumersandsmall
businesseswhousedthemostexpensivebankinFebruarytotransferUSDwouldhavepaid
overAUDmorethaniftheyhadusedthecheapestsupplierinoursample

Foreign currency conversion services inquiry—Final report
Banksarenottheonlysecureoption
Donotassumethatbanksareamoresecureoptionthannon-banksuppliersofIMTservices
Whenshoppingaroundyoushouldasksuppliersabouttheirsecuritymeasuresandwhethertheyoer
guaranteesforIMTs
BanksarenotalwaysthefastesttodeliveranIMT
OurinquiryfoundthatthebanksdidnotalwaysprovidethefastestdeliverytimesforIMTs
WhenshoppingaroundyoushouldasksuppliersabouttheirspeedofdeliveryforIMTs
Checkwhetheryouwillincuradditionalfees
WhenshoppingforIMTservicesasksuppliersifanyfeeswillbedeductedfromthefundsyoutransfer
ThesefeesareoftencalledcorrespondentbankingfeesIffeeswillbedeductedaskforanestimateof
thefundsthatwillbedeliveredtotherecipient(somesuppliershaveanonlinetoolthatallowsyoutodo
this)Alsoaskwhetheryoucanpayallfeesup-front
Whencomparingpricesacrosssuppliersconsiderwhetherasupplierthatchargesallcorrespondent
bankingfeesup-frontmaybeabettervalueoption
Findoutiftherecipient’sbankchargesafeeaswellEvenifyouhavepaidallcorrespondentbanking
feestherecipient’sbankmaychargeanadditionalfee
Travelling overseas
Beforetravellingoverseasconsiderthedierentforeigncurrencyservicesavailableforconducting
transactionswhileoverseasTheseinclude
debitorcreditcards
travelcards
foreigncash
Youshouldmakeyourselfawareofthedierencesbetweentheseservicesandanyapplicablefees

Foreign currency conversion services inquiry—Final report
Key characteristics of services for travelling overseas
Foreigncash Paymentcards Travelcards
Acceptance
Accepted by the majority
of merchants.
Useful in places where
card payments are not
accepted or there is a
minimum spend required
to use a payment card.
Accepted by the majority of merchants and ATMs in most
countries.
Certaintyof
price
Able to see the price at
the time of purchase.
Unless the consumer
uses Dynamic Currency
Conversion (see chapter 3,
box 3.7), generally unable to
determine the retail exchange
rate applied at the time of the
transaction.
Able to see the price at the
time the foreign currency is
loaded onto the travel card.
Unable to determine the
retail exchange rate applied
for purchases in a currency
not loaded onto the card at
the time of the transaction.
Fees will also likely apply to
these transactions, including
for cash withdrawals at ATMs.
Convenience
Suppliers do not
generally have eligibility
requirements, although
there may be limits on the
amount of foreign cash
that can be purchased.
Carrying cash has a
physical burden, and is
limited to how much a
person can carry and take
into a foreign country.
Cash is easy to use.
For debit cards, the
consumer will need a
transaction account with
the relevant supplier. For
credit cards, the consumer
will need to satisfy eligibility
requirements, including
demonstrating they can
repay the line of credit. Once
a consumer has obtained
the payment card it is easy
to use.
Can be used for transactions
in most foreign currencies.
Generally do not need to be
an existing customer of the
supplier. For some travel
cards, will need to sign up
to a frequent flyer rewards
program. Once a consumer
has obtained the travel card
it is easy to use.
The ability to store multiple
currencies.
Security
No protection from theft.
Security protections from fraudulent or unauthorised transactions.
Debitandcreditcardfees
Adebitorcreditcardisusuallythecheapestoptionformakingpurchaseswhileoverseasevenmoreso
forcreditordebitcardsthatdon’tchargeinternationaltransactionfeesForexample
ifcustomersofthebigfourbanksusedadebitorcreditcardwithoutinternationaltransactionfees
insteadofatravelcardtheycouldsaveuptoAUDonaUSDpurchase
thesavingsaremoremodestforthedebitorcreditcardstowhichinternationaltransactionfees
applycustomersofthebigfourbankscouldsaveuptoAUDonaUSDpurchaseiftheyuseda
‘regular’debitorcreditcardinsteadofatravelcard

Foreign currency conversion services inquiry—Final report
Price of a USD200 purchase using selected foreign currency conversion services*
Average over 5 business days: 6–12 February 2019
$288
$299
$301
$303
$304
$290
$291
$293
$293
$294
$281
$289
$289
$290
$289
$0
$200
$220
$240
$260
$280
$300
Cheapest other
supplier
ANZ WBC CBA NAB
AUD
Travel cards:
ANZ
ANZ
ANZ
Other suppliers
Other suppliers
Other suppliers
NAB
NAB
NAB
CBA
CBA
CBA
WBC
WBC
WBC
Foreign cash:
Payment cards:
*ReportedpricesareasimpleaveragecalculatedbytheACCCoverthepricedatacollectionperiodPricesforforeigncash
arebasedonin-storepurchasesatnon-airportlocationsThepaymentcardsissuedbythebigfourbanksincludedinour
pricedatacollectionexerciseallchargeinternationaltransactionfeeswenotethatthebigfourbanksalloerpaymentcards
withoutinternationaltransactionfeesbutthosecardsarenotcapturedinthefigure
SourceDatacollectedfortheACCCThedatacollectedwassourcedfrompubliclyavailableinformationAppendixB
(sectionB)setsouthowthisdatawascollected
Anumberofotherfeesareassociatedwithdebitandcreditcardssuchasannualfeesandinterest
chargesoncreditcardsYoushouldconsiderallfeeswhenchoosingacardAdebitorcreditcardthat
suitsyoureverydayusemaynotalwaysbethebestcardfortravellingoverseas
Travelcardfees
Dependingonthesupplieranumberoffeesassociatedwithtravelcardscanmakethemmore
expensivethanotherservicesincluding
feesforpurchasingacardin-store
ATMfees
inactivityandclosurefees
Atravelcardcanbeaparticularlyexpensiveoptionwhenusedfortransactionsinacurrencythatis
notloadedonthecardForexampleifatravelcardholderwithoneofthebigfourbankswithdrewthe
equivalentofAUDinGBPfromanoverseasATMinMayandGBPwasnotpre-loadedontothe
travelcardtheywouldhavebeenchargedanATMfeeofaroundGBP(aboutAUD)plusaper
centcurrencyconversionfeeThetotalfeesforthistransactionwouldbeaboutAUDoralmost
percentofthetransactionamount
Foreigncashfees
Whileforeigncashtendstoberelativelymoreexpensivetobuythanbuyinggoodsorservicesusing
travelcardsanddebitorcreditcardsitmaybeessentialforsomeoverseasdestinationsInsome
locationsdebitcreditandtravelcardsarenotwidelyacceptedandcashisrequiredtomakepurchases
Checkallapplicablefeesbeforeusingyourtraveldebitorcreditcardtowithdrawforeign
cashoverseasUsingthesecardsmaycostmorethanbuyingforeigncashinAustraliaduetovarious
feeschargedbycardissuersandoverseasATMoperatorsTheremayalsobefeesandinterestcharges
forcashadvancesusingacreditcard

Foreign currency conversion services inquiry—Final report
Knowyourretailexchangerate
Debitorcreditcardsdonotgenerallyprovidethesamecertaintyaboutretailexchangeratesastravel
cardsandforeigncashYoumaynotknowtheretailexchangerateatthetimeyoumakeapurchase
withyourdebitorcreditcardunlikewhenyouloadforeigncurrencyontoatravelcardorpurchase
foreigncash
Avoidtheairport
ForeigncashismoreexpensiveatairportlocationsthanatotherlocationsShoparoundandpurchase
foreigncashbeforeyougettotheairporttosavemoneyForexamplewhenbuyingUSD
inFebruaryconsumerscouldsaveAUDbypurchasingfromthecheapestsupplierata
non-airportlocationcomparedwiththemostexpensivesupplierattheairportBewaryofservicesthat
advertise‘nofeesnocommissions’asthismaybetodistractfromanunfavourableexchangerate
PayinginAustraliandollarsmaybemoreexpensive
WhenusingadebitorcreditcardsomemerchantsmaygiveyoutheoptionofpayinginAustralian
dollarsoranothercurrencyThisisknownasDynamicCurrencyConversionPayinginAustraliandollars
maybethemoreexpensiveoption
Ifanoverseasbankprocessesthetransactionandperformsaforeigncurrencyconversionitwill
usuallyaddamarginormark-uptotheexchangeratetomakeaprofitonthetransactionAlsodespite
payinginAustraliandollarsyourcardissuermaystillchargeyouaninternationaltransactionfeeas
thetransactionoccurredoverseasForexampleifyouareshoppinginanairportoverseasandthe
merchantasksyouwhetheryouwouldliketopayinthelocalcurrencyorAustraliandollarsifyou
chooseAustraliandollarsyoumaybe
oeredalessfavourableratethantherateoeredbythecardscheme
chargedaninternationaltransactionfeeeventhoughyouarepayinginAustraliandollars
Shopping online
IfyouregularlymakeoverseaspurchasesfromAustraliaortraveloverseasyoushouldconsideran
internationalfee-freecreditordebitcardHoweverwhencomparingcardsyoualsoneedtoconsider
allapplicablefeesandinterestcharges
Ifyoudonothaveaninternationalfee-freecardyourcardissuermaychargeyouafeeforpurchases
madeinAustraliandollarsifthetransactionisprocessedoverseasThesefeesareoftenaround
percentofthepurchasepriceYourcardissuermayoertheabilitytoblockinternational
transactionsforparticularpaymentcards
Ifyouaremakingalargepurchaseonlinecontactthebusinesstocheckwhetheryourpaymentwill
beprocessedoverseasItmaynotbeclearfromthewebsitethataninternationaltransactionfeemay
applyForexampleifawebsitehasa‘comau’domainnameorpricesgiveninAustraliandollarsit
doesnotmeanthatthebusinesswillprocessthepaymentinAustralia
IfyouarechargedanunexpectedinternationaltransactionfeeforapurchaseinAustraliandollars
fromamerchantthatappearedtobelocatedinAustraliaitcouldbeconsideredmisleadingunder
theAustralianConsumerLawYoushouldcontactyourcardissuer(forexampleyourbank)orthe
internationalcardscheme(forexampleMastercardorVisa)torequestarefundIfyoucannotresolve
theproblemwithyourprovideryoucanreportittotheACCCatwwwacccgovauconsumers
complaints-problemsmake-a-consumer-complaint

Foreign currency conversion services inquiry—Final report
. Overview of foreign currency
conversion services
Keypoints
Thetotalpriceoftheinquiryservicesisdrivenbytwocomponentstheretailexchangerate
andfeesAservicemayappeartoberelativelycheapwhenconsideringonlyfeesortheretail
exchangeratebutthetotalpriceforthatservicemaybemoreexpensive
Asaresultconsumersneedtobeabletocomparethetotalpriceofinquiryservicestoensure
theygetthebestdealTheACCC’sinabilitytoeasilycollatecompletepriceinformationfrom
publiclyavailablesourcesparticularlyforIMTservicesdemonstrateshowdicultitisfor
consumerstocomparetotalprices
Theexchangeratesreportedbythenewsmediaarenotagoodguideforwhatconsumerswill
payatmostsuppliersTheexchangeratesactuallypaidbyconsumersaresetbysuppliersbased
onarangeoffactorsincludingthecostsassociatedwithprovidingtheservicethesupplier’s
performanceagainstitsbusinessplansandrevenuetargetsandperceivedchangesinthe
competitivedynamicsfortheservice
Thischapterprovidesanoverviewof
theinquiryservices(section)
thesupplierswefocusedoninthecourseofthisinquiry(section)
thepricingofinquiryservices(section)
thesubstitutabilityoftheinquiryservices(section)
 About the inquiry services
AustralianconsumerspurchasetheequivalentofoverAUDbillioninforeigncurrencythroughthe
inquiryserviceseachyearincluding
theequivalentofaboutAUDbillioninpersonalremittancessentoverseasfromAustraliavia
internationalmoneytransfers(IMTs)
atleastAUDbillionintransactionsonpaymentcardsthatinvolveconversionofAustraliandollars
toforeigncurrencyeitherthroughforeigncashwithdrawalsorpurchasesofgoodsorservicesina
foreigncurrency
atleastAUDbillionintransactionsontravelcardsthatinvolvetheconversionofAustraliandollars
toaforeigncurrency
overAUDbillioninforeigncashpurchasesmadeinAustralia

WeobservethattheotherinquiryservicesaregenerallynotsubstitutesforIMTsIMTsaretheonly
availableinquiryserviceforconsumerswhowishtosendmoneyoverseas
IMTsarealsosignificantintermsoftheaveragetransactionsizetheaveragesizeofIMTsismuchlarger
thananyotherinquiryserviceForthebigfourbankswhooereachofthefourinquiryservicesthe
averagesizeIMTtransactionin–wasalmostAUDmorethantheaverageforeigncash
 TheWorldBankBilateralRemittanceMatrixhttpwwwworldbankorgentopic
migrationremittancesdiasporaissuesbriefmigration-remittances-dataviewedJulyascitedinGlobalPartnership
forFinancialInclusionGNationalRemittancePlanAustraliaGermanyhttpswwwgpfiorgsitesgpfifiles
Australia-GNationalRemittancePlanpdfp
 FiguresforforeigncashpurchasespaymentcardtransactionsandtravelcardtransactionsarebasedonACCCanalysisof
dataprovidedbytheinquirysuppliersfortheyeartoJune

Foreign currency conversion services inquiry—Final report
purchaseandoverAUDmorethantheaveragetransactiononapaymentcardinvolvingthe
conversionofAUDtoaforeigncurrency(figure)
Figure 1.1 Average transaction size for each inquiry service at the big four banks
1 July 2017–30 June 2018
$0
$500
$1 000
$1 500
$2 000
$2 500
$3 000
$3 500
$4 000
$4 500
Payment cards Travel cards Foreign cash IMTs
AUD
SourceACCCanalysisofdataprovidedbythebigfourbanks
Internationalmoneytransfers
ForthepurposesofthisinquiryanIMTserviceisthetransferofmoneyfromasenderinAustraliatoan
overseasrecipientAspartoftheservicethemoneytransferredisconvertedfromAustraliandollarsto
thecurrencyofthedestinationcountryoranotherforeigncurrencyAnIMTisalsosometimesreferred
toasaforeigncurrencytransferorremittanceoratelegraphictransfer
AsatJunetherewereoverindividualentitiesprovidingIMTservicesinAustraliaaswellas
overentitiesthatprovideIMTservicesonbehalfofsomeoftheseentities

Thesesuppliersoer
IMTservicesthroughanumberofdistributionchannelsincluding
onlinethroughwebsitesinternetbankingplatformsandmobileapplications
inpersonthroughbrancheskiosksandstores
overthephone
DependingontheinquirysupplierconsumeraccesstoIMTservicesissubjecttocertainrestrictions
ForexamplethebigfourbanksgenerallyonlyprovideIMTservicestotheiraccountholders

while
TransferWiseandOFXrequireconsumerstoregisterwiththembeforetheycanpurchasetheirIMT
 BasedonAUSTRACcorrespondencetotheACCCdatedandJuly
 CBAoersIMTservicestoconsumersandbusinesseswhoarenotexistingcustomersofCBAHoweveroverpercent
oftheIMTssentforindividualconsumersbyCBAintheyeartoJunewereforindividualswhoheldatransaction
accountwithCBA
WestpacoersXYLOthroughwhichitscustomerscanundertakeIMTswithoutaWestpacbankaccountXYLOappearsto
beaspecialistproducttargetedatbusinesscustomers
Source
Informationprovidedbytheinquirysuppliers
AustraliaandNewZealandBankingGroupLimitedInternationalMoneyTransferhttpswwwanzcomaupersonal
travel-internationalinternational-paymentsviewedMay(“You’llneedtobeanANZcustomertomakeanANZ
InternationalMoneyTransfer”)
NationalAustraliaBankLimitedTransferMoneyOverseashttpswwwnabcomaupersonalinternationaltransfer-
money-overseasviewedMay(“BeforeyoucantransfermoneyoverseaswithNAByoumustbeaNABcustomer
withanopentransactionaccount”)
WestpacBankingCorporationSendmoneyoverseashttpswwwwestpaccomauinternational-travelinternational-
transferssend-moneyviewedMay(“Here’swhatyou’llneedAWestpacbankaccountthatisregisteredfor
OnlineBankingandWestpacProtectSMSCode”)
WestpacBankingCorporationXYLOForeignExchangehttpswwwwestpaccomaubusiness-bankinginternational-
traderead-up-onxyloviewedMay

Foreign currency conversion services inquiry—Final report
services

AsanotherexampleWesternUnionrequiresconsumerstoregisterforitsonlineservices
but
doesnotrequireconsumerstoregisterorsetupanaccountforin-storepurchasesIMTsuppliers
likeallsuppliersofinquiryservicesrequireinformationfromtheircustomerstocomplywith
Australia’santi-moneylaunderingandcounter-terrorismfinancing(AMLCTF)regulationsAMLCTF
requirementsarediscussedfurtherinappendixC
TheIMTservicesofsomesuppliersincludefeaturesinadditiontotheabilitytoremitforeigncurrency
toanothercountryTheextenttowhichsupplierscompeteonfeaturesotherthanpriceincludingthe
securityandspeedofdeliveryisexploredinchapter(section)
HowIMTswork
SupplierscantransmitanIMTinatleastthreeways
throughacorrespondentbankingnetworkorsimilararrangements
usingapeer-to-peerarrangement
overonlinepaymentinfrastructure
Correspondent banking networks
Acorrespondentbankingnetworkisanarrangementunderwhichbanksoperateasagentsforeach
othertofacilitatethetransferoffundsfromonecountrytoanother(figure)Networkarrangements
existbecauseitisimpracticalforanyonebanktohavebilateralarrangementswitheverybankinevery
countryInsteadtheycanaccessalmostanybankintheworldviaacorrespondentbankingnetwork

Figure 1.2 An IMT facilitated though multiple correspondent banks
Country A
Correspondent bank
Country B
Correspondent bank
Sending country
Originating bank
Sender
Receiving country
Receiving bank
Beneficiary
WhenaconsumerinAustraliarequestsabank(theoriginatingbank)tosendmoneytoarecipient
overseastheoriginatingbankdetermineswhichbankswithinitsnetwork(correspondentbanks)can
connectittothereceivingbankFigureisastylisedexampleofanIMTwheretheoriginatingbank
reliesonacorrespondentbankandthecorrespondentnetworkofthatcorrespondentbanktosend
anIMT
Non-banksupplierscanalsouseacorrespondentbankingnetworkorasimilarnetworktosendmoney
overseasForexamplesomeofthesesupplierscombinethemoneycollectedfromtheircustomers
anduseanetworkinvolvingothersuppliersorbankstosendthebalancetoabankaccountinthe
destinationcountryfromwhichthefundsarethendistributedtorecipientsinthatcountry

IMTstransmittedthroughacorrespondentbankingnetworkcommonlyattractfeesleviedbythe
correspondentbank(s)theseareknownascorrespondentbankingfeesReceivingbankscanalso
chargeafeeThesefeesareoftenpassedontotheconsumerorIMTrecipientusuallybybeing
deductedfromthesumbeingtransferred
 TransferWiseWelcometomoneywithoutbordershttpstransferwisecomregisterviewedMay
OFXRegisterhttpsauofxcomregistrationviewedMay
 BankforInternationalSettlementsJulyCommitteeonPaymentsandMarketInfrastructures—Correspondentbanking
Switzerlandwwwbisorgcpmipubldpdfp
 ReserveBankofAustraliaJuneDevelopmentsinCorrespondentBankingintheSouthPacificSydneyhttpswww
rbagovaupublicationsbulletinjunpdfdevelopments-in-correspondent-banking-in-the-south-pacificpdfp

Foreign currency conversion services inquiry—Final report
Acorrespondentorreceivingbankcansometimesdeductfeesfromtheamounttransferredevenif
thesupplierspecificallyinstructsthemnottodosoInparticularwherethereceivingbankisnotpart
ofthesupplier’scorrespondentbankingnetworkthesupplierwillnottypicallybeabletoinfluenceany
feesthatthereceivingbankmaydeductfromtheamounttransferredAlsoitmaynotbepossiblefor
supplierstoidentifyallcorrespondentbankingfeesthatanIMTwillincuratthetimeaconsumerinitiates
theIMTespeciallywhereanIMTisprocessedthroughmultiplebanks

Asuppliermayhoweverhave
visibilityofthefeeschargedbyeachofthecorrespondentbanksithasadirectagreementwith
The
issuesarisingforconsumersfromalackoftransparencyofcorrespondentbankingfeesareconsidered
furtherinchapter(section)
Peer-to-peer arrangement
SomesuppliersfacilitateIMTsthroughpeer-to-peerarrangementsInitssimplestformapeer-to-peer
arrangementinvolvesasuppliermatchingIMTsthatflowinoppositedirectionsfortwocurrencies
Forexampleanidealpeer-to-peertransactionwouldinvolveaconsumerinAustraliawantingto
sendAUDtotheUKandaUKconsumerwantingtosendGBPtoAustraliaandassumingan
AUD–GBPexchangerateofInsteadofsendingfundsinbothdirectionsapeer-to-peersupplier
usestheGBPreceivedfromtheUKsendertopaytheUKrecipientandusestheAUDtopaythe
recipientinAustralia(figure)
Figure 1.3 An IMT facilitated though a peer-to-peer arrangement
Australia
Supplier’s AUD
bank account
AUD100
AUD100
United Kingdom
Supplier’s GBP
bank account
GBP55
GBP55
Beneficiary A
Sender B
Sender A
Beneficiary B
Funds do not need to
physically cross the
border, but the result is
essentially the same
IMTswillseldommatchforapeer-to-peerprovideraspreciselyastheexamplesetoutinfigure
Whenthereisamismatchthesupplierwillbuytherelevantcurrencytomakeuptheshortfalland
completetheIMTforitscustomer

Thepeer-to-peermodelisgenerallysupportedbyasupplierhavingabankaccountineachcountry
inwhichitsuppliesIMTservices

Thisallowsthesuppliertousethemoneyreceivedforanoutgoing
IMTtopaytherecipientofanincomingIMT(asinfigure)Thisapproachallowspeer-to-peer
supplierstoprovideIMTserviceswithouthavingfundsactuallycrossnationalbordersTheavailabilityof
bankingservicesinAustraliatoIMTsuppliersincludingpeer-to-peerprovidersisconsideredfurtherin
chapter(section)
Online payments infrastructure
PayPalisanexampleofasupplierwhereIMTsaremadeoveronlinepaymentsinfrastructurePayPal’s
digitalpaymentsplatformactsasanIMTservicethroughwhichitsaccountholderscansendmoneyto
andfromeachother

 NationalAustraliaBankLimitedOctoberResponsetoACCC’sForeignCurrencyConversionServicesInquiryh t t p s 
wwwacccgovausystemfilesNABpdfp
 TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWisepdfp
 TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWisepdfp
 PayPalAustraliaPtyLimitedSendingmoneytofriendsandfamilyhttpswwwpaypalcomauwebappsmppsend-
money-onlineviewedMarch

Foreign currency conversion services inquiry—Final report
ThesendercanfundtheIMTusingtheirPayPalbalancebankaccountcreditcardordebitcard

Whereaconsumerusesacreditcarddebitcardorbankaccount
thesendermakesapaymenttoPayPalusingtheircreditcarddebitcardorbankaccountand
PayPalmakesapaymentintothebeneficiary’sPayPalaccount
WhenthesenderholdssucientvalueintheirPayPalaccounttofundtheIMTPayPalusesitsplatform
todebitthesender’sPayPalaccountbalancetocreditthebeneficiary’sPayPalaccount
Foreigncash
AforeigncashservicereferstothesupplyofforeigncashtoaconsumerConsumerstypically
purchaseforeigncashbeforetravellingoverseasDependingupontheirlocationconsumerspotentially
havemanysuppliersfromwhomtopurchaseforeigncashAroundentitieswereenrolledwith
theAustralianTransactionReportsandAnalysisCentre(AUSTRAC)asforeigncashsuppliersin
June

Foreigncashservicesareavailablethroughvariousdistributionchannelsincluding
inpersonatbankbranchesandkiosksincludingatairportlocations
onlineoroverthephonewithcashcollectedatanominatedoutletSomesuppliersoerdeliveryof
foreigncashorderedonline
atautomatedtellermachines(ATMs)thatdispenseforeigncash
Suppliersdonotgenerallyhaveeligibilityrequirementsforconsumerstopurchaseforeigncash
servicesalthoughsomeofthebigfourbanksmaylimittheamountofforeigncashorthedistribution
channelsavailabletonon-customers
Paymentcards
ApaymentcardFXservicereferstotheforeigncurrencyconversionthatoccurswhenaconsumer
usestheirdebitcard

orcreditcard

foraninternationaltransactionincludingtopurchasegoodsand
servicesinaforeigncurrencyorwithdrawforeigncashwhileoverseas
Debitcardsandcreditcardsaredierentproductswithdierentfeatures
Adebitcardislinkedtoaconsumer’sdepositaccountandallowstheconsumertousetheirown
moneywhenmakingpurchasesorwithdrawingcash

Acreditcardallowstheconsumertodrawonalineofcredituptoacertainamountfromthe
cardissuertomakepurchasesorwithdrawcashCreditcardissuerschargeinterestontransaction
amountsifaconsumerdoesnotrepaytheamounttheyborrowedwithintheinterestfreeperiod

or
ifaconsumerwithdrawscashunderthelineofcredit(knownasacashadvance)

Incontrasttodebitcardscreditcardsaregenerallyavailabletoconsumerswithouttheneedto
holdadepositaccountwiththerelevantsupplierConsumerswillhoweverneedtosatisfyeligibility
requirementsbeforeacreditcardisissuedForexampleconsumersneedtoverifytheiridentityand
demonstratetheycanrepaythelineofcredit
 PayPalAustraliaPtyLimitedSendingmoneytofriendsandfamilyhttpswwwpaypalcomauwebappsmppsend-
money-onlineviewedMarch
 BasedonAUSTRACcorrespondencetotheACCCdatedJuly
 Onlydebitcardsthatcanaccessapaymentnetworkprovidedbyaninternationalcardschemecanbeusedforforeign
currencytransactions
 ForthepurposesofthisreportallreferencestocreditcardsareinclusiveofchargecardsChargecardsaresimilartocredit
cardshoweverunlikecreditcardswhichareassociatedwitharevolvinglineofcreditchargecardsrequirethecardholder
topaytheiroutstandingbalanceinfullatsetperiods(typicallymonthly)
 ASIC’sMoneySmartDebitCardshttpswwwmoneysmartgovauborrowing-and-creditdebit-cardsviewed
March
 Notallcreditcardshaveaninterest-freeperiodForcreditcardswithoutaninterest-freeperiodinterestispayableeither
fromthedayapurchaseismadeorfromthedaythemonthlycreditcardaccountstatementisissued
 ASIC’sMoneySmartCreditCardshttpswwwmoneysmartgovauborrowing-and-creditcredit-cardsviewed
March

Foreign currency conversion services inquiry—Final report
Dependingonthesupplierdebitandcreditcardsareavailablethroughanumberofdistribution
channelsincludingbranchesonlineandoverthephone
Cardissuersandinternationalcardschemes
Ofrelevancetoourinquirytherearetwotypesoffirmsinvolvedinthesupplyofpaymentcard
FXservicesthecardissuerandtheinternationalcardscheme
Card issuers
Thecardissuermakesthepaymentforthecardholder’spurchasesandcashwithdrawalsmade
byacardholderprovidedtherearesucientfundsavailableinthecardaccounttocompletethe
transaction—includingfundsavailableunderthelineofcreditinthecaseofcreditcardsItisthecard
issuerthatacreditcardholderowesmoneytowhendrawingonthelineofcreditfeatureofacredit
cardThecardissuerisalsogenerallyresponsibleformatterssuchassendingaccountstatementsto
cardholderstoprovidedetailsoftransactionsandseekingrepaymentinthecaseofcreditcards
Debitcardsandcreditcardsareissuedbybanksandotherauthoriseddeposit-takinginstitutions(ADIs)
Therearealsosomeinternationalcardschemes(discussedbelow)thatissuecreditcardsdirectlyto
consumersForexampleAmericanExpressCompany(AmericanExpress)issuesitsowncreditcards
ThebigfourbanksarethemajorissuersofpaymentcardsinAustraliaTheyheldaboutpercentof
allhouseholddepositswithAustralianbanksasatMay

andissuethemajorityofdebitcards

In
termsofcreditcardsthebigfourbanksaccountedforaboutpercentoftheoutstandingcreditcard
balanceswithAustralianbanksasatMay

DuringtheyearendingJunethebigfour
bankscombinedprocessedovermilliontransactionsinvolvingtheconversionofAustraliandollars
toaforeigncurrencyviaapaymentcardThecombinedAustraliandollarvalueofthosetransactions
wasoverAUDbillion
International card schemes
NearlyallpaymentcardsusedbyAustraliansareissuedwiththebrandingofthecardschemes
operatedbyAmericanExpressDinersClubInternational

MastercardIncorporated(Mastercard)or
VisaInc(Visa)

collectivelyreferredtointhisreportastheinternationalcardschemes
Theinternationalcardschemesfacilitatetransactionsmadewithpaymentcardsthatincludethesupply
ofpaymentcardFXservicesThesetransactionsofteninvolvethemovementofmoneyacrossborders
orbetweencurrenciesForexamplewhereacardholdertravelsoverseasandusestheircardfora
purchaseorwhereacardholdermakesatransactiononlineinacurrencydierentfromthecurrency
inwhichtheircardaccountisdenominatedImportantlyinfacilitatingsuchtransactionsitisthe
internationalcardschemethatdeterminestheretailexchangeratethatwillapplytothetransactionThe
internationalcardschemeslevyfeesonthecardissuersforfacilitatingthesetransactions

 ‘Households’asdefinedinAPRA’sMonthlyBankingStatistics‘individualsorgroupsofindividualsresidentinAustralia
whosedealingswithothersectorsareforpersonalorhouseholdpurposesItexcludessoleproprietorspartnershipsfamily
trustsandanyotherunincorporatedenterprisesownedbyhouseholds’
AustralianPrudentialRegulationAuthorityMonthlyBankingStatisticsGlossaryhttpswwwapragovausitesdefault
filesMBSGlossarypdf
AustralianPrudentialRegulationAuthorityMonthlyBankingStatisticsMayhttpswwwapragovaupublications
monthly-banking-statisticsviewedJuly
 ReserveBankofAustraliaSeptemberCompetitionintheFinancialSystemSubmissiontotheProductivity
CommissionInquiryhttpswwwrbagovaupublicationssubmissionsfinancial-sectorcompetition-in-the-
financial-systemsubmission-to-productivity-commission-september-pdfp
 AustralianPrudentialRegulationAuthorityMonthlyBankingStatisticsMayhttpswwwapragovaupublications
monthly-banking-statisticsviewedJuly
 DinersClubInternationalisasubsidiaryofDiscoverFinancialServices
 ReserveBankofAustraliaCreditandChargeCards—MarketSharesofCardSchemeshttpswwwrbagovaustatistics
tablesxlsc--histxlsxviewedApril
 NationalAustraliaBankLimitedOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovau
systemfilesNABpdfp

Foreign currency conversion services inquiry—Final report
Travelcards
Travelcardsarestoredvalueorpre-paidcardsthatcanbeusedoverseastowithdrawcashfrom
ATMsormakepurchasesamongotheruses

Valuecanbeloadedontoatravelcardinoneormore
oftheforeigncurrenciesoeredbythesupplier(knownassupportedcurrencies)orinsomecases
Australiandollars
CashwithdrawalsandpurchasescanbemadeinthecurrenciesloadedontoatravelcardTheycanalso
bemadeinothercurrenciesalthoughsuchtransactionsmayattractadditionalfeesCashwithdrawals
andpurchasescanonlybemadewherethereissucientvaluestoredonthetravelcard
Atravelcardservicereferstotheforeigncurrencyconversionthattakesplace
atthetimeaforeigncurrencyispurchasedforloadingontothetravelcardor
whenthetravelcardisusedforatransactioninacurrencythatisnotloadedonthecard
TherearesignificantlyfewersuppliersoftravelcardscomparedwithsuppliersofIMTandforeigncash
servicesMarketresearchundertakenbyaconsultantandobtainedbyatleastoneofthebigfour
banksindicatesthatthemostcommonlyusedtravelcardsweretheQantasCBAandVelocitytravel
cards—collectivelyaccountingforthemostrecenttransactionofoverpercentoftravelcardusers

TheANZNABandWestpactravelcardscollectivelyaccountedforthemostrecenttransactionof
aboutpercentoftravelcardusers
Travelcardscanbepurchasedonlineorinpersonforexampleinbankbranchesandfromkiosks
Consumersdonotgenerallyneedtobeanexistingcustomerofasuppliertopurchaseatravelcard
QantasandVelocityrequireconsumerstosignuptotheirfrequentflyerprograms

Thecurrenciesavailableforusewithtravelcards
OneinquirysupplierobservedinaninternalstrategicreviewdocumentfromMaythatthereis
littleproductdierentiationbetweentravelcardsbutonekeydierencebetweencardsisthenumber
ofsupportedcurrenciesoeredtoconsumersConsiderablevarietyexistsinthesupportedcurrencies
acrosstravelcardswithsomecardssupportingasfewasfivecurrenciesandotherssupportingupto
currencies

TenofthemorecommonlysupportedcurrenciesareAustraliandollarsCanadiandollarsEuros
GreatBritishpoundsHongKongdollarsJapaneseyenNewZealanddollarsSingaporedollarsThai
bahtandUnitedStates(US)dollarsThesuppliersintableoertravelcardsthatincludethose
currenciesassupportedcurrenciesalongwiththeadditionalcurrenciesnotedinthetable
 TravelcardscanalsobeusedwithinAustraliatomakepurchasesorwithdrawcash
 TheresearchwasbasedonaconsumersurveyconductedbyaconsultingfirminAprilThesurveyinvolved
individualswhohadtravelledoverseasinthepreviousmonthsandusedatravelcard
 QantasAirwaysLimitedGettheQantasTravelMoneyCardhttpswwwqantascashcomhow-it-worksviewed
March
VelocityFrequentFlyerPtyLtdWelcometoGlobalWallethttpswwwvelocityglobalwalletcomviewedMarch
 CanstarJulybenefitsofatravelmoneycardhttpswwwcanstarcomautravel-money-cardsfive-benefits-of-
a-travel-money-cardviewedFebruary

Foreign currency conversion services inquiry—Final report
Table 1.1 Other currencies oered by selected suppliers*
ChineseYuan SouthAfricanRand UnitedArabEmirates
Dirham
VietnameseDong
ANZ
CBA
✓ ✓ ✓
NAB
Qantas
✓
Travelex
Velocity
✓
Westpac
✓
*AllsupplierslistedinthistableoertravelcardsthatsupportAustraliandollarsCanadiandollarsEurosGreatBritish
poundsHongKongdollarsJapaneseyenNewZealanddollarsSingaporedollarsThaibahtandUSdollars
SourceInformationobtainedfromsupplierwebsitesfortheANZTravelCardCBATravelMoneyCardNABTravellerCard
QantasTravelMoneyCardTravelexMoneyCardVelocityGlobalWalletandWestpacGlobalCurrencyCard
 About the inquiry suppliers
ThisinquiryisprimarilyfocusedontheinquirysuppliersANZCBANABOFXTransferWiseTravelex
WesternUnionandWestpacEachinquirysupplierprovidesoneormoreoftheinquiryservices
(table)Theinquirysupplierswerechosenasabroadlyrepresentativesampleofsuppliersfromthe
diverserangeoffirmsprovidingtheinquiryservices
Table 1.2 Inquiry services provided by the inquiry suppliers
Inquiryservice
IMTs Foreigncash Paymentcards Travelcards
ANZ
• • • •
CBA
• • • •
NAB
• • • •
OFX
•
TransferWise
•
Travelex
a
• •
WesternUnion
•
Westpac
• • • •
aTravelexprovidesIMTservicesatselectedstoresasanagentforWesternUnionandIMTservicesoeredonTravelex’s
websiteareprovidedbyOFX

Foreign currency conversion services inquiry—Final report
Thebigfourbanks
ThebigfourbanksareAustralia’sfourlargestADIsandaresignificantsuppliersoffinancialservices
includinginquiryservicesinAustraliaThebigfourbanksuseavarietyofdistributionchannelsto
provideinquiryservicesincludingin-branchonlineoverthephoneandthroughATMsHoweverthey
donotallusethesamechannelstodistributeeachserviceForexample
ANZdoesnotoerIMTservicesin-branchtoindividualconsumersorthemajorityofsmallbusiness
customersliketheotherbigfourbanksinsteadreferringcustomerstoitsphonebankingchannel
ANZistheonlyoneofthebigfourbankstohavephysicaloutletsatSydneyInternationalAirport
thatsupplyforeigncashservicesandtravelcards

WestpacistheonlybigfourbankwithATMsthatdispenseforeigncash

Unlikesupplierswhoseonlybusinessissupplyingoneormoreoftheinquiryservicestherevenue
fromprovidinginquiryservicestoindividualconsumersdoesnotmakeupasignificantpartofthebig
fourbanks’overallrevenuesForexampleweobservethatforthebigfourbanks’respective–
financialyears

revenuesforIMTsforeigncashandtravelcardscombinedwerelessthanpercentof
thetotaloperatingincomeoftheconsolidatedbankinggroupsateachbank

OFXandTransferWise
OFXandTransferWisesupplyIMTservicesthroughtheirwebsitesandmobileapps

Thesesuppliers
donothaveanyphysicaloutletssuchaskiosksorstoresandtheydonotacceptcashorchequeas
fundingforIMTs

WesternUnion
WesternUnionsuppliesIMTservicesonline(throughitswebsiteormobileapp)andinpersonthrough
itsagentnetwork

whichincludesAustraliaPostandTravelexkiosks

WesternUnion’sagentnetwork
 AustraliaandNewZealandBankingGroupLimitedForeigncurrencyexchangecentrelocationshttpswwwanzcomau
personaltravel-internationalforeign-exchange-ratesforeign-centre-locationsviewedMay
 TheATMsdispenseEurosGreatBritishpoundsNewZealanddollarsandUSdollarsWestpacBankingCorporation
OctoberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesWestpacpdfpp–
 The–financialyearendedonJuneforCBAandonSeptemberforANZNABandWestpac
 Thecomparisonrelatestorevenuesgeneratedfromeachtransactioninvolvingtheacquisitionofaforeigncurrencyusing
AustraliandollarsbyindividualconsumersComparisonsoftherevenuederivedfromtheinquiryservicestothetotal
operatingincomeofthebigfourbanksarebasedon
ACCCanalysisofdataprovidedbythebigfourbanks
AustraliaandNewZealandBankingGroupLimitedAnnualReporthttpsshareholderanzcomsitesdefault
filesanzannualreportfinalpdfp
CommonwealthBankofAustraliaAnnualReporthttpswwwcommbankcomaucontentdamcommbank
about-usshareholderspdfsresultsfycba-annual-report-pdfp
NationalAustraliaBankLimitedAnnualFinancialReporthttpswwwnabcomaucontentdamnabrwd
documentsreportscorporate-annual-financial-reportpdfp
WestpacBankingCorporationWestpacGroupAnnualReporthttpswwwwestpaccomaucontentdam
publicwbcdocumentspdfawicWestpacAnnualReportpdfp
ThetotaloperatingincomeforWestpacwasderivedfromitsreportednetoperatingincomebeforeexpenses
 TransferWiseInternationalmoneytransfershttpstransferwisecomausend-moneyviewedFebruary
OFXTransferringmoneywithOFXissimplehttpswwwofxcomen-aumoney-transferstep-by-stepviewed
February
 OFXCanItransfermoneytoOFXviacashorcheque?httpswwwofxcomen-aufaqscan-i-transfer-money-to-ofx-via-
cash-or-chequeviewedMay
TransferWiseCanIpaywithcashorbycheque?httpstransferwisecomhelparticlegood-to-knowcan-
transferwise-convert-fromto-cash-or-chequeviewedMay
 WesternUnionSendmoneyfromAustraliahttpswwwwesternunioncomauensend-moneyhtmlviewed
May
 AustraliaPostInternationalmoneytransferwithWesternUnionhttpsauspostcomaumoney-insurancebanking-and-
paymentsinternational-money-transfer-with-western-unionviewedMay
TravelexLimitedWesternUnionMoneyTransferhttpswwwtravelexcomauserviceswestern-union-money-transfer
viewedMay

Foreign currency conversion services inquiry—Final report
isextensivewithIMTservicesbeingoeredfromaroundagentlocationsacrossAustraliaasat
December

WesternUniondiersfromotherinquirysuppliersbyprovidingIMTservicestoconsumerswhodo
nothaveaccesstobankingservices

ForexamplethesendercanpayforanIMTusingcashandthe
recipientcanreceivefundsincashataWesternUnionagentlocation

AdditionallyWesternUnion
suppliesIMTsincurrencieswhichmaynotbeavailablefromotherIMTsupplierssuchastheIraqiDinar
andtheAngolanKwanza

Travelex
Travelexisakioskoperator

andsuppliesarangeofinquiryservicesincludingforeigncashtravelcards
andIMTsTravelexsuppliesitsservicesviaanumberofdistributionchannelsincludingitskiosksATMs
andonline

ThereareoverTravelexkiosksandaroundTravelexforeigncashATMsaround
Australiaincludingatairportlocations

TravelexalsoprovidesIMTservicesatselectedstoresasanagentforWesternUnion

IMTservices
oeredonTravelex’swebsiteareprovidedbyOFX

InadditionTravelexalsosuppliesawhitelabelforeigncashserviceThisinvolvesTravelexsupplying
foreigncashtoothersupplierswhothendistributeitundertheirownbrandSeveralofthebigfour
bankshaveadvisedtheACCCthattheydistributeforeigncashsuppliedbyTravelexpursuanttoawhite
labeloragencyagreementThesearrangementsareoutsidethescopeofthisinquirywhichhasbeen
focusedonthesupplyofFXservicestoconsumersandsmallbusinesses
 The pricing of the inquiry services
Typicallythepriceofaninquiryserviceisdeterminedbyacombinationoftheretailexchangerate
appliedtotheamountofforeigncurrencybeingpurchasedandthefees

Thissectionoutlinesthe
natureofthesepricecomponentsandtheACCC’sobservationsonthepricingoftheinquiryservices
Unlessotherwisestatedreferencestopriceinthisreportaretothetotalpriceincludingtheforeign
currencyamountexpressedinAustraliandollarsbasedontheretailexchangerateandanyfees
 WesternUnionSendmoneyfromAustraliahttpswwwwesternunioncomauensend-moneyhtmlviewed
July(“InPerson”)
 WesternUnionSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesWestern
Unionpdfpp–
 WesternUnionSendmoneyfromAustraliahttpswwwwesternunioncomauensend-moneyhtmlviewed
July(“InPerson”)
 WesternUnionSendMoneyOnlinehttpswwwwesternunioncomauensend-moneyappstartviewedMarch
 KioskoperatorssupplyFXservicesfromphysicaloutletssuchaskiosksorstoreslocatedinairportsorotherlocations
Somekioskoperatorsaugmenttheirphysicaloutletswithanonlineservicesuchasthoseallowingconsumerstoorder
foreigncashonlineandcollectitfromakioskorstoreThesesuppliersonlysupplyFXservices
 TravelexLimitedNovemberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
Travelexpdfp
 TravelexLimitedTravelexStoresinAustraliabyStateTerritoryhttpswwwtravelexcomaustores-by-stateviewed
March
TravelexLimitedForeignCurrencyATMshttpswwwtravelexcomauforeign-currency-atmsviewedMarch
 TravelexLimitedNovemberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
TravelexpdfAnnexureBp
TravelexLimitedWesternUnionMoneyTransferhttpswwwtravelexcomauserviceswestern-union-money-transfer
viewedMay
 TravelexLimitedAboutInternationalPaymentshttpswwwtravelexcomaumoney-transferabout-international-
paymentsviewedMay
 SomesuppliersmayrefertofeesascommissionsForthepurposeofthisinquiryfeesincludesfeescommissionsor
chargespayablebyaconsumerforaninquiryservice

Foreign currency conversion services inquiry—Final report
Consumersneedtobeabletocomparethetotalpriceoeredbysupplierstoensuretheyaregetting
thebestdealServicesthatappeartoberelativelycheapwhenconsideringonlyfeesortheretail
exchangeratecanturnouttobethemostexpensivebasedonthetotalpriceForexamplefromour
pricedatacollectiontheforeigncashservicesoeredbyANZWestpacCBAandNABatnon-airport
locationshadcompetitiveretailexchangeratesforthepurchaseofUSDbutoncetheirfeeswere
addedtheybecamesomeofthemoreexpensivesuppliersinthesample(figure)
Figure 1.4 Price for purchasing USD200 in foreign cash*
Average over 5 business days: 6–12 February 2019
$0
$200
$220
$240
$260
$280
$300
$320
AUD
ANZ
Other suppliersNAB
CBAWBC
Conversion:
ANZ
Other suppliers
NABCBAWBC
Fee:
weXchange
$288
Travel
$290
Money Oz
Travelex
$291
Australia
$296
Post
ANZ
$299
WBC
$301
CBA
$303
NAB
$304
Global
Exchange
(online purchase)
$312
*Reportedpricesarebasedonin-storepurchasesatnon-airportlocationsonlyexceptthereportedpriceforGlobalExchange
whichrepresentsonlinepurchaseswithcollectionatSydneyInternationalAirportPricescalculatedbytheACCCasasimple
averageoverthepricedatacollectionperiod
SourceDatacollectedfortheACCCThedatacollectedwassourcedfrompubliclyavailableinformationAppendixB
(sectionB)setsouthowthisdatawascollected
Retailexchangerates
Theexchangeratesapplyingtoinquiryservicespurchasedbymostconsumersaregenerallydierent
totheexchangeratesthatarereportedbythenewsmediaTheexchangeratesreportedbythemedia
areusuallybenchmarkrateswhichareindicativeofthewholesaleexchangeratesatwhichfinancial
institutionsandcentralbankstradeverylargevaluesandvolumesofforeigncurrency
MostconsumerscannotaccessbenchmarkratesInsteadtheypurchaseinquiryservicesataretail
exchangeratesetbythesuppliersoftheseservices
Theretailexchangeratesofmostsuppliersandformostinquiryservicesarecomprisedoftwo
components

thewholesaleexchangerateatwhichthesupplieracquiredtherelevantcurrencythewholesale
exchangeratemaybesimilartothebenchmarkratesreportedinthemediaforsomesuppliers
aretailmargin(alsoknownasamark-up)
Figureisanexampleofhowtheretailexchangerate(thecombinationofthewholesaleexchange
rateandtheretailmargin)andfeescombinetodeterminethetotalpricepaidbyaconsumerforan
inquiryserviceTheexampleisbasedonrealpricedataandrelatestoaconsumerbuyingUSD
inforeigncashfromanairportlocationincludedinourpricedatacollectiononFebruary
Wehaveassumedthebenchmark(WMReuters)AUD–USDrateonthatdaywasthewholesale
exchangerateatwhichthesupplierpurchasedtheUSdollarssoldtotheconsumer

Thatexchange
 NotallsuppliersapplyaretailmarginintheirformulationoftheretailexchangerateOneinquirysupplieralignsitsretail
exchangeratewiththeReutersmid-marketrateandinsteadderivesaprofitmarginfromfeeschargedtoconsumers
 ThisisasimplifyingassumptionforthepurposeofthisexampleBenchmarkratesdonotnecessarilyreflecttheactual
wholesalecostatwhichsuppliersacquireforeigncurrency

Foreign currency conversion services inquiry—Final report
ratewaswhichmeanstheapproximatecostoftheUSdollarstothesupplierwasAUD(the
benchmarkcostinfigure)TheretailexchangerateoeredbythesupplierwasAUD–USD
meaningtheconsumerpaidAUDfortheirUSDamark-upofAUD(retailmargininfigure)
FinallythefeeschargedbythesupplierwereAUDThetotalpricefortheconsumertopurchase
USDwasAUD
Figure 1.5 Illustrative example of price components: purchase of USD200 in foreign cash*
12 February 2019
$283
$35
$12
$0
$50
$100
$150
$200
$250
$300
$350
AUD
Benchmark cost** Retail margin Fees
*ReportedpriceisbasedonACCCanalysisofpricedatacollectedfortheACCCandotherpubliclyavailabledataasat
FebruaryThebenchmarkcostwascalculatedbytheACCCbasedontheWMReutersAUD–USDbenchmarkrate
Theretailmarginandfeesarebasedonarealpricequotedbyasupplieratanairportlocationusingdatacollectedforthe
ACCC(seefigure)Theexampleisintendedtobeillustrativenotdefinitive
**Thebenchmarkcostprovidesanindicationofthesupplier’swholesalecostoftheforeigncurrencysoldanddoesnot
necessarilyreflecttheactualwholesalecostatwhichthesupplieracquiredforeigncurrencyThesupplier’sretailmarginis
thereforelikelytodierfromwhatisshowninthischart
SourceDatacollectedfortheACCCThedatacollectedwassourcedfrompubliclyavailableinformationAppendixB(section
B)setsouthowthisdatawascollected
ReserveBankofAustraliaExchangeRates—Daily—toCurrenthttpswwwrbagovaustatisticstablesxls-hist-
currentxlsviewedApril
Suppliersgenerallysetdierentretailexchangeratesfortransactionsinwhichaconsumerisbuyinga
foreigncurrencycomparedwiththoseinwhichaconsumerissellingthesamecurrency(box)Many
suppliersparticularlythosesupplyingforeigncashservicesderivedrevenuefromthedierenceat
whichforeigncurrencywasboughtandsoldbythesupplier

 TravelexLimitedNovemberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
Travelexpdfp

Foreign currency conversion services inquiry—Final report
Box 1.1 The eect of buy and sell retail exchange rates*
AconsumerarrivesatSydneyAirportonFebruarylookingtochangeAUDtoGBP
Asupplier’sretailexchangerateforbuyingGBPonthatdaywasAtthisexchangerate
theconsumerreceivesGBP(x)forAUDIftheconsumerchangedtheirmind
anddecidedtoimmediatelyselltheirGBPbacktothesamesuppliertheexchangerateoered
wasAUD–GBPTheconsumerhadGBPsotheywouldhavereceivedAUD
()Despitecompletingbothtransactionsveryclosetogethertheconsumerwouldhave
lostAUDbeforeanyfeesoverthecourseofthesetransactions
AUD100 GBP39.90 AUD54.96
Buy rate
AUD GBP
0.3990
Sell rate
AUD GBP
0.7260
*ThisexamplehasbeenusedtoillustratethedierencebetweenbuyandsellretailexchangeratesThedierencemaybeless
pronouncedatdierenttimesandoutsideofairportlocations
SourceDatacollectedfortheACCCThedatacollectedwassourcedfrompubliclyavailableinformationAppendixB(section
B)setsouthowthisdatawascollected
Howinquirysupplierssetprices
Pricesforaninquiryservicemaychangedailyoroverthecourseofadaybecauseoffluctuationsin
wholesaleexchangerateswhichmoveinlinewithchangesinthesupplyanddemandforcurrenciesin
globalmarketsThesefluctuationsaretypicallyoutsidethecontrolofsuppliersThissectionfocuseson
theelementsofpricethatarewithinaninquirysupplier’scontrol
Wheretheyapplytheretailmarginandfeesincludedinaninquirysupplier’spricesareintendedto
coveritsoperatingcostsanddeliveraprofittothesupplierMoregenerallyavarietyoffactorscan
influencethepricesofinquirysuppliersincluding
thecostsassociatedwithprovidingtheinquiryservice

Thesecostsmayvaryacrosscurrencypairs
inquiryservicesanddistributionchannels
performanceagainstbusinessplansorrevenuetargets
aperceivedchangeinthecompetitivedynamicsforaparticularserviceorcurrencypair
likelycustomerorcompetitorresponsetoproposedpricechanges
WeexpectthattheemphasisonthesefactorswillvaryfromsuppliertosupplierandovertimeThe
emphasisasupplierplacesonthesefactorsmayalsovaryasaresultofthecontextandcircumstances
inwhichthatsupplierismakingadecisionaboutsettingitspricesChaptersetsoutourfindingson
pricecompetition
SomeinquirysuppliershavedierentretailexchangeratesforIMTsforeigncashandtravelcardsFor
exampleNABandWestpacoerdierentretailexchangeratesforeachoftheseservices

Weexpect
thatthenatureandassociatedunderlyingcostsofsupplyingeachoftheinquiryservicesarepartofthe
reasonwhyretailexchangeratesvaryacrossservices
TheinquirysuppliersgenerallyadvertisetheirpricesontheirwebsitesHoweversomeinquirysuppliers
mayoerdiscountsotheiradvertisedpricesForexamplesomeinquirysuppliersoerdiscounted
pricesthatcandependononeormoreofthefollowingthevalueofthecustomerrelationshiptothe
supplierthevalueofthetransactionthenumberoftransactionsundertakenbythecustomerorprices
oeredbyothersuppliers
Duringthecourseofourpricedatacollectionweidentifiedonesupplierthat
allowedretailexchangeratesforforeigncashtobenegotiatedinperson
 DetailsofthecostsdataprovidedbytheinquirysuppliersissetoutinappendixB(sectionB)
 NationalAustraliaBankLimitedForeignexchangerateshttpswwwnabcomaupersonalinternationalforeign-
exchange-ratesrateviewedMarch
WestpacBankingCorporationForeignExchangeRateshttpswwwwestpaccomaubusiness-bankingservices
foreign-exchange-ratesviewedMarch

Foreign currency conversion services inquiry—Final report
Retailmargin
Manyinquirysupplierssettheirretailmarginsortheirinternalpricingformulafordeterminingretail
marginsaspartofaperiodicbusinessreviewwithseniordecisionmakersWhilepricesmaychange
dailyinlinewithfluctuationsinwholesaleexchangeratestheACCChasobservedthatdecisionsto
changeretailmarginsarefarlessfrequentExamplesofcircumstanceswheresomeofthebigfour
banksdecidedtoreduceretailmarginsarediscussedinchapter(section)
Fees
ThewayaserviceisdeliveredcaninfluencethefeesthatapplytothatserviceWherefeesdier
acrossdistributionchannelsforthesamesupplieritmaybeareflectionofsomedistributionchannels
havingaloweroperatingcostthanothersadesirebythesuppliertoredirectconsumerstoaparticular
distributionchanneloracombinationofbothForexampleoneofthebigfourbanksreducedits
feesforsendingIMTsonlineasawayofencouragingcustomerstousethisdistributionchannelOur
reviewofthefeesapplyingtoinquiryservices(discussedinthesubsectionsbelow)showsthatonline
distributionchannelsgenerallyattractthelowestfees
Internationalmoneytransferservices
TherearethreekeycomponentstoIMTprices
thefeespaidatthetimetheconsumerpurchasesanIMT(up-frontfees)
correspondentbankingfeeswheretheyapply
theretailexchangerate

Up-frontfeesandcorrespondentbankingfees
Theup-frontfeesforIMTservicescanvarydependingontheIMTamountthedistributionchannelused
toinitiatetheIMTorthecurrencyinwhichtheIMTisbeingsent(table)Correspondentbanking
fees(discussedinfurtherdetailinchaptersection)canapplyinadditiontoup-frontfeesforIMTs
sentthroughsomesuppliersandincertaincircumstancesInstanceswherecorrespondentbankingfees
donotapplyorarelesslikelytoariseinclude
themajorityofIMTssuppliedbyInstaReMorOFX
IMTssuppliedbyNABtoindividualconsumersNABwillabsorbcorrespondentbankingfeesfor
theseIMTssothatfeesarenotdeductedfromtheamountstransferred

IMTssuppliedbyTransferWise
IMTssuppliedbyWesternUnionwhoseup-frontfeesareintendedtocoverallfeessothatno
additionalfeesaredeductedfromtheamountstransferred
WhencomparingtheIMTpricesofsuppliersconsumersshouldconsiderthetotalpriceincluding
theretailexchangerateup-frontfeesandanycorrespondentbankingfeesConsumersshouldask
suppliersifanyfeeswillbedeductedfromthefundstheytransferandiffeeswillbedeductedaskfor
anestimateofthefundsthatwillbedeliveredtotherecipient
 Wenotethatthereareotherfeessuchasreceivingbankfeesandlocaltaxeswhichmaybedeductedfromamounts
transferredUnlessotherwiseindicatedthesefeesarenotconsideredinouranalysis
 InsomeinstancesbeyondNAB’scontroloverseasbanksmaydeductfeesfromtheamounttransferred
NationalAustraliaBankLimitedInternationalTransfersTermsandConditionshttpswwwnabcomaupersonalhelp-
and-guidanceterms-and-conditions-for-personal-productsinternational-transfers-terms-conditionsviewedMay

Foreign currency conversion services inquiry—Final report
Table 1.3 Up-front fees applying to IMTs sent through selected suppliers*
28 June 2019^
Purchaseinbranch Orderonlineorviamobileapplication
ANZ — For transactions under the equivalent of AUD10 000:
$9 for payments to Fiji, Samoa, Vanuatu, Kiribati, Tonga, Solomon
Islands and Cook Islands
$12 for payments to other countries
$0 for transactions over the equivalent of AUD10 000
CBA
$30 $6 for IMTs under or equal to the equivalent of AUD1000
$12 for IMTs over the equivalent of AUD1000
InstaReM
a
— Typically 0.25%–1.00% of the transaction amount depending on the
currency
NAB
a
$30 $10
OFX
a
— $15 for IMTs under the equivalent of AUD10000
$0 for IMTs over the equivalent of AUD10000
TransferWise
a
— Fees range from $1 + 0.45% to $3.25 + 0.80%, depending on the currency.
b
The percentage fee may be discounted depending on the amount sent,
the currency and the payment method.
Westpac $32
$10 to a Pacific
Westpac account
$5–$10 depending on the currency sent and type of IMT service.
c
WesternUnion
a
$0–$15,
d
depending on the currency, transaction value and how the consumer pays for the IMT.
*FeesareexpressedinAUDorwhereexpressedasapercentagetheyareappliedtotheAUDequivalentofeachforeign
currencypurchased
^FeesforTransferWiseandWesternUnionasatDecember
—Thesupplierdoesnotprovidetheservice
aAssetoutinthediscussionabovecorrespondentbankingfeeswillnotorareunlikelytoapplytoIMTssentbythissupplier
bFeesforBrazilianrealsEurosGreatBritishpoundsIndonesianrupiahsIndianrupeesMalaysianringgitNewZealand
dollarsPhilippinepesosThaibahtandUSdollarsIMTservicesareavailableinothercurrenciesandthefeesapplyingtoIMTs
inthosecurrenciesmaybeoutsideofthisrange
cTheup-frontfeecanbewaivedincertaincircumstancesInadditiontoWestpac’sregularIMTserviceWestpacoersseveral
otherIMTservicesincludingLitePayInternationalPaymentsviaWestpaconlinebankingLitePaypaymentsmaybesentto
thePhilippines(Philippinepesos)India(Indianrupees)Europeancountries(AustriaBelgiumCyprusEstoniaFinland
FranceGermanyGreeceIrelandItalyLatviaLithuaniaLuxembourgMaltaNetherlandsPortugalSlovakiaSloveniaSpain)
(Euros)andtheUnitedKingdom(GreatBritishpounds)ThemaximumdailylimitforaLitePaypaymentisAUD
dFeesof–relatetoIMTsdeliveredtoabankaccountordigitalwalletFeesforIMTsdeliveredtotherecipientascash
maybesignificantlyhigher(upto)duetofactorsspecifictothistypeoftransactionincludingbutnotlimitedtothe
highercostsofin-personandcashhandlingservices
SourceInformationobtainedfromsupplierwebsitesviewedJuneandinformationprovidedbysuppliers
Retailexchangerates
RetailexchangeratesfortheIMTservicesoeredbysomeinquirysupplierscanvarydependingonthe
distributionchannelthroughwhichtheIMTwasinitiatedForsomeinquirysupplierstheretailexchange
ratecanalsovarywiththeamountoftheIMTForexampleatoneofthebigfourbanks
theretailexchangeratesforIMTsinitiatedviainternetbankingchangethroughoutthedaywhereas
forIMTsinitiatedoverthephonetheretailexchangeratesaresetonceadayfortransactionsbelow
AUD

forIMTsoverAUDconsumersmaybeabletonegotiatetheexchangeratethatwillapplyto
theirIMTregardlessofthedistributionchannel
 TheretailexchangerateschangeoverthecourseofthedayforIMTsoverAUDinitiatedoverthephone

Foreign currency conversion services inquiry—Final report
Someoftheinquirysuppliersmayoerpreferentialretailexchangeratestocertaincustomerssuchas
thosewhocompletealargenumberofIMTtransactionsorhigh-valueIMTtransactions
Pricecomparisonsacrossselectedsuppliers
Ourpricecomparisonsconsiderretailexchangeratesup-frontfeesandwhereapplicable
correspondentbankingfeesInformationonretailexchangeratesandup-frontfeeswasgatheredfrom
thesuppliers’websites

Correspondentbankingfeeswerehowevernotgenerallydisplayedonthe
websitesandwerequestedthisinformationfromtherelevantsuppliers
Ourinabilitytoeasilycollatecompletepriceinformationfrompubliclyavailablesourcesdemonstrates
howdicultitisforconsumerstocomparetotalpricesandsupportsourcallforIMTsupplierstoinform
consumersofthetotalpriceofIMTs(seechaptersection)
PricesforIMTservicesvarysometimessignificantlyacrosssuppliersForexampletherewasaprice
dierenceofuptoAUDbetweenthecheapestandmostexpensivesupplierwhensendingUSD
totheUSinmid-February(table)andadierenceofuptoAUDwhensendingUSD
(equivalenttoapproximatelyAUD)(seechaptertable)
Table 1.4 Price* to send a USD200 IMT through selected suppliers
Average over 5 business days: 6–12 February 2019
Conversion
(AUD)
Up-frontfee(AUD) Correspondentbanking
fee(AUD)
Price(AUD)
InstaReM $281 $1 $0 $282
TransferWise $281 $2 $0 $283
OFX $287 $15 $0 $302
NAB $294 $10
a
$0
a
$304
WesternUnion $293 $15 $0 $308
CBA $298 $6 Up to $9
b
Up to $313
c
ANZ $291 $12 Up to $36
b
Up to $339
c
Westpac $297 $10 Up to $37
b
Up to $344
c
*ReportedpricesarebasedontransactionsundertakenviaonlinechannelsonlyPricescalculatedbytheACCCasasimple
averageoverthepricedatacollectionperiod
aNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividualconsumershoweverinsomeinstancesbeyond
NAB’scontroloverseasbanksmaydeductfeesfromtheamountsent
bWherecorrespondentbankingfeesapplythesearetypicallydeductedbythecorrespondentbankfromthesum
transferredtotherecipientCorrespondentbankingfeesmaydierforothercurrencycorridorsandtransactionvaluesThe
correspondentbankingfeesusedinthispricecomparisonhavebeenconvertedfromUSDintoAUDbytheACCCusing
individualsuppliers’retailexchangerateinformationcollectedduringFebruary
cThepricereportedforthissupplierincorporatesthemaximumcorrespondentbankingfeeleviedonUSDIMTssent
duringFebruarythroughthissupplier’scorrespondentbankingnetwork
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC
SignificantpricedierencesalsoexistbetweenthecheapestandmostexpensiveIMTsuppliersfor
othercurrenciesincludinglesscommonlyoeredandusedcurrenciessuchasFijiandollars(FJD)Only
five

oftheeightsuppliersonwhichwecollectedpricedatawouldremitIMTsforFJD(equivalent
 AppendixB(sectionB)setsouthowthisdatawascollected
 ThefivewereANZCBANABOFXandWestpacWesternUnionisnotincludedinthispricecomparisonasitdoesnot
allowcustomerstosendIMTswithavalueexceedingAUDviaitsonlinechannel

Foreign currency conversion services inquiry—Final report
toapproximatelyAUD)onlinetherewasadierenceofaboutAUDinthetotalpricebetween
thecheapestsupplier(ANZ)andthemostexpensive(NAB)forsuchanIMT

IMTserviceswithaflatfeestructuremighthavelowerfeesthanthosewithavariablefeestructure
especiallyforlargerIMTsbutserviceswithflatfeesarenotalwaysthecheapestoverallForexample
tableshowshowasupplierwithavariablefee(SupplierA)wascheaperthanaflatfeesupplier
(SupplierB)overarangeofIMTamountsbecauseSupplierAhadcheaperretailexchangeratesThis
illustratestheimportanceofcomparingthetotalpriceofanIMTservicenotjustthefees
Table 1.5 Price* to send a USD200 and USD7000 IMT through selected suppliers
Average over 5 business days: 6–12 February 2019
SupplierAVariable
up-frontfee
SupplierBFlat
up-frontfee
Dierence
USD
Conversion (AUD) $281 $294
Up-front fee (AUD) $1 $10
Total(AUD)   
USD
Conversion (AUD) $9850 $10 288
Up-front fee (AUD) $49 $10
Total(AUD) $9899 $10 298 $399
*ReportedpricesarebasedontransactionsundertakenviaonlinechannelsonlyPricescalculatedbytheACCCasasimple
averageoverthepricedatacollectionperiod(seetableandchaptertable)
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC
Foreigncashservices
Fees
Thefeespayableforforeigncashservicesdependonthedistributionchannelthevalueofthe
transactionandforoneofthebigfourbankswhetherornottheconsumerisanexistingcustomer
(table)
 ReportedpricesarebasedontransactionsundertakenviaonlinechannelsonlyPricescalculatedbytheACCCasa
simpleaverageoverthepricedatacollectionperiodandincludewhereapplicablethemaximumcorrespondentbanking
feesleviedonFJDIMTssentduringFebruaryWherecorrespondentbankingfeesapplythesearetypically
deductedbythecorrespondentbankfromthesumtransferredtotherecipientThecorrespondentbankingfeesused
inthispricecomparisonhavebeenconvertedfromAUDtoFJDbytheACCCusingindividualsuppliers’retailexchange
rateinformationcollectedduringFebruaryNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividual
consumershoweverinsomeinstancesbeyondNAB’scontroloverseasbanksmaydeductfeesfromtheamountsent
BasedoninformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC

Foreign currency conversion services inquiry—Final report
Table 1.6 Fees applying to foreign cash services*
28 June 2019^
In-store Orderonline
ANZ 1% ($8 min. fee)
a
1% ($8 min. fee)
a
AustraliaPost $0 $0
CBA 1% ($10 min. fee) 1% ($10 min. fee)
GlobalExchange
Airport: $5 for transactions less than AUD1000
b
Airport: Nil for transactions over AUD1000
b
$0
NAB $10 $0
Travelex
Non-airport: $0
Airport: 2–3%
c
Collect in-store: $0
Home delivery: Max. $10
d
TravelMoneyOz $0 $0
Westpac $4
e
$4
weXchange $0 $0
*FeesareexpressedinAUDorwhereexpressedasapercentagetheyareappliedtotheAUDequivalentofeachforeign
currencypurchasedFeesrelatetothepurchaseofasinglecurrencyonlySomesuppliershaveadierentfeestructurefor
consumerspurchasingamixofcurrencies
^FeesforGlobalExchange’sTravelex’sandWestpac’sin-storelocationswereobservedinourpricedatacollectionduring
February
aWaivedforexistingANZcustomersMustbeanANZaccountholderforonlineordersMustbeanANZaccountholderfor
transactionsoverAUDinANZbrancheslimitdoesnotapplytotransactionsatANZForeignExchangecentres
bFeeestimatesarebasedonthoseobservedatSydneyInternationalAirport
cFeesforairportsarebasedonthoseobservedatSydneyDomesticAirportMelbourneInternationalAirportandBrisbane
InternationalAirportAtSydneyDomesticAirportthefeequotedwasoraminimumofAUD
dAfeeofAUDappliestotransactionsunderAUDNofeeappliestotransactionsoverAUD
eOnlyavailabletocustomerswhoholdaWestpacaccount
SourceInformationobtainedfromsupplierwebsitesviewedJunedatacollectedfortheACCCandinformation
providedbysuppliers
Pricecomparisonacrossselectedsuppliers
Thedierencebetweenthecheapestandmostexpensivesuppliersofforeigncashservicescanbe
significantevenforrelativelysmalltransactionsForexamplewhenbuyingUSDconsumerscould
saveAUDbypurchasingfromthecheapestsuppliercomparedwiththemostexpensivesupplier
(figure)Evenexcludingairportlocationswhicharegenerallythemostexpensive(box)
consumerscouldstillsavearoundAUDonthistransactionbyusingthecheapestsuppliercompared
withthemostexpensivenon-airportsupplier

Foreign currency conversion services inquiry—Final report
Figure 1.6 Price for purchasing USD200 in foreign cash from selected suppliers*
Average over 5 business days: 6–12 February 2019
$0
$200
$220
$240
$260
$280
$300
$320
$340
AUD
Non-airport location Airport location
weXchange
$288
Travel Money Oz
$290
Travelex
$291
Australia Post
$296
ANZ
$299
WBC
$301
CBA
$301
NAB
$304
ANZ
(Sydney International Airport)
$308
Global Exchange
(online purchase)
$312
Travelex
(Melbourne Airport)
$312
Global Exchange
(Sydney International Airport)
$323
Travelex
(Brisbane Airport)
$325
Travelex
(Sydney Domestic Airport)
$328
*Reportedpricesarebasedonin-storepurchases(airportandnon-airportlocations)exceptthereportedpricesforGlobal
ExchangewhichrepresenteitheronlinepurchaseswithcollectionatSydneyInternationalAirportorpurchasesin-storeat
SydneyInternationalAirportasnotedinthefigurePricescalculatedbytheACCCasasimpleaverageoverthepricedata
collectionperiod
SourceDatacollectedfortheACCCThedatacollectedwassourcedfrompubliclyavailableinformationAppendixB
(sectionB)setsouthowthisdatawascollected
Box 1.2 The airport premium
Foreigncashservicesfromthesamesupplieraremoreexpensiveatairports(figure)
Weconsiderthathigherpricesreflectthesmallnumberofsuppliersprovidingforeigncashservices
atairportsandconsumers’greaterwillingnesstopaywhenalternativesarelimitedOneinquiry
supplieridentifiedthat‘airportcustomershavelefttheirFXneedstothelastminutehavetheir
imminenttravelasapriorityandarethereforelesspricesensitive’andthesupplierconsideredthatit
could‘priceforconvenienceutilizing[redactedpricingmethod]atairportswithoutcompetition’
HigherpricesatairportsmayalsoreflecthigheroperationalcostsforsuppliersForexamplehigher
rentsthanatotherlocationsandthehighcostsofmaintainingstangandservicingoutletsat
airports
Paymentcards
ThepriceforapaymentcardFXserviceisbasedontheretailexchangerateappliedtothecard
transactionandanyfeesassociatedwiththetransactionTheinternationalcardschemesetstheretail
exchangeratethatappliestothetransactionwhilethecardissuersetsanyfeesthatwillapplyBox
providesanexampleofhowthesecomponentscombinetogivethetotalpriceforapaymentcard
FXservice

Foreign currency conversion services inquiry—Final report
Box 1.3 Price for payment card FX service
AconsumerusedtheirdebitcardtopayforaUSDmealwhileinNewYorkTheinternational
cardschemefacilitatedthepaymentandconvertedUSDtoAUDbasedonanAUD–USD
retailexchangerateofTheirbankalsochargedthemaninternationaltransactionfee
ofpercent(AUD)takingthetotalpriceofthetransactiontoAUDThereforethetotal
pricetopurchaseUSDwasAUD
Fees
TherearetwomaintypesoffeesapplicabletopaymentcardFXservices
internationaltransactionfees(sometimesreferredtoasaforeigntransactionfeeorforeigncurrency
conversionfee)and
internationalATMfeesforcashwithdrawals(debitcards)orcashadvances(creditcards)
Anumberofcardissuersoerpaymentcardswithoutinternationaltransactionfeesandinsomecases
withoutinternationalATMfeesAconsultant’sproductbenchmarkingreportfromJulyheldby
oneofthebigfourbanksnotedthat
Foreign[international]transactionfeesisanareawherecardissuersarestartingtodierentiate
themselves
Theconsultant’sreportwentontonotesixdierentcardissuerswhohaveatleastonepaymentcard
thatdoesnotchargeaninternationaltransactionfeeonpurchasetransactions
ConsumersshouldconsiderallfeesnotjustthefeesrelatingtopaymentcardFXserviceswhen
choosingapaymentcardThatisbecauseanumberofotherfeesareassociatedwithpaymentcards
suchastheannualfeesthatapplytosomecreditcardsandaccountfeesforbankaccountstowhich
somedebitcardsareattachedTheseotherfeesarenotconsideredfurtherinthisreportastheyare
outsidethescopeoftheinquiry
International transaction fees
Forthecardstowhichtheyapplyaninternationaltransactionfeeisleviedwheneverthecardissuerand
themerchantorthefinancialinstitutionprocessingthecardtransactionforthemerchantareindierent
countries(seechaptersection)Thismeansthataninternationaltransactionfeewillapplywhen
apaymentcardisusedtomakeapurchaseorwithdrawforeigncashoverseasortomakeanoverseas
purchasefromAustraliaThepaymentcardsincludedinourpricedatacollectionhadinternational
transactionfeesrangingfromtopercentofthetransactionamountwithmosthavingafeeof
percent

 Thefollowingpaymentcardswereincludedinourpricedatacollection
AmericanExpressEssentialCreditCardandAmericanExpressExplorerCreditCardAmericanExpressCompanyAcloser
lookatcreditcardfeeshttpswwwamericanexpresscomaucredit-cardsabout-credit-cardsfees?intlinkau-acq-
creditcards-learnaboutccfeesviewedJuly
ANZFrequentFlyerBlackAustraliaandNewZealandBankingGroupLimitedMarchANZPersonalBankingAccount
FeesandChargeshttpswwwanzcomaucontentdamanzcomaudocumentspdfpersonal-account-fees-charges
pdfp
CBAAwardsCreditCardCommonwealthBankofAustraliaInternationalfeesandchargeshttpswwwcommbankcom
aupersonaltravelinternational-fees-chargeshtmlviewedJuly
CitibankPlusTransactionAccountCitibankCitibankPlusAccounthttpswwwcitibankcomaubankingbank-
accountscitibank-plusviewedJuly
INGOrangeEverydayINGOrangeEverydayfeeshttpswwwingcomaurates-and-feesorange-everyday-feeshtml
viewedJuly
LatitudeDegreesPlatinumCardLatitudeDegreesPlatinumCarddetailshttpswwwdegreescardcomaucard-
detailsviewedJuly
NABQantasRewardsSignatureCardNationalAustraliaBankLimitedJuneAGuidetoFees&Charges—Personal
BankingFeeshttpswwwnabcomaucontentdamnabrwddocumentsguidesbankingpersonal-banking-fees-and-
charges-guidepdfp
WestpacLowRateCardWestpacBankingCorporationLowRateCardhttpswwwwestpaccomaupersonal-banking
credit-cardslow-rate-cardslow-rateviewedJuly
FeesreportedareasatJuly

Foreign currency conversion services inquiry—Final report
InsomecasesaninternationaltransactionfeewillbechargedforonlinepurchasesinAustraliandollars
thatappeartobelocaltransactionsThisoccurswhenthemerchant’sbankislocatedoverseaseven
ifthewebsiteappearstobeAustralianandthepricesareadvertisedinAustraliandollarsThese
unexpectedinternationaltransactionfeesarediscussedinchapter(section)
ATM fees
Thecardissuercanchargethecardholderfeesforwithdrawingcash(debitcard)ormakingacash
advance(creditcard)atanoverseasATMThesefeesmaybechargedasaflatfeeorapercentage
ofthetransactionamountConsumersmayalsobechargedafeebytheoverseasATMoperator
InternationalATMfeesfordebitcardsincludedinourpricedatacollectionrangedfromAUDto
AUDThefeeforcashadvancesusingacreditcardrangedfromAUDorpercent(whichever
isgreater)toAUDorpercent(whicheverisgreater)

Retailexchangerates
Whilesomeoftheinternationalcardschemespublishonlinetheretailexchangeratestheyapplyto
paymentcardFXservicestheapplicableretailexchangerateisnotvisibletoconsumersatthetime
ofindividualtransactions

Thatisbecausetheactualexchangerateappliedtoatransactionmaybe
dierenttothatappearingonlineatthetimeofthattransactionbecauseofthetimetakentoprocess
thetransaction

Pricecomparisonsacrossselectedpaymentcards
Ourpricedatademonstratesthatpricesdidnotvarysignificantlyformanypaymentcardsinrelationto
purchasesmadeinforeigncurrenciesinFebruary

Thatisbecause
therewaslittlevariationbetweentheretailexchangeratesappliedbytheinternationalcardschemes
andasaresulttheforeigncurrencyconversionincludedinprices
asimilarinternationaltransactionfeeaboutpercentofthepurchaseamountappliedacrossthe
largemajorityofcards
Consumerswouldhaveobtainedthecheapestpricebyusingapaymentcardwithoutaninternational
transactionfeeConsumersusingapaymentcardwithoutaninternationaltransactionfeewouldhave
savedoverAUDonaUSDpurchasecomparedwithconsumersusingacardwithapercent
internationaltransactionfeeThepricingofinternationalfee-freepaymentcardsmeansthatconsumers
shouldconsiderthemforthemaininquiryservicetheyusewhentravellingoverseas(seetheGuide
forConsumers)
Travelcards
Fees
ThenatureandmixoffeesapplyingtotravelcardsvariesacrosssuppliersThiscanmakeitdicultfor
consumerstocompareproductsWediscussafewexamplesofthesefeesbelow
 Dierentfeesmayapplywheretheconsumerisdrawingontheirownfundsratherthanalineofcredit
ThisfeeiscappedatforCBAandWestpaccards
 Seeforexample
MastercardMastercardCurrencyConverterhttpswwwmastercardusen-usconsumersget-supportconvert-currency
htmlviewedFebruary
VisaExchangeRateshttpswwwvisacomautravel-with-visaexchange-rate-calculatorhtmlviewedFebruary
 MastercardMastercardCurrencyConverterhttpswwwmastercardusen-usconsumersget-supportconvert-currency
htmlviewedFebruary
VisaExchangeRateshttpswwwvisacomautravel-with-visaexchange-rate-calculatorhtmlviewedFebruary
 AppendixB(sectionB)setsouthowthisdatawascollected

Foreign currency conversion services inquiry—Final report
Basedonareviewofninetravelcards

weobservethatdependingonthecardthefollowingfeescan
applyinthefollowingsituations
Whilemanysuppliersdonotchargeafeeforloadingvalueontoatravelcardsomesupplierswill
chargeafeedependingonthedistributionchannelusedtoloadvalueontothecardorthepayment
methodusedForexamplethisfeecanbeuptopercentoftheamountloadedontoatravel
cardorAUDwhicheverisgreaterforin-storepurchases

WhenwithdrawingforeigncashfromanoverseasATMthisfeemaybechargedintherelevant
currencyandfluctuatewiththeexchangerateForexampleforoverseaswithdrawalsintheUKand
USthefeecanbeuptoGBP(AUD)andUSD(AUD)respectively

Whentransactinginacurrencyforwhichthereisnovaluestoredonthetravelcard—inwhichcasea
feeuptopercentcanapply

Thisfeeisknownasacurrencyconversionfee

Thesefeesarenotmutuallyexclusivemorethanoneofthefeesabovecanapplytothesame
transactionThisisdiscussedfurtherintheGuideforConsumers
Retailexchangerates
Dierentpartiessettheretailexchangerateappliedtotravelcardservicesdependingon
thetransaction
Thecardissuergenerallysetstheretailexchangeratethatisappliedwhenvalueisloadedontoa
travelcard

Theinternationalcardschemesetstheexchangeratethatisappliedwhenawithdrawalorpurchase
transactionisundertakeninacurrencythatisnotloadedontothecard
Althoughtheinternationalcardschemewillfacilitatetransactionsundertakeninacurrencythatisnot
loadedontoatravelcardandsettheretailexchangerateforthosetransactionssomecardissuers
chargeconsumersafeeforthosetransactionsOneinquirysupplier’srationaleforthatfeeisthatitisa
proxyfortheretailmarginthatitwouldhavechargedontheexchangeratehadtheconsumerloaded
therelevantcurrencyontotheirtravelcard
Pricecomparisonsacrossselectedtravelcards
Asconsumerscangenerallyavoidthefeesassociatedwithloadingandreloadingvalueontoatravel
cardourcomparisonofpricesfocusedonretailexchangeratesThepricesofsuppliersinoursample
werelargelysimilarForexampleforloadingUSDontoatravelcardinmid-Februarywe
 OurreviewincludedthefollowingtravelcardsANZTravelCardAustraliaPostCashPassportCashPassportPlatinum
MastercardCBATravelMoneyCardNABTravellerCardQantasTravelMoneyTravelMoneyOzCurrencyPassTravelex
MoneyCardandWestpacGlobalCurrencyCard
 MastercardMayCashPassportPlatinumMastercardhttpswwwcashpassportcomaumedia
mccashpassportplatinumpdsxmmnocropmarkhrpdfp
 AustraliaandNewZealandBankingGroupJulyANZTravelCardProductDisclosureStatementhttpswwwanz
comdocumentsaufeechargeanztravelcardpdfpp–
CommonwealthBankofAustraliaTravelMoneyCardfeesandchargeshttpswwwcommbankcomautraveltravel-
money-cardfees-chargeshtml?eiratescash-withdrawaltermsviewedApril
MastercardMayCashPassportPlatinumMastercardhttpswwwcashpassportcomaumedia
mccashpassportplatinumpdsxmmnocropmarkhrpdfp
TravelMoneyOzFebruaryTravelMoneyOzCurrencyPassProductDisclosureStatementandTerms&Conditions
httpswwwtravelmoneyozcomsitesvtravelmoneyozcomfilesCurrency-Card-PDS-FSGpdfp
FortheconversionofGBPintoAUDandUSDintoAUDwehaveusedanexchangerateofandrespectively
asreportedbytheRBAasatFebruarytheconclusionofthepricedatacollectionperiodReserveBankof
AustraliaExchangeRates—Daily—toCurrenthttpswwwrbagovaustatisticstablesxls-hist-currentxls
viewedJuly
 TravelexLimitedAprilTravelexMoneyCardProductDisclosureStatementandTermsandConditionshttpswww
travelexcomaumediatmc-tc-and-pdspdfp
 SomesupplierschargeanunsupportedcurrencyconversionfeeratherthanacurrencyconversionfeeThe
unsupportedcurrencyconversionfeewillapplywhenthetravelcardisusedforatransactioninacurrencythatisnota
supportedcurrency
SeeforexampleAustraliaandNewZealandBankingGroupLimitedJulyANZTravelCardProductDisclosure
Statementhttpswwwanzcomdocumentsaufeechargeanztravelcardpdfpp–
 ForexamplethecardissuerdoesnotsettheretailexchangeratefortheWestpacGlobalCurrencyCardthedistributor
(Westpac)setstheretailexchangeratethatisappliedwhenvalueisloadedontothistravelcard

Foreign currency conversion services inquiry—Final report
observedamaximumpricedierenceofAUD(assumingnofeeswerepayable)becauseofdierences
insuppliers’retailexchangerates

 Substituting between inquiry services
ConsumersusedierentinquiryservicesfordierentpurposesForthemostpartconsumersuse
inquiryserviceswhentravellingoverseaswhenmakingoverseaspurchasesfromAustraliaorwhen
transferringmoneyoverseas
Whethertheinquiryservicesaresubstituteslargelydependsontheconsumer’srequirementsandthe
services’acceptabilityasapaymentmethodForconsumerstravellingoverseasforeigncashtravel
cardsandpaymentcardsaregenerallysubstitutesWhereasforconsumerswhowishtosendmoney
overseasIMTsaretheonlyavailableinquiryservice(table)
Table 1.7 Degree of substitutability of inquiry services by consumer requirement
Consumerrequirement Serviceused Degreeofsubstitutability
Travellingoverseas One or more of foreign
cash, travel cards and
payment cards
Varies depending on acceptable payment methods and
consumer preferences
Makingoverseaspurchases
fromAustralia
Travel cards, payment
cards or IMTs
All substitutes depending on acceptable payment
methods
Transferringmoneyoverseas IMTs None of the inquiry services; our observations are that
using travel cards or payment cards for this purpose
would be impractical, and using foreign cash would be
high risk
Travellingoverseas
Travellersrequiredierentinquiryservicesbasedonthecountriestheyvisitandtheactivitiesthey
undertakeForexampletravellerstoCubaareencouragedtotakecashasaccesstofundsthrough
paymentortravelcardsmaybelimited

Incontrastinothercountriesconsumerscanoftenusea
combinationofforeigncashtravelcardsandpaymentcards
Thesubstitutabilityofservicesfortravellersislargelydependentonthepaymentmethodsaccepted
bymerchantsandtheinquiryservicesusedbythetravellerWhereatravellerhasachoiceofpayment
methodstheuseofoneinquiryserviceovertheotherdependsontheirpreferencesincluding
whethertheyprioritiseconsiderationssuchasconvenienceorpriceThesepreferencesmayvarywith
thetraveller’ssituationortransactionwhichwouldexplainwhyaconsumersurveyundertakenby
aconsultingfirmandobtainedbyoneofthebigfourbanksshowedthatconsumersgenerallyusea
rangeofinquiryserviceswhentravellingoverseas(table)
 ReportedpricesareasimpleaveragecalculatedbytheACCCoverthepricedatacollectionperiodThedatacollectedfor
theACCCwassourcedfrompubliclyavailableinformationAppendixB(sectionB)setsouthowthisdatawascollected
 DepartmentofForeignAairsandTradeJuneCubahttpssmartravellergovauCountriesamericas
caribbeanPagescubaaspxexpand-page-sections-topviewedJuly

Foreign currency conversion services inquiry—Final report
Table 1.8 Inquiry services used by Australians travelling overseas*
March 2018
Foreigncash Travelcards Creditcards Debitcards
Per cent of consumers
who used this service to:
Make purchases 75 24 48 27
Withdraw cash Not applicable 33 22 58
*BasedonasurveyundertakenbyaconsultingfirminMarchThesurveyinvolvedconsumerswhohadtravelled
overseasinthemonthspriorThesurveydefinedconsumersasindividualswithatransactionaccount
SourceInformationprovidedbyoneofthebigfourbanks
ConsumersmakingoverseaspurchaseswhileinAustralia
Similartooverseastravellersthesubstitutabilityofservicesforconsumersmakingoverseaspurchases
largelydependsonthepaymentmethodsmadeavailablebythemerchantWhereaconsumerhas
achoiceofpaymentmethodstheuseofoneinquiryserviceovertheotherdependsonconsumer
preferencesForexampleitseemsthataconsumermakingarelativelysmall-valuepurchasefrom
anoverseasmerchantismostlikelytouseapaymentcardwhereasaconsumermakingarelatively
large-valuepurchasesuchasbuyingrealestateinanothercountryismorelikelytouseanIMTThe
priceoftheinquiryservicemayalsobeafactorinconsumerchoiceinthesecircumstances
Transferringmoneyoverseas
AnumberofsuppliersoerIMTservicesinAustraliawithdierentbusinessmodelstargetedat
dierentcustomerneedsForexampleifasmallbusinessneededtosettleaninvoicefromoverseas
itcoulduseoneofthebigfourbanksOFXTransferWiseorWesternUnion(amongothers)totransfer
moneytoanoverseasbankaccountOntheotherhandaseasonalworkerwhoneededtosendmoney
overseastoarecipientwithoutabankaccountcoulduseWesternUnionoranothersupplierwhooers
transfersdeliveredtotherecipientascash
WedonotconsiderthatanyoftheotherinquiryservicesaresubstitutesforIMTserviceswhen
transferringmoneyoverseasbecause
travelcardsandpaymentcardsrequiretherecipienttohavefacilitiestoreceiveacardpaymentand
foreigncashisgenerallynotusedastherearenosecuritymeasuresforprotectionfromloststolen
ordamagedcash
SubstituteservicesforIMTservicesincludeforeignchequesandinternationalbankdraftsbutthese
serviceswerenotconsideredaspartofourinquiry

Foreign currency conversion services inquiry—Final report
. Competition in foreign currency
conversion services
Keypoints
TheaveragepriceofsendingmoneyfromAustraliaviainternationalmoneytransfer(IMT)ishigh
byworldstandardsTherearemanypossiblereasonsforthisbuttheevidencesuggeststhatthe
bigfourbankswhoaresignificantIMTsuppliershavegenerallynotbeenfocusedonoering
thelowestprices
Whilethebigfourbanks’pricesforIMTsweresignificantlyhigherthansomeotherinquiry
supplierstheyhavesoughttocompeteoncertainnon-priceaspectsoftheirIMToerings
Newernon-bankIMTsupplierswhooerlowerpricesandhavesomebetterservicefeatures—
atleastintermsofbeingmoreattractivetoconsumers—thanexistingIMTsuppliershave
beendrivingachangeinthecompetitivedynamicforIMTsEachofthebigfourbankshas
changedorischangingitsIMTpriceandnon-priceoeringinresponsetothatchanging
competitivedynamic
Weareconcernedthatcompetitionwillbeharmedandthepotentialgainsfromgreater
competitionlostifnon-bankIMTsuppliersareundulydeniedaccesstobankingservicesTo
addressthissituationwehaverecommendedaschemethroughwhichIMTsupplierscanaddress
duediligencerequirementsofthebanksincludinginrelationtoanti-moneylaunderingand
counter-terrorismfinancing(AMLCTF)requirements
Thischaptercontainsourobservationsoncompetitioninthesupplyofinquiryservicestoconsumers
inAustralia
sectionconsiderspricecompetitioninthesupplyofIMTs
sectionaddressescompetitiononnon-pricefactorsforIMTs
sectionoutlineshowthecompetitivedynamicischangingforIMTs
sectionexplainsthebarrierstoentryandexpansionfacedbysuppliersandpotentialsuppliersof
IMTsthissectioncontainsourkeyrecommendationtoprotectcompetitioninthissector
sectionconsiderspricecompetitioninforeigncashtravelcardsandpaymentcards
ThechapterfocusesprimarilyonthesupplyofIMTsbecausethepotentialgainsfromgreater
competitionaresignificantForexampleifconsumersusingthebigfourbankstosendIMTsinUSDand
GBPin–hadinsteadusedthelowestpricedsupplierweestimatetheywouldhavecollectively
savedoverAUDmillion

Further
theWorldBankhasfoundthatthepriceofsendingmoneyfromAustraliaishighby
globalstandards
consumersengageinsubstantiallylargerIMTtransactionsonaveragecomparedwiththeother
inquiryservices

AustralianssendtheequivalentofaboutAUDbillioninpersonalremittancesoverseasfrom
AustraliaeachyearviaIMTs

 Thesepotentialsavingsarediscussedfurtherissectionofchapter
 TheaveragepriceofsendingmoneyfromAustraliaishigherthanboththeaverageGpriceandglobalaverageprice
SeeTheWorldBankRemittancePricesWorldwideIssueMarchhttpsremittancepricesworldbankorgsites
defaultfilesrpwreportmarchpdf
 TheaveragetransactionsizeofIMTsforindividualconsumerswasaboutfourtimesthesizeofforeigncashtransactions
andtimesthesizeoftravelcardtransactionsin–(seechapterfigure)
 TheWorldBankBilateralRemittanceMatrixhttpwwwworldbankorgentopic
migrationremittancesdiasporaissuesbriefmigration-remittances-dataviewedJulyascitedinGlobalPartnership
forFinancialInclusionGNationalRemittancePlanAustraliaGermanyhttpswwwgpfiorgsitesgpfifiles
Australia-GNationalRemittancePlanpdfp

Foreign currency conversion services inquiry—Final report
 Price competition in the supply of IMTs
InresponsetotheIssuesPapersomestakeholders(includingsomeofthebigfourbanks)statedthat
FXservicesinAustraliaarehighlycompetitive

ForexampleCBAstated
CBAconsidersthattheretailforeigncurrencyconversionindustryishighlycompetitivewitha
largenumberofsuppliers

WhileAmericanExpresssaid
themarketforforeigncurrencyconversionisextremelycompetitive

Incontrasttothoseviewsinternaldocumentsfromoneofthebigfourbanksdescribedthebigfour
banks’approachtothesupplyofIMTsas
Thetraditional(BigFour)AustralianBanks’strategy(including[redactedbank])havechosento
focusonmaximisingtheirrevenuethroughmarginattheexpenseofflowallowingthemono-lines
topenetratereducedmarginbusiness[sic]
Separatelyonebigfourbankdescribedthepositionofnon-banksuppliersinasfollows
Todaythesenon-banksareprovidingsuperiorspeedcheaperpricingandgreaterfeatures
thanwhathastraditionallybeenoeredbybanksthusprovidingagreaterexperienceto
theircustomers
Theevidencesuggeststhatthebigfourbankswerenotcompetingvigorouslyonpriceinthesupplyof
IMTsduringthereviewperiodspecifically
thebigfourbanksdidnotvietooerthelowestpricestoconsumersThebigfourbankssetprices
thatwerelargelyinlinewitheachotherandatalevelhigherthanmanyotherIMTsuppliers
eachofthebigfourbanksappearedtobemoreconcernedaboutensuringitsexisting
bankingcustomersusedthebanks’IMTservicesratherthanwinningnewIMT-onlycustomers
fromcompetitors
Thebigfourbanks’IMTretailmarginsaresomeofthehighestworldwide
SomeofthebigfourbanksfoundthatinandretailmarginsforIMTsinAustraliawerehigher
thanretailmarginsinotherjurisdictionsInthewordsofonebigfourbankwhenreferringtoIMT
servicesin‘theAustralianmajorbankshavesomeofthehighestrelativeRetailFXRatesglobally’
Otherexamplesinclude
twobanksestimatingbasedonadvertisedexchangeratesinonecasethattheretailmarginsofthe
bigfourbankswereatleastdoublethoseofmajorbanksinNewZealand
adierentbigfourbankestimatingitsretailmarginstobeatleastdoublethoseofcertainbanksin
theUS
Retailmarginswerehighenoughforonebigfourbanktorecognisethatthiscouldbeareputational
riskThatbankhastoldtheACCCthathighretailmarginsamongotherfactorsledtoit‘proactively
endeavouringtoreducemargintoasustainablelevel’Thisbankhassincereduceditsretailmarginsfor
IMTsalthoughwenotethatitspricesremainedhigherthansomeotherinquirysuppliers
 SeeforexampleCommonwealthBankofAustraliaOctoberSubmissioninresponsetoIssuesPaperhttpswww
acccgovausystemfilesCommonwealthBankofAustraliapdfp
NationalAustraliaBankOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovausystemfiles
NABpdfp
MastercardOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovausystemfilesMastercardpdf
viewedJune
 CommonwealthBankofAustraliaOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovau
systemfilesCommonwealthBankofAustraliapdfp
  AmericanExpressOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovausystemfiles
AmericanExpresspdfp

Foreign currency conversion services inquiry—Final report
TheevidencebeforetheACCCsuggeststhatthedisparitybetweenIMTretailmarginsinAustraliaand
NewZealandismorelikelyduetodierencesinthelevelofpricecompetitionthanotherreasonssuch
asdierencesinthecostofprovidingIMTservicesinAustraliacomparedwithNewZealandOnebig
fourbanknotesthatNewZealandis‘ourmostalignedmarket’inaninternaldocumentwhileanother
bankstatedthatthe‘NZmarket’is‘smallerandpotentiallymorecompetitive’thanAustralia
Thebigfourbanksdidnotvietooerthebestpricestoconsumers
Weobservethatoneeectofthebigfourbanks’respectivestrategieshasbeenthattheirIMTprices
havebeenabovesometimeswellabovethoseofnumerousnon-banksuppliersGiventheireconomies
ofscaleourviewisthatthebigfourbankscouldoercheaperprices
Theremaybeanumberofreasonswhythebigfourbanksmaynotseektooerthelowestprices

butwebelievethemainreasoncouldbethattheydonotneedtocompetevigorouslyonprice
toretainmostofthecustomerswhousetheirIMTservicesWeconsiderthisislikelyakeyreason
whyoneofthebigfourbanksviewedtheideaofmatchingthepricesofotherinquirysuppliersas
‘unnecessarilyaggressive’
Oneofthebigfourbanksaimedtooerthelowestpricesamongthebigfourbanksduringthereview
periodAdierentbigfourbankconsideredreducingitsretailmarginsothatitwaslowerthanthe
otherbigfourbanksbutultimatelydecidednottodosoThesizeoftherevenuereductionassociated
withsuchamoveappearstohavebeenanimportantconsideration(amongothers)forthebankin
decidingtoreducemarginsbyalesseramountTheothertwobigfourbanksgenerallyaimedto
positionthemselvessothattheydidnothavethehighestorthelowestpricesofthebigfourbanksOne
ofthesebanksstateditsstrategywas
asoneofthemajorbanksinAustraliathebusinessaimstopriceallproductsandcurrencies
(bothbuyandsell)withintherangesetbypeers
TheotherbanksaidtotheACCCthat
[Bank]hasgenerallytriedtopositionitselfasamongthetopthreemajorbanks
Incontrasttotheapproachofthebigfourbanks
atleastonenon-bankinquirysupplieraimedtobethecheapestIMTsupplierand
atleasttwonon-bankinquirysuppliersspecificallyaimedtobemuchcheaperthanthebig
fourbanks
WeobservethatthebigfourbanksdidchargesignificantlyhigherpricesforIMTsthanotherinquiry
suppliersduringourpricedatacollectionperiod(forexamplefigures–)Inthecaseofindividual
consumerswhousedthemostexpensivebigfourbanktosendanIMTofUSDtotheUnited
StatestheywouldhavepaidoverAUDmorethaniftheyhadusedthecheapestnon-banksupplier
(figure)
Thisdoesnotappeartohavebeenanisolatedeventwitheachbigfourbankobservingininternal
documentsthatitwasmoreexpensivethansomeoftheotherinquirysuppliersForexampleonebig
fourbankdescribedsomeofthecheapersuppliersashavingretailexchangeratesandfeesthatwere
‘disruptivelypricedbelowthemajorbanks’Anotherbank’scustomersandstagaveitfeedbackin
Septemberthatits‘retailFXratescompareunfavourablywiththoseoeredbyspecialistservice
providerswhoapplyminimalmargins’
 Forexampleitmaybethat
• thebigfourbanksoerdierentiatedIMTserviceswhicharebetterthantheoeringsofnon-banksuppliersinways
otherthanprice
• thebigfourbanksdonotprioritisecompetingvigorouslytooerthelowestpricesonIMTsbecauseIMTsarepartofa
broaderpackageoffinancialservicesoeredtocustomers
• IMTsarenotacomparativelysignificantserviceforthebankswenotethattherevenuederivedfromIMTsforindividual
consumersaccountforlessthanpercentoftheconsolidatedoperatingincomeateachbankfortheirrespective
–financialyears

Foreign currency conversion services inquiry—Final report
Figure 2.1 Price* to send a USD7000 IMT through selected suppliers^
Twice daily data points over 5 business days: 6–12 February 2019
$0
$9 600
$9 800
$10 000
$10 200
$10 400
$10 600
$10 800
Day 1 Day 2 Day 3 Day 4 Day 5
AUD
CBA
a
WBC
a
ANZ
a
NAB
b
TransferWise OFX
c
InstaReM
*ReportedpricesarebasedontransactionsmadeviaonlinechannelsonlyPricescalculatedbytheACCC
^WesternUnionwaspartofoursampleforthepricemonitoringdatabutdoesnotfeatureinthischartasitdoesnotallow
customerstosendIMTswithavalueexceedingAUDviaitsonlinechannel
aPriceincorporatesthemaximumcorrespondentbankingfeeleviedonUSDIMTssentbythissupplierduring
FebruaryThecorrespondentbankingfeesusedinthispricecomparisonhavebeenconvertedfromUSDintoAUDbythe
ACCCusingindividualsuppliers’priceinformationcollectedduringFebruaryWheretheyapplycorrespondentbanking
feesaretypicallydeductedbythecorrespondentbankfromtheamountbeingtransferredtotherecipient
bNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividualconsumershoweverinsomeinstancesbeyond
NAB’scontroloverseasbanksmaydeductfeesfromtheamountsent
cTheconsultantcollectingpricedatafortheACCCwasunabletocollectdataforthissupplierduringoneperiodofthedata
collectionThisisrepresentedinthechartbyamissingdatapoint
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC

Foreign currency conversion services inquiry—Final report
Figure 2.2 Price* to send a GBP5500 IMT through selected suppliers^
Twice daily data points over 5 business days: 6–12 February 2019
$0
$9 600
$9 800
$10 000
$10 200
$10 400
$10 600
$10 800
Day 1 Day 2 Day 3 Day 4 Day 5
AUD
CBA
a
WBC
a, b
ANZ
a
NAB
c
TransferWise OFX
d
InstaREM
*ReportedpricesarebasedontransactionsmadeviaonlinechannelsonlyPricescalculatedbytheACCC
^WesternUnionwaspartofoursampleforthepricemonitoringdatabutdoesnotfeatureinthischartasitdoesnotallow
customerstosendIMTswithavalueexceedingAUDviaitsonlinechannel
aPriceincorporatesthemaximumcorrespondentbankingfeeleviedonGBPIMTssentbythissupplierduringFebruary
ThecorrespondentbankingfeesusedinthispricecomparisonhavebeenconvertedfromGBPintoAUDbytheACCC
usingindividualsuppliers’priceinformationcollectedduringFebruaryWheretheyapplycorrespondentbankingfees
aretypicallydeductedbythecorrespondentbankfromtheamountbeingtransferredtotherecipient
bWestpac’spricerelatestoitsstandardIMTservicenotitsLitePayserviceAsatFebruaryWestpac’sLitePayservice
hadadailytransferlimitofAUD
cNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividualconsumershoweverinsomeinstancesbeyond
NAB’scontroloverseasbanksmaydeductfeesfromtheamountsent
dTheconsultantcollectingpricedatafortheACCCwasunabletocollectdataforthissupplierduringoneperiodofthedata
collectionThisisrepresentedinthechartbyamissingdatapoint
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC

Foreign currency conversion services inquiry—Final report
Figure 2.3 Price* to send a PHP400000 IMT through selected suppliers^
Twice daily data points over 5 business days: 6–12 February 2019
$0
Day 1 Day 2 Day 3 Day 4 Day 5
AUD
CBA
a
WBC
a, b
ANZ
a
NAB
c, d
TransferWise OFX
d
InstaReM
$10 200
$10 400
$10 600
$10 800
$11 000
$11 200
$11 400
$11 600
*ReportedpricesarebasedontransactionsmadeviaonlinechannelsonlyPricescalculatedbytheACCC
^WesternUnionwaspartofoursampleforthepricemonitoringdatabutdoesnotfeatureinthischartasitdoesnotallow
customerstosendIMTswithavalueexceedingAUDviaitsonlinechannel
aPriceincorporatesthemaximumcorrespondentbankingfeeleviedonPHPIMTssentbythissupplierduringFebruary
ThecorrespondentbankingfeesusedinthispricecomparisonhavebeenconvertedfromPHPintoAUDbytheACCC
usingindividualsuppliers’priceinformationcollectedduringFebruaryWheretheyapplycorrespondentbankingfees
aretypicallydeductedbythecorrespondentbankfromtheamountbeingtransferredtotherecipient
bWestpac’spricerelatestoitsstandardIMTservicenotitsLitePayserviceAsatFebruaryWestpac’sLitePayservice
hadadailytransferlimitofAUD
cNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividualconsumershoweverinsomeinstancesbeyond
NAB’scontroloverseasbanksmaydeductfeesfromtheamountsentThereisamissingdatapointforthefirstperiodonDay
wheretheconsultantwasunabletocollectdataforNAB
dTheconsultantcollectingpricedatafortheACCCwasunabletocollectdataforthissupplierduringoneperiodofthedata
collectionThisisrepresentedinthechartbyamissingdatapoint
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC
Thebigfourbanksfocusedonretainingexistingbankingcustomers
Althoughweobservedsomeexamplesofthebigfourbanksaimingtoattractnewcustomerstotheir
respectiveIMTservicesduringthereviewperiodtheyappearedtotheACCCtobemorefocused
onmakingsuretheirexistingbankingcustomersusedtheirIMTservicesratherthanthoseofanother
supplierVariousinternaldocumentsofeachofthebigfourbankscontainedanalysisonthenumberof
theirbankingcustomersthatwereusinganothersupplierforIMTs
EachbankconsideredhowtowinbackthosecustomersForexampleatleasttwobanksidentified
thattheycouldreducepricesanddidsoEachbankconsiderednon-pricemeasuressuchasimproving
thecustomerexperiencetowinbackcustomersWediscusscompetitiononnon-pricefactorsin
sectionbelow
Asnotedinchapter(section)threeofthebigfourbanks

requireconsumerstobeanexisting
bankcustomer(byholdingoropeningabankaccount)beforetheycanaccessthebank’sIMT
 AustraliaandNewZealandBankingGroupLimitedInternationalMoneyTransferhttpswwwanzcomaupersonal
travel-internationalinternational-paymentsviewedMarch(“You’llneedtobeanANZcustomertomakeanANZ
InternationalMoneyTransfer”)
NationalAustraliaBankLimitedTransferMoneyOverseashttpswwwnabcomaupersonalinternationaltransfer-
money-overseasviewedMarch(“BeforeyoucantransfermoneyoverseaswithNAByoumustbeaNABcustomer
withanopentransactionaccount”)
WestpacBankingCorporationSendmoneyoverseashttpswwwwestpaccomauinternational-travelinternational-
transferssend-moneyviewedMarch(“You’llneedAWestpacbankaccountthatisregisteredforOnlineBanking
andWestpacProtectSMSCode”)

Foreign currency conversion services inquiry—Final report
services

Weconsidertheserestrictionsmaynotbenecessary(box)andarelikelytoimpede
competitionbetweenthebanksby
precludingallnon-bankcustomersfromaccessingtheirIMTservicesand
increasingthecostsofIMTcustomersseekingtoswitchtherebyprotectingthebanks’relative
marketsharetosomedegree(notingthatitwouldnotpreventcustomersswitchingtoother
supplierswhodonothavesimilarrequirements)
WeobservethatbarrierstoconsumersswitchingIMTsuppliersisonereasonthebigfourbanksmay
notcompeteforthebusinessofnewcustomersOurobservationsonbarrierstoentryandexpansion
areatsection
Box 2.1 Approaches to customer verification by IMT suppliers
ANZNABandWestpacrequireconsumerstoholdoropenabankaccountbeforethoseconsumers
canusetheirIMTservicesItmaybethatthesebankshavechosentoimposethisrequirementin
ordertomeettheirobligationstocollectandverifycertaininformationabouttheircustomersin
accordancewithAustralia’sAMLCTFregulations
UndertheseregulationsentitiesarerequiredtohaveanAMLCTFprogramfortheirbusinessto
meettheirobligationsundertheAnti-MoneyLaunderingandCounter-TerrorismFinancingAct
(Cth)AllAMLCTFprogramsmustincludecustomerduediligenceprocedurestoensurethe
reportingentityknowsitscustomersandunderstandstheircustomers’financialactivities
CBAandnon-banksupplierswhoaresubjecttothesameAMLCTFregulationshaveverification
processesthatdonotrequirethecustomertoopenabankaccountForexample
TransferWise’scustomerscanverifytheiridentitythroughanonlineprocess
OFX’sverificationcantakeplaceautomaticallybasedoninformationprovidedbythecustomer
orthroughdocumentsuploadedonline
WesternUnion’sonlinecustomersarerequiredtoregisteranaccountanduploadrelevant
identitydocumentsonline
In-storecustomersarenotrequiredtoregisterorsetupanaccount
butmustprovidevalididentitydocuments
SourceInformationprovidedbytheinquirysuppliers
AUSTRACAUSTRACcomplianceguidehttpwwwaustracgovaubusinessesobligations-and-complianceaustrac-
compliance-guideviewedMarch
TransferWiseVerifyyouridentityhttpstransferwisecomhelparticleverificationverify-your-identityviewed
March
OzForexLimitedDoIneedtoregistertomakeatransfer?httpswwwofxcomen-aufaqsdo-i-need-to-register-to-make-
a-transferviewedMarch
OzForexLimitedHowlongdoesittaketoverifymyidentity?httpswwwofxcomen-aufaqshow-long-does-it-take-to-
verify-my-identityviewedMarch
OzForexLimitedI’veregistered—whencanImakeatransfer?httpswwwofxcomen-aufaqsive-registered-when-can-i-
make-a-transferviewedMarch
WesternUnionSendMoneyOnlinehttpswwwwesternunioncomauensend-moneyappstartviewedMay
 Competition on non-price factors for IMTs
IMTsupplierscanseektocompetewithrivalsonpricenon-pricefactorsorbothWhilethebigfour
banksdidnotcompetevigorouslytooerthelowestpricesforIMTswefoundsomeevidenceofthe
bigfourbanksseekingtocompeteoncertainnon-priceIMTfeaturesForexample
positioningtheirIMTserviceassafereliableortrustworthyhasbeenaconsiderationforanumberof
inquirysuppliersincludingsomeofthebigfourbanks
somebigfourbanksimprovedorareimprovingtheeaseofuseandconvenienceoftheirIMT
servicestocompetewiththeserviceoeredbynon-banksuppliers
 WestpacoersXYLOthroughwhichitscustomerscanundertakeIMTswithoutaWestpacbankaccountXYLOappearsto
beaspecialistproducttargetedatbusinesscustomers

Foreign currency conversion services inquiry—Final report
WhilethespeedofIMTdeliveryisanimportantconsiderationformanyconsumerswefoundthatIMT
deliverytimesweresimilaracrossmostinquirysuppliers
Safetyreliabilityandtrustasapointofdierentiation
MostinquirysuppliersknowthatconsumerswantasafereliableandtrustworthyIMTserviceThatis
consumerswantIMTsthatwillreachtheirintendedrecipientThevaluesomeconsumersplaceonthese
factorsmaybepartofthereasontheysendasmallIMTseeminglyasatesttomakesurethemoneyis
receivedbytherecipientbeforesendinganIMTforthefullamounttheyintendtoremit
Someconsumersregardthebanksasbeingsaferthannon-bankIMTsuppliersandtheinquirysuppliers
areawareofthisThisknowledgeislikelyatleastpartofthereasonthat
somenon-bankinquirysuppliersnotethereliabilityandsafetyoftheirservicesintheiradvertising
ForexampleOFXandTransferWisebothdrawattentionontheirrespectivewebsitestothefact
theyareASICregulated

atleasttwobigfourbankshaveconsideredprojectingasenseofsafetytoconsumersEmail
correspondencebetweentwostaatoneofthesebanksnotesthat‘[r]iskisaseriousissuefor
customers’andthatinthefuturethebankwillbewantingto‘tellcustomersthat[redactedbank]
ismuchsaferthanamonoline’Theotherbigfourbankconsidered‘dial[ing]upourstrengths
particularlyaroundsecurity’
Ourviewisthatifbank-initiatedIMTsareindeedsaferthanthoseinitiatedbynon-banksuppliers
itisbecauseofregulationcodesofconductandproductfeaturesthatarenotaimedprimarilyat
protectingIMTcustomersorensuringthesafedeliveryofIMTsRatherthesemeasureshaveother
objectivessuchasprotectingdepositorsandensuringthesafetyofonlinebankingtransactions
Forexample
asauthoriseddeposit-takinginstitutions(ADIs)thebigfourbanksaresubjecttoprudential
supervisionbyAPRANon-bankIMTsuppliersarenotsubjecttoprudentialsupervisionbutare
regulatedinotherways(seeappendixC)Prudentialsupervisionisdesignedtoprotectdepositors
andpreservesystemicstabilitybyamongotherthingsreducingthelikelihoodoffinancial
institutionsfailing

ItisnotintendedtoprotectIMTsorIMTcustomersregardlessofwhetherthe
supplierisanADI
eachofthebigfourbanksoersmoneybackguaranteeswhereunauthorisedIMTtransactions
occur

Eachbankmustoertheseguaranteesbecausetheyhavevoluntarilysubscribedto
theePaymentsCode(seeappendixC)TheePaymentsCodeappliestoallconsumerelectronic
paymenttransactionsincludingATMEFTPOS

andcreditcardtransactionsonlinepayments
 TransferWiseSendMoneyOverseashttpstransferwisecomausend-moneyviewedApril
OzForexLimitedForeignExchangeServicesRegulationhttpswwwofxcomen-aulegalregulationviewed
April
 SeeAPRAAboutAPRAhttpswwwapragovauabout-apraviewedApril
 Dependingonthebanktherecanbecaveatsonthesemoneybackguaranteessuchastheguaranteeonlybeingvalidif
theIMTsenderdidnotcontributetoloss
Source
AustraliaandNewZealandBankingGroupLimitedInternationalmoneytransfershttpswwwanzcomaupersonal
travel-internationalinternational-paymentsviewedApril
AustraliaandNewZealandBankingGroupLimitedBankaccountprotectionhttpswwwanzcomausecurityaccount-
protectionviewedApril
CommonwealthBankofAustraliaInternationalMoneyTransferhttpswwwcommbankcomaupersonalinternational
international-money-transferhtmlviewedApril
CommonwealthBankofAustraliaSecurityGuaranteehttpswwwcommbankcomausecurity-privacynetbank-
securityhtmlviewedApril
NationalAustraliaBankLimitedInternationalTransferstermsandconditionshttpswwwnabcomaupersonalhelp-
and-guidanceterms-and-conditions-for-personal-productsinternational-transfers-terms-conditionsviewedJune
NationalAustraliaBankLimitedTransactionandsavingsproductstermsandconditionshttpswwwnabcomau
personalhelp-and-guidanceterms-and-conditions-for-personal-productspersonal-transaction-and-savings-products
viewedJune
WestpacBankingCorporationSendmoneyoverseashttpswwwwestpaccomauinternational-travelinternational-
transferssend-moneyviewedApril
 TheePaymentsCodedefinesEFTPOSas‘electronicfundstransferatthepointofsale—anetworkforfacilitating
transactionsatthepointofsale’
ASICePaymentsCodeMarchhttpsdownloadasicgovaumediaepayments-code-published--
march-pdf

Foreign currency conversion services inquiry—Final report
internetandmobilebankingandBPAYAtleastonenon-banksupplierwhoisnotasignatorytothe
ePaymentsCodealsooersaguarantee

Ourviewisthatthisnon-banksupplierdoessobecause
itsguaranteeisvaluedbycustomersWenotetheProductivityCommissionhasrecommendedthat
ASICshouldhavethepowertomaketheePaymentsCodemandatoryforallorganisationsthatsend
orreceiveelectronicpayments

mostinquirysuppliersadvertisefeaturesaimedatpreventingunauthorisedIMTtransactions
HoweverinmostcasesthesefeaturesarefocusedonaccountsecurityInthecaseofthebigfour
banksthesefeaturesareoeredtoprotectallonlinebankingtransactions

Otherinquirysuppliers
alsooerfeaturestoprotectIMTtransactions

SomebanksimprovedtheeaseofuseandconvenienceofIMTservicesto
competewithnon-bankinquirysuppliers
Someofthebigfourbankshaverecognisedthatcertainaspectsoftheservicesoeredbynon-
bankIMTsuppliershavebeenmoreattractivetoconsumersthantheirrespectiveoerings
Onebank
identifiedinastrategydocumentinlatethat‘newcompetitorsareprovidinglowercosthigher
qualitycustomerexperienceforinternationalpayments’
Atleasttwobankshaveimplementedorareconsideringchangestoimprovetheeaseofuseand
convenienceoftheironlineanddigitalIMTservicesSomeofthesechangeshavebeenaimedat
deliveringasimilar-qualityIMTserviceasthatoeredbynon-banksuppliersorprovidingapointof
servicedierentiationforthebank

Forexampleonebank
consideredthatitwasimportanttohavethecapabilitytosendIMTpaymentsthroughitsmobile
bankingapplicationbecausethiswouldimprovecustomerexperienceand‘easeofuse’We
understandthisbankisintheprocessofimplementingthischange
identifiedthatitwasimportantforittomakeimprovementstoitscustomeronboardingprocess
becauseits‘complexinfrastructuremakesitdicult[forthebank]tomatchthemono-linesinterms
ofserviceparticularlyreal-timeonboardingofnewcustomersandthesimplicity&transparencyof
theironlineoering’
IMTdeliveryspeedsweresimilarformostinquirysuppliers
ThespeedofIMTdeliveryisidentifiedinthedocumentsofsomesuppliersasbeingafeaturethat
consumersvalue
Thisislikelythereasonwhyatleasttwonon-banksuppliersstateontheirwebsites
thattheirIMTservicesarequick

Oneofthesesuppliersaimedtoprovidethe‘fastestpossibleproduct
 OzForexLimitedIndividualClientAgreementhttpswwwofxcomen-aulegalindividual-client-agreementviewed
July
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemhttpswwwpcgovauinquiries
completedfinancial-systemreportfinancial-systempdfp
 AustraliaandNewZealandBankingGroupLimitedANZShieldhttpswwwanzcomausecurityaccount-protection
anz-shieldviewedApril
CommonwealthBankofAustraliaSecurityGuaranteehttpswwwcommbankcomausecurity-privacynetbank-
securityhtmlviewedApril
NationalAustraliaBankLimitedNAB’sSMSSecurityhttpswwwnabcomaupersonalbankingnab-internet-banking
sms-securityviewedApril
WestpacBankingCorporationSendmoneyoverseashttpswwwwestpaccomauinternational-travelinternational-
transferssend-moneyviewedApril
 OzForexLimitedSecureFundsTransfer&MoneySafetyhttpswwwofxcomen-ausecurityviewedApril
TransferWiseSecurityhttpstransferwisecomsecurityviewedApril
WesternUnionOnlineSecurityCenterhttpswwwwesternunioncomauensecurity-centerhtmlviewedApril
 WeunderstandthatCBAhasintroducednewfunctionalityonitssmartphoneappdesignedtoalertcustomersofadditional
chargeswhileusingCBAcreditanddebitcardsoverseasWenotetheimplementationofthisfunctionwasoutsidethe
ReviewPeriodSeeJFrostAprilCBAtargetsinternationaltravellerswithnewtechAustralianFinancialReview
httpswwwafrcombusinessbanking-and-financecba-targets-international-travellers-with-new-tech--
paboviewedJuly
 OzForexLimitedHowlongdoesittaketotransfermoneywithOFX?httpswwwofxcomen-aubloghow-long-
does-a-money-transfer-takeviewedMarch
TransferWiseHowlongdoesittake?httpstransferwisecomhelparticlebasic-informationhow-long-does-
it-takeviewedMarch

Foreign currency conversion services inquiry—Final report
inAustralia’andprovidesanonlinecalculatorestimatingthedateonwhichtheIMTwillarriveat
itsdestination
WefoundthataveragedeliverytimesforfiveoftheseveninquirysuppliersofIMTswerebroadlysimilar
andforIMTstotheUSlessthanhours

Oftheothertwoinquirysuppliersbothbigfourbanks
onehadanaveragedeliverytimetotheUSofhours
theotherwasunabletoprovideuswithanestimateoftheaveragedeliverytimesforIMTsitsent
weconsiderthisasanindicationthatIMTdeliverytimeswerenotaparticularfocusforthisbig
fourbank
 New entry is changing the competitive dynamic
for IMTs
ThereisevidencethatthecompetitivedynamicforthesupplyofIMTsischangingThechangehasbeen
drivenbynewerentrantswhoaregenerallycheaperandwhohavesomebetterservicefeaturesat
leastintermsofbeingmoreattractivetoconsumersthanthoseofthebigfourbanks
OverallweobservethatthebigfourbankshaverespondedtothesenewersuppliersbyreducingIMT
prices(section)andsomebigfourbanksimprovedaspectsoftheirnon-priceoering(section)
TheseimprovementswereoftenfocusedonIMTsinitiatedthroughonlinechannelsThesechannelsare
themeansthroughwhichthenewerentrantsgenerallydistributetheirIMTservices
NewerIMTentrantsaregrowingincludingbywinningcustomersfromthe
bigfourbanks
TherehavebeenanumberofnewerentrantssupplyingIMTservicesinAustraliaincludingOFX
CurrencyFairInstaReMandTransferWiseAllfourofthesenewerIMTsuppliersadvertisetheirservice
asoeringbetterretailexchangeratesandlowerfeesthanthebigfourbanks

EachofthesefournewersupplierslargelydeliversitsservicesthroughonlinechannelsWhilenota
newerentrantWesternUnionwhichbegansupplyingIMTservicesinAustraliainexpandedits
operationsintothesupplyofonlineIMTservicesin

SomenewerIMTsuppliershavegrownquickly
Thishasbeenincontrasttothetrendobservedformany
existingsuppliersincludingthebigfourbanksForexampleonenewerentrantgrewsignificantlyover
thereviewperiod(seefigure)
Toputthatgrowthinperspective
thetotalvalueofIMTssentonbehalfofindividualconsumersbyallsuppliersinfigureincreased
byaroundpercent
overthesameperiodthetotalvalueoffundstransferredbySupplierforindividual
consumerstripled
 ThetimesprovidedbytheinquirysuppliersrepresenttheaveragetimetakenforanIMTtoreachthebeneficiary’sfinancial
institutionduringOctober
 OFXHomepagehttpswwwofxcomen-auviewedMarch
TransferWiseHomepagehttpstransferwisecomauviewedMarch
CurrencyFairHomepagehttpswwwcurrencyfaircomviewedMarch
InstaReMHomepagehttpswwwinstaremcomen-auviewedApril

Foreign currency conversion services inquiry—Final report
Figure 2.4 Total value of IMTs remitted by inquiry suppliers
Quarters starting 1 July 2016–1 July 2018
Jul–16 Oct–16 Jan–17 Apr–17 Jul–17 Oct–17 Jan–18 Apr–18 Jul–18
AUD
Supplier 1 Supplier 2 Supplier 3 Supplier 4
Supplier 5 Supplier 6 Supplier 7
SourceACCCanalysisofdataprovidedbytheinquirysuppliers
Supplier’sgrowthduringthereviewperiodsawitgofromremittingthelowestquarterlyvolumeof
IMTsamongtheinquirysupplierstothehighest(figure)Itappearstohavedonethisbysuccessfully
winningcustomersfrombanksandnon-banksuppliersbyoeringlowerpricesaswellasbetter
non-pricefeatures

Atleastthreeofthebigfourbanksacknowledgedthatatleastonenon-bankIMTsupplieroered
cheaperpricesOnenon-bankIMTsupplier’spriceoeringwasdescribedbydierentbigfourbanksas
‘morecompetitivethanBanksinIMT’and‘disruptivelypricedbelowthemajorbanks’
Atleasttwoofthebigfourbanksalsoregardedsomeaspectsoftheservicesoeredbynewerentrants
asalsobeingbetterthanwhathadbeenoeredbybanksOnebankidentifiedthat‘[n]ewcompetitors
areprovidinglowercosthigherqualitycustomerserviceforinternationalpayments’
ConsumerresponsestotheACCC’sFXInquiryquestionnairerevealedthattheymaybeattractedtothe
cheaperpricesofnewerentrants

Onequestionnairerespondentnotedthatonenewentrantoered
‘thefairestconversionratebyFAR’[originalemphasis]

Anotherquestionnairerespondentnotedthat
anewerentrant‘hadthebestrates’

Onenon-bankIMTsupplier’sanalysisindicatedthatitwaswinningcustomersfromothersuppliers
includingthebigfourbanksandthatcustomersmovedtoitforbothitspriceandnon-priceoering
Itsanalysisshowedthatmostofitscustomerssentmoneywiththeirbank(usuallyabigfourbank)
beforeusingitsservicesandnearlypercentofitscustomerswantedtotryitbecauseitwas
cheaperItsanalysisalsoshowedthatitscustomerswhohadpreviouslyusedanon-bankcompetitor
‘valuethingslikespeedorconveniencealittlemore’
 ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
 ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
 ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX

Foreign currency conversion services inquiry—Final report
Weobservedthatthissupplierwasamongthethreecheapestsuppliersinoursampleacrosssix
IMTtransactionsofdierentvaluesandcurrenciesovertheperiod–February

Theother
twocheapestsupplierswerealsonewerentrantsThebigfourbankswereneverthecheapest
suppliersofcommoncurrencies(USDandGBP)overthatsameperiodandweresometimesthemost
expensivesuppliers
Thebigfourbankschangedtheirpriceandnon-priceIMToering
EachofthebigfourbankshaschangedorischangingitsIMTpriceandnon-priceoeringatleast
partlyinresponsetothechangingcompetitivedynamicbeingdrivenbynewersuppliersThese
changeswereoftenfocusedondigitalchannelsincludingonlinebankingandmobileapplications
wherenewerentrantsmostlyoperate
Theeectofnewerentrantsonthebigfourbankswasapparentinatleastthreeofthesebanks
acknowledginginternallythattheywerelosingIMTcustomersormarketsharetonewerentrants
Forexampleonebankcommentedthattherewas‘[e]videnceof‘disruptors’gainingtractioninthe
market’withcustomertransferstothebanks’keyIMTcompetitorsbeingAUDmillionhigherinthe
monthofDecembercomparedwithDecemberAnotherbankcommentedthatof
itscustomersdealtwithanon-bankproviderforthepurposesofconductinganIMTtransactioninthe
financialyear
Bigfourbankpricechangespartlyinresponsetonewerentrants
Weobservethateachofthebigfourbanksreducedprices

inthereviewperiodinresponsetonew
entryOnebankreduceditsfeesandretailmarginsforIMTssentinaspecificcurrencyandbelowa
certainamount
ThebanklaterexpandedthisoertofourcurrenciesThebankexplainedthisdecision
internallybysaying
customersneedafastsecurelow-costsolutionforsendingsmallregularamounts
internationally[Bank’s]traditional[IMTservice]generallydoesnotsatisfythisneedcosting
[redacted]perpaymentandtaking–daysonaveragetobereceivedTheresultissignificant
leakagefrom[theBank]tootherpaymentproviders
DataprovidedtotheACCCbytheinquirysuppliersshowsthatwhilethebigfourbanks’revenue
asaproportionoftotalremittanceamountsgenerallydeclinedoverthereviewperioditremained
appreciablyhigherthanthatofthenewernon-bankinquirysuppliersinoursamplesetDependingon
thenewernon-bankinquirysupplierandthebigfourbankbeingcompareditwasbetweentwoto
seventimeshigherforthelastquarterofthereviewperiod

  ReportedpricesarebasedontransactionsundertakenviaonlinechannelsonlyPricescalculatedbytheACCCasa
simpleaverageoverthepricedatacollectionperiodforthefollowingreferencetransactionsUSDUSDGBP
GBPPHPandPHPWhiledatawasalsocollectedonIMTssenttoFijiinFJDthissupplierdidnot
oerIMTsinFJDatthetimeofdatacollectionWheretheyapplymaximumcorrespondentfeeshavebeenconsideredin
drawingcomparisonsbysuppliersInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersand
datacollectedfortheACCCAppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC
  ThepriceconsumerspayforIMTsismadeupoffeesandtheretailexchangeratewhichincorporatesaretailmargin
(chaptersection)
  ACCCanalysisofdataprovidedbyinquirysuppliersTheACCCcalculationswerebasedonthetotalrevenueearnedon
IMTsasaproportionofthetotalamountremittedinthequartersstartingOctobertoJulyforindividual
consumersDierentservicefeaturesandoperatingcostsaresomeofthereasonsasidefromdierencesinthesuppliers’
approachtopricecompetitionwhytherevenueasaproportionoftotalremittanceamountsmightvaryacrosssuppliers

Foreign currency conversion services inquiry—Final report
Price changes by the big four banks in late–2017
BetweenOctoberandDecembereachofthebigfourbanksamendedthefeesapplyingtotheir
IMTservices

Aswellasitsfeechangeonebankreducedretailmargins

Boxsetsoutthe
backgroundtothosedecisions
Thereisevidencefromthreeofthebigfourbanksthateachwasatleastpartlymotivatedtoreduce
pricesinresponsetocompetitionfromonlinenon-banksuppliersForexample
onebigfourbankassessedthatitsretailexchangeratesandfeesincludingcorrespondentbanking
feesmadethebank’s‘IMToeringuncompetitivecomparedtodisruptivenewentrants’Banksta
notedinaninternaldocumentthatmaintainingthecurrentfeestructurewas‘notanoption’for
thebankbecauseofthelossofbusinessto‘newdigitalplayers’
Thisbankhadseparatelyreduced
theretailmarginincorporatedintoitsretailexchangeratesoveranumberofyearsforvarious
reasonsincludingto‘reducethepricingadvantageheldbythemonolines(OzForexWesternUnion
TransferWise)’
anotherbigfourbankidentifiedthatitneededto‘movetoamorecompetitiveandresponsivepricing
modelandinvestinanenhancedcustomervalueproposition’becauseitwaslosingmarketshare
dueto‘non-competitivepricing’and‘capabilitygapsaround[its]retailcustomervalueproposition’

Itbelieveditcouldnot‘donothing’becauseitsrevenueandmarketsharewouldcontinuetodecline
andlikelyatanincreasingrateascustomersdiscoveredmorecompetitivealternatives
Box 2.2 The big four banks’ IMT fee changes in late-2017
ThreeofthebigfourbankshadbeenconsideringchangingtheirIMTfeesamongothermatters
foratleastfivemonthsbeforetheywerepubliclyannouncedDocumentsproducedtothe
ACCCrevealed
onebankconductedareviewofitsIMTpricinginlateandfoundthatitsmarketshare
andrevenueweredecliningThebankconsideredalternativepricingoptionstoimprovethe
competitivenessofitsIMToeringthroughout
inMayadierentbankproposedreducingfees—onereasonofseveralbeingtocompete
withemergingnon-bankcompetition
thethirdbankconductedastrategyreviewinJulyandfoundthatitshighfeeswereamajor
reasonitscustomerschosearivalIMTsupplierInresponseandbeginninginFebruarythe
bankconsideredproposalstoreduceitsfees
Thisculminatedinfeereductionsinlate
TheremainingbigfourbankdecreaseditsIMTfeesindirectresponsetosomeoftheotherbigfour
banks’changesInOctoberbankstarecommendedthatthebankchangeitsfeepricing
foroverseaspaymentssentonlineinaforeigncurrencyaftersomeoftheotherbigfourbanks
introducedtheirfeereductionsItconsideredthatbecauseoftheotherbanks’pricereductionsits
‘pricingisnowuncompetitiveandthereishighfocusonFXpricingacrosstheindustry’
  AustraliaandNewZealandBankingGroupLimitedDecemberANZreducesinternationalmoneytransferfeesfor
foreigncurrencieshttpsmediaanzcompostsanz-reduces-international-money-transfer-fees-for-
foreign-currenviewedMarch
CommonwealthBankofAustraliaOctoberCommonwealthBankcutsfeesoninternationaltransfershttpswww
commbankcomauguidancenewsroomimt-fee-reduction-htmlviewedMarch
WestpacBankingCorporationDecemberWestpacreducesfeesonforeignexchangepaymentsonlinehttpswww
westpaccomauabout-westpacmediamedia-releases-decemberviewedMarch
  AustraliaandNewZealandBankingGroupLimitedDecemberANZreducesinternationalmoneytransferfeesfor
foreigncurrencieshttpsmediaanzcompostsanz-reduces-international-money-transfer-fees-for-
foreign-currenviewedMarch

Foreign currency conversion services inquiry—Final report
Dependingonthebanktherewerealsootherreasonsbehindthedecisionstoreducepricesin
late
PublicpressurearoundhighIMTpricesinAustraliawasanimportantfactorforatleasttwobigfour
banksinreducingpriceswithoneofthebanksidentifyingthat
Thereisincreasedreputationalriskto[bank]ifwedonothingandareultimatelyforcedtochange
throughcompetitororregulatoractionTheseforcedoutcomesmayleadtoremediationcosts
andreputationalandbusinesslossintheshortterm
Anotherbankfeltthatreducingpriceswould(amongotherthings)respondtothe‘threatof
regulatoryscrutiny’
Atthetimethebigfourbanksconsideredreducingfeesallfourexpectedthatreducingfeeswould
increasethetotalvalueofIMTstheywereremittingForatleastthreeofthebanksareductionin
revenuefromlowerfeeswasexpectedtobeatleastpartiallyosetbyhigherrevenuederivedfrom
anincreaseinthetotalvalueofIMTsbeingsentbytherespectivebanksForatleastoneofthese
bankstheopportunitytomakeincreasedretailmarginrevenueappearedtobeaconsiderationin
decidingwhichfeesitreducedthebanknotedthat
Paymentswithoutcurrencyconversiontoremainat[redacted]toreflectabsenceofFX
revenueopportunityThesetransactionsincludeAUDpaymentsfromAUDaccountsand
paymentsfrom[redacted]inthatsamecurrency
Inmakingtheirpricechangesatleasttwoofthebigfourbanksexplicitlydecidednottomatchor
betterthepricesofthenewercheapersuppliersOneofthebanksthatreducedpricesinlate
notedthatreducingpricesinsuchamannerwouldbe‘unnecessarilyaggressive’Adierentbigfour
bankthatmadepricechangesforspecificcurrenciesobservedaftercomparingthepricesofdierent
suppliersforsendingUSDEUandGBPduringthat
Non-bankcompetitorssuchasTransWise[sic]HiFXandOFXaredisruptivelypricedbelowthe
majorbanksByswitchingtothesealternativeprovidersconsumerscanbeaored[sic]cost
savingsof–perpaymentInresponsetothisour[bankservice]isstrategicallypricedto
reducethecostdierentialtoaroundperpayment
Followingthebigfourbanks’reductionoffeesandmarginsinlateweobservedadecliningtrend
forfeeandretailmarginrevenuecombined(figure)

Foreign currency conversion services inquiry—Final report
Figure 2.5 Average revenue per IMT from fees and retail margin for the big four banks combined*
Quarters starting 1 October 2016–1 July 2018
$0
$50
$100
$150
$200
Oct–16 Jan–17 Apr–17 Jul–17 Oct–17 Jan–18 Apr–18 Jul–18
AUD
Fees Retail margin
Change to fees and retail
margins
a
*AveragerevenueperIMTrepresentstheaveragecalculatedacrossthebigfourbanks’totalIMTremittedduringeachquarter
withinthereviewperiod
aEachbankchangedeitherfeesorretailmarginsOnlyonebankchangedboth
SourceACCCanalysisofdataprovidedbythebigfourbanks
Thebigfourbankshavealsoimprovednon-priceaspectsoftheiroering
Eachofthebigfourbankshaveacknowledgedthatcertainnon-pricefactorsareimportant
considerationsfortheircustomerswhenselectinganIMTsupplier(section)Inrelationtonon-price
featuresonebigfourbanknotedinaninternalpresentationthatnon-banksuppliersare
providingsuperiorspeedcheaperpricingandgreaterfeaturesthanwhathastraditionally
beenoeredbybanksthusprovidingagreaterexperiencetotheircustomers
Eachofthebigfourbanksaretakingorhavetakenactiontoimprovetheirnon-priceoeringThe
eectofnewentrantsoncompetitionappearstohavebeenanimportantfactorinthosedecisions
OnebankimprovedtheeaseofuseandconvenienceofitsIMToeringbyimplementingtheability
tosendmoneyoverseasusingarecipient’smobilenumberThebankidentifiedthatitneededto
dothisbecause‘[t]hecurrent[Bank]IMTproductoeringisbeingsurpassedbyfasterandcheaper
alternativesinarapidlyevolvingmarketwherenewentrantsareundercuttingBankpricingand
providingsuperiorserviceoerings’
Anotherbankintroducedfastertransferspeedsforpaymentsunderacertainamountandinselect
currenciesThebankidentifiedthatitsslowertransferspeedwasonereasonconsumerswereusing
non-banksuppliersPaymentsintheselectedcurrenciescannowbereceivedwithinminutesorat
leastonedayfasterthanthebank’straditionalIMTservice
ThebigfourbankshaveadvisedtheACCCthatasatJunetheyhaveeitherimplementedor
areintheprocessofimplementingSWIFTgpi(chapterbox)Foratleasttwoofthebigfour
bankspartofthereasonforthatdecisionwastoimprovetheirnon-priceoeringtocompetewith
non-banksuppliersForoneofthesebankspartofthemotivebehindtheirdecisiontoimplement
SWIFTgpiwasthatitwoulddeliverthebankan‘improvedinternationalpaymentoeringwhichwill
closethegapbetweencurrentcapabilitiesofmonolineplayers(OFXTransferwiseetc)andother
newpaymenttechnologies’notingthatitwouldassistthebankto‘clawbackourcustomersspendon
externalproviders’[sic]

Foreign currency conversion services inquiry—Final report
 New IMT suppliers face barriers to entry
and expansion
NewentrantshaveincreasedcompetitioninthesupplyofIMTsbyoeringcheaperpricesandin
somecasesbetterIMTfeaturesthanthebigfourbanks(sectionsand)Thebigfourbankshave
respondedbyimprovingpriceandnon-priceaspectsoftheirIMToerings(section)
Weconsidertheprospectof‘de-banking’facedbynon-bankIMTsupplierstobeasignificantthreat
tocompetitioninthesupplyofIMTsDe-bankingistheprocessofbankswithdrawingornotsupplying
bankingservicesincludingbankaccounts
WehaverecommendedthatworkstartonthedevelopmentofaschemethroughwhichIMT
supplierscanaddresstheduediligencerequirementsofthebanksincludinginrelationtoAMLCTF
requirementstoaddressthatthreat
WealsoconsiderthatconsumersfacecostsinswitchingIMTsuppliersThewaysinwhichthesecosts
couldactasanimpedimenttotheentryofnewsuppliersandthegrowthofnewandexistingsuppliers
arediscussedinthissectionChaptersetsoutrecommendationswhichmaylowerthesecosts
De-bankingofnon-bankIMTsuppliers
Non-bankIMTsuppliersoftenrelyonaccesstobankingandpaymentsservicesfromtheirvertically
integratedcompetitors(banks)tocompeteforthesupplyofIMTstoconsumersForexample
non-banksuppliersrequireabankaccounttoreceivepaymentforIMTsfromtheircustomersTheyalso
requireaccesstopaymentserviceseitherthroughabankaccountorbyaccesstopaymentsystem
infrastructuretomakeoutwardIMTpaymentsfortheircustomers
Fromacommercialperspectivetherecanbelittleincentiveforabanktosupplybankingservices
toanIMTsupplierwhoispossiblygoingtowinIMTbusinessfromthatbankHiFXalludestothisin
itssubmission
aresidualrisktolargernon-bankprovidersthatbankslooktosecurealarger[share]ofthe
overallmarketbymakingitharderfororrefusingtoprovideservicestonon-bankproviders

AnumberofinquirystakeholdershavestatedconcernstotheACCCabouttheavailabilityofcertain
bankingservicessuchasbankaccountstonon-bankIMTsuppliers

TheAustralianRemittanceand
CurrencyProvidersAssociation(ARCPA)hashighlightedtheseverityofthisissueforsomesuppliers
notingthattheyhavegoneoutofbusinessasaresultofde-banking

AUSTRACanalysisgivessomeindicationofthepastprevalenceofde-bankingwithbankaccounts
ofIMTsuppliersandaliatesbeingclosedbyAustralianbanksbetweenearlyandmid-

We
notethatanIMTsuppliercanhavemorethanonebankaccountWeconsiderthathavingaccountswith
twoormorebanksmaybeoneofthewaysnon-bankIMTsuppliersseektomitigatetheriskofbeing
de-bankedbyonebank
 HiFXSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesHiFXpdfp
 Seeforexample
ARCPANovemberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesARCPApdf
p
TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWise
pdfp
HiFXSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesHiFXpdfp
WesternUnionOctoberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
WesternUnionpdfpp–
  Seeforexample
ARCPAMarchARCPASubmissiontotheProductivityCommissionInquiryintoCompetitionintheAustralianFinancial
Systemhttpswwwpcgovaudataassetspdffilesubdr-financial-systempdfp
  AUSTRACStrategicanalysisbriefBankde-riskingofremittancebusinesseshttpswwwaustracgovausites
defaultfiles-sa-brief-bank-derisking-remittance-businessesWEBpdfp

Foreign currency conversion services inquiry—Final report
Thebanks’AMLCTFpoliciesandde-banking
ConsistentwiththeirrespectiveAMLCTFpoliciesthebigfourbankshavede-bankednumerous
IMTsuppliers
Twoofthebigfourbanks’AMLCTFpoliciesstipulatethatthebanksgenerallycannotprovide
certainbankingserviceswherethoseserviceswillbeusedtoundertakeIMTactivitiesalthoughthe
policyofoneofthesebanksallowsittodosounderexceptionalcircumstancesincludingwherein
thewordsofthebank‘thereisalignmentwiththeBank’sbroaderstrategicobjectives’Eveninthese
circumstancesthebank’scustomermustbewithinthebank’sriskappetiteandnotprejudicethe
bank’scompliancewithitsAMLCTFobligations
Theothertwobanks’AMLCTFpoliciesdonotprohibittheprovisionofbankingservicestoIMT
suppliersHowevertheystipulatethatthebanksmustundertakethoroughduediligencechecksof
allcustomerswhoareIMTsuppliers
DuringconsultationwithindustrystakeholderstheACCCencountereddieringviewsonthe
obligationsarisingunderAMLCTFlawsforbankssupplyingbankingservicestoIMTsuppliers
OneaspectonwhichviewsdivergedsignificantlywastheextenttowhichKnowYourCustomer
(KYC)requirements(describedinappendixC)becomeaknowyourcustomers’customer(KYCC)
requirementforabanksupplyingbankingservicestoanon-bankIMTsupplierTheopinionsof
stakeholdersgenerallyfellintooneoftwogroups
abankonlyneedstobesatisfiedthatthenon-bankIMTsupplierhassatisfactoryriskassessment
frameworkandriskcontrolsforAMLCTFcompliancethatistherequirementisKYConlyor
aswellastheKYCrequirementabankalsoneedstounderstandeachIMTtransactionanon-bank
IMTproviderisengagingintothesameextentitwouldwerethebanksendingtheIMTitselfthatis
therequirementisclosertoKYCC
BankscanfacehighpenaltiesiftheyfailtocomplywithAMLCTFobligations

Banksalsoface
reputationalrisksassociatedwithnon-complianceincludingiftheyareknowntohavesuppliedbanking
servicesthatwereinvolvedevenindirectlyinmoneylaunderingorterrorismfinancingactivities
Weconsiderthatasaresultthebanksmayhavetakenaconservativeapproachwhendesigning
theirAMLCTFpoliciesForexampleatleastonebigfourbankbelievesthatinordertoensureithas
compliedwithitsobligationsitmustconductduediligenceonitsIMTsuppliercustomersandconduct
screeningandmonitoringoftheIMTssentbycustomersofthoseIMTsuppliers
Thecostofduediligenceandmonitoringactivitiesmaypotentiallymakethesupplyofbankingservices
tonon-bankIMTsuppliersunprofitableforabankAsoneofthebankshastoldtheACCC
acustomerthatposesahigherdegreeofriskwillbemorecostlyfor[thebank]tomonitor
toensureongoingcompliancewith[thebank’s]policiesandultimatelywiththeAMLAct
[Thebank]thereforeweighsthecompliancecostagainstthelikelycommercialbenefitofthe
customerwhendecidingwhethertoprovidewholesalebankingservices
WeareawarethatanumberofIMTsupplierswhohavebeende-bankedwerenotgivenreasonsfor
thosedecisionsIfthede-bankingwasbecauseofperceiveddeficienciesintheIMTsupplier’sAML
CTFriskcontrolsandprocessesnotprovidingreasonsdeniesanopportunityfortheIMTsupplierto
engagewiththeirbanktoaddresstheissueThisinturnmakesitharderforIMTsupplierstoaccess
bankaccounts
TheACCCunderstandsthatunderAustralia’sAMLCTFlawsitisanoenceforanentitysuchasa
bankto‘tipo’itscustomersaboutasuspiciousmatter

Thiscouldbeonefactorcontributingtowhy
 ForexampleinCBApaidamillionpenaltyforcontraventionsoftheAnti-MoneyLaunderingandCounter-
TerrorismFinancingAct(Cth)seeAUSTRACJuneAustracandCBAagreempenaltyhttpwwwaustrac
govaumediamedia-releasesaustrac-and-cba-agree-m-penaltyviewedMarch
  Weunderstandthatunlessanexemptionisinplaceareportingentitymustnotdisclosetoanyother(otherthan
AUSTRAC)thatitformedasuspicionaboutacustomerorthatitsubmittedasuspiciousmatterreporttoAUSTRAC
DoingsoisanoenceprohibitedbysectionoftheAnti-MoneyLaunderingandCounterTerrorismFinancingAct
(Cth)SeeAUSTRACSuspiciousMatterReports(SMRs)httpwwwaustracgovaususpicious-matter-reports-
smrstipping-oviewedMay

Foreign currency conversion services inquiry—Final report
banksmaynotprovidereasonsonwhyanIMTsupplierhasbeende-bankedHowevertotheextent
thatprovidingreasonsdoesnotcontravenetheprohibitionontippingotheACCC’sviewisthatbanks
shoulddoso
Theeectofde-bankingonIMTsuppliers
Weconsiderthatthede-bankingofnon-bankIMTsuppliersraisestheircostsandsohinderstheirability
tocompeteandgrowDe-bankingcanbea
barriertoentrybypreventinganewentrantfromprovidingremittanceservicesbecauseitcannot
obtainabankaccountormustincursignificantcoststolookforandobtainalternatives
barriertoexpansionbecauseitincreasesthecostsofexistingnon-bankremittanceprovidersrelative
tobanksNon-banksuppliersmusteitherincurpotentiallyhighcompliancecoststomaintaintheir
accesstobankaccountsorcoststolookforandobtainnewbankaccountsoraccessalternatives

LikeanybusinessanIMTproviderneedstorecoveritscostsifitistoremainviableandan
increaseinitscostbasemayconsequentlyhamperitsabilitytopriceitsservicescompetitivelyand
wincustomers
The cost of managing the risk of being de-banked
Non-bankIMTsupplierscanspendextendedperiodsoftimeanddeployconsiderableresourcesto
mitigatetheriskofbeingde-bankedOnesupplierhastoldusthatduringthereviewperiod
ithadbeennegotiatingwithabankforoversixmonthstoobtainbankingservices
ithadspentatleastmonthstryingtoobtainanExchangeSettlementAccount(ESA)andto
becomeanADItoconnectdirectlytotheNewPaymentsPlatform(NPP)andtheBulkElectronic
ClearingSystem(BECS)
ithadspentapproximatelyAUDmillionsofarinpursuingaccesstopaymentsysteminfrastructure
includingremunerationforatleastsixstadevotedtothetask
Otherinquirysuppliershaveinformedusthattheyincurmaterialincrementalexpenseinmaintaining
theirbankingrelationshipsincludingasaresultofhavingtoregularlyandcomprehensivelydemonstrate
theadequacyoftheirAMLCTFriskcontrolstobanks
Access to payment system infrastructure can also present challenges
Wenotethatnon-bankIMTsupplierscouldconsideraccessingpaymentsysteminfrastructuresuchas
theNPPandBECSasanalternativetousingabankaccountNon-bankIMTsupplierscouldseekeither
directaccesstothatinfrastructureorindirectaccess

Therearetwowaysanon-banksuppliercouldgetdirectaccesstopaymentsysteminfrastructure
becomeadirectparticipantintheNPP

orbecomeaTierparticipantinBECSAppendixDsets
outthecurrentrequirementsfordirectaccesstotheNPPandBECSasatJuneDuringthe
RBA’sreviewofNPPfunctionalityandaccessindustrystakeholdersidentifiedsomerequirements
  Seeforexample
WesternUnionOctoberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
WesternUnionpdfpp–
TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWisepdfp
 MemberscanparticipateinBECSintwocapacitiesaccordingtowhethertheydirectlyclearandsettleusinganExchange
SettlementAccount(Tiermembers)orappointarepresentativetoclearandsettleontheirbehalfthatisindirectlyclear
andsettle(Tiermembers)
DirectparticipantsconnecttotheNPPusingtheirownNPPpaymentgatewayTheyareabletoclearandsettlepayments
onbehalfoftheircustomersandmayprovideindirectconnectivitytotheNPPforotherinstitutions
SourceReserveBankofAustraliaOctoberNewPaymentsPlatformFunctionalityandAccessConsultationh t t p s 
wwwrbagovaupayments-and-infrastructurenew-payments-platformfunctionality-and-access-consultationhtml
viewedMarch
 DirectparticipantsconnecttotheNPPusingtheirownNPPpaymentgatewayTheyareabletoclearandsettlepayments
onbehalfoftheircustomersandmayprovideindirectconnectivitytotheNPPforotherinstitutions
SourceReserveBankofAustraliaOctoberNewPaymentsPlatformFunctionalityandAccessConsultationh t t p s 
wwwrbagovaupayments-and-infrastructurenew-payments-platformfunctionality-and-access-consultationhtml
viewedMarch

Foreign currency conversion services inquiry—Final report
thatcouldpreventnewparticipantsfromaccessingtheNPP

AppendixDalsooutlinesthechanges
recommendedbytheRBA(inconsultationwiththeACCC)totheNPPaccessrequirementsassetout
intheRBA’sreportofJuneThechangesaimtoimproveequityandeaseofaccess
Non-banksupplierscouldalsoaccesstheNPPandBECSindirectlythroughpaymentservicesoered
bydirectparticipantsinthosepaymentsystemsHoweverweconsiderthatthesameissuesthat
havegivenrisetode-bankingwouldalsoaecttheseindirectaccessarrangementsThatisbecause
AMLCTFlawsextendtotheseindirectaccessarrangementsDirectparticipantsintheNPPandBECS
(whichincludethebigfourbanks)canapplysimilarriskcontrolstothesepaymentservicesastheydo
forbankaccounts
Thecaseforrenewedactiononde-banking
BoththeAustralianGovernmentandtheremittanceindustryhavetakenactionatdierenttimesin
thepasttoaddresstheissueofde-bankingForexamplebetweenandtheAustralian
GovernmentformedtheWorkingGrouponRemittanceAccountClosures(box)andARCPA
developedanAMLCTFcertificationprocessforitsmembers(boxfurtherbelow)Despitethese
initiativesourviewisthatthisissuehasnotbeenresolvedandthatitishavinganadverseeect
oncompetition
Weconsiderrenewedgovernmentactiononde-bankingisnecessarytoprotectthegainsnewentrants
havedeliveredtoIMTconsumersandtoensurecompetitionisnotinhibitedthroughnewandexisting
non-banksupplierslosingaccesstobankingservicesWebelievethepotentialgainsforconsumers
estimatedatoverAUDmillionforIMTssenttotheUSandUKin–aloneprovideacompelling
caseforaction
Box 2.3 Working Group on Remittance Account Closures
TheWorkingGrouponRemittanceAccountClosureswasformedinDecembertoestablisha
communicationmechanismbetweenfinancialinstitutionsandsmalltomedium-sizedIMTsuppliers
TheWorkingGroupwasfocusedonidentifyingpracticalmeasuresthatthoseIMTsupplierscould
undertaketomaketheirbusinessesmorelikelytofitwithintherisktoleranceofbanks
TheWorkingGroupmetmonthlybetweenDecemberandMayandafinalmeetingwas
conductedonSeptemberAkeyoutputoftheWorkingGroupwasstrategicanalysisby
AUSTRACofthescaleofde-bankingactivityanditsimpactonfinancialflowsAUSTRACfound
thatatthattimetherewasnoevidencede-bankinghadcausedasignificantchangeinthevolume
orvalueofIMTsbeingsentAUSTRACexplainedthattherecouldbearangeofpossiblereasonsfor
thisincludingthat
customersofde-bankedIMTsuppliersbeganusingotherIMTsuppliers
IMTsupplierswhohadbeende-bankedwereabletosecurenewbankingarrangementsand
continuetheiroperations
IMTsupplierswhohadbeende-bankedaccountedforasmallvolumeandvalueofallIMTs
IMTsupplierswhohadbeende-bankedwerenotprovidingdatatoAUSTRACpriortobeing
de-banked
TheWorkingGroupwaschairedbytheAttorney-General’sDepartment(AGD)andalsocomprised
AUSTRACtheDepartmentofForeignAairsandTradetheAustralianCrimeCommissionthe
AustralianBankers’AssociationARCPAandtheSomaliMoneyRemittersGroup
SourceAustralianGovernmentWorkingGrouponRemittanceAccountClosuresnodateWorkingGrouponRemittance
AccountClosuresOutcomesStatementhttpswwwhomeaairsgovaucriminal-justicefilesfcs-outcomes-report-working-
group-on-remittance-account-closurespdf
Beforecomingtoarecommendationonactiontoaddressde-bankingtheACCCconsideredwhether
existingregulatoryorprivatesectormeasurescouldbeutilisedtohelpresolvetheissueWedonot
 ReserveBankofAustraliaJuneNPPFunctionalityandAccessConsultationConclusionsPaperhttpswwwrbagov
aupayments-and-infrastructurenew-payments-platformpdffunctionality-and-access-reportpdf

Foreign currency conversion services inquiry—Final report
believetheyprovidethemostecientmechanismbywhichtodosoThreeofourkeyconsiderationsin
thisregardaresetoutbelow
UnderAustralia’sAMLCTFlawsIMTsuppliersarerequiredtosubjecttheirAMLCTFprogramto
regularindependentreviewsTheACCChasconsideredwhetherinadditiontosatisfyingAMLCTF
requirementsthesereviewscouldbeappliedaspartofthebanks’duediligenceprocessesfor
providingbankingservicestonon-bankIMTsuppliers
Thenatureandscopeofthesereviewsdonotappeartobesucienttomeetinternalpolicy
requirementsofdierentbanksTherearelikelyanumberofreasonsforthisincludingthatbanks
arenotonlyconcernedaboutanon-bankIMTsupplier’scompliancewithAustralia’sAMLCTFlaws
Theyarealsoconcernedwitharangeofissuesrelatedtomoneylaunderingandterrorismfinancing
suchasrequirementsimposedonthembytheircorrespondentbanks

internationalsanctions
andthepotentialforreputationdamage(discussedabove)

Asaresultbanks(andprovidersof
paymentservicesinfrastructure)requireaduediligencemechanismthatiswiderinapplicationthan
compliancewithAustralia’sAMLCTFlaws
TheACCChasconsideredwhetherindividualinstancesofde-bankingandthreatsofde-banking
identifiedoverthecourseofthisinquirymayraiseconcernundertheCCAItwillcontinuetodoso
shoulditbecomeawareoffurtherinstancesofde-bankingorthreatsofde-bankingTheneedto
proactivelyaddressthepossiblecompetitionimpactofde-bankingparticularlywhereanumber
ofIMTsuppliersarede-bankedoratriskofbeingde-bankedformspartoftherationalefor
Recommendation(setoutfurtherbelow)
WeseetheexistingARCPAcertificationschemeasunsuitedtoresolvingtheissueofde-banking
HoweverasnotedinboxweseethepotentialfordrawinglessonsfromtheARCPAmodel
andexperience
 ForexampleinNovemberJPMorganChase(whohadacorrespondentbankingrelationshipwithWestpac)directed
WestpactostopprocessingfundstransfersforIMTsuppliersWestpacwascompelledtodosobecauseifitdidnotits
abilitytotransactinUSdollarscouldhavebeencompromisedIthasbeenreportedthatJPMorgangavethedirection
becauseitcouldbeliableunderUnitedStateslawsfortransgressionsofforeignbankswhosefundsitclearsThedirection
camesomemonthsafterJPMorganhadbeenfinedoverUSDbillionforbreachesrelatedtoAMLCTFcomplianceinthe
UnitedStates
Source
JEyersFebruaryBankspullplugonsendingmoneyoverseasAustralianFinancialReviewhttpswwwafrcom
businessbanking-and-financebanks-pull-plug-on-sending-money-overseas--rye
RLStanleyandRPBuckleyJuneProtectingtheWestexcludingtheresttheimpactoftheAMLCTFRegimeon
financialinclusionsinthePacificandpotentialresponsesMelbourneJournalofInternationalLawVolNohttpslaw
unimelbeduaudataassetspdffileStanleypdf
  AUSTRACfortheCommonwealthofAustraliaStrategicanalysisofbriefBankde-riskingofremittancebusinesses
httpswwwaustracgovausitesdefaultfiles-sa-brief-bank-derisking-remittance-businessesWEBpdf
p

Foreign currency conversion services inquiry—Final report
Box 2.4 ARCPA’s certification program
ARCPAcurrentlyadministersacertificationprogramthesecondversionofwhichwaslaunched
inJulyThatprogramhashadlimitedtake-upAsatJunesupplierswerelistedon
ARCPA’swebsiteashavingbeencertifiedundertheprogram
Weconsiderthattheduediligenceschemewehaverecommendedhasanumberofadvantages
overtheARCPAprogramthatwillenableittoaddressthecompetitionissuesposedby
de-bankingmoreeectivelySpecifically
unliketheARCPAprogramwhichisavailableonlytoARCPAmemberstheproposedscheme
wouldbeopentoallIMTsuppliers
havingexpertgovernmentAMLCTFpolicymakersinvolvedintheschemedesignandhaving
theschemeadministeredbyanarmofgovernmentwillgiveitgreatereectivenessand
credibility
arobustpublicconsultationprocesswillprovideanopportunitytoincorporatethelessons
fromtheARCPAschemebothintermsofschemedesignandfromtheperspectiveofhow
tobestaddresstheduediligencerequirementsofbanksandprovidersofpaymentservices
infrastructure
SourceARCPACertifiedMemberswwwarcpaorgaucertified-membershtmlviewedJune
Lessonsfromoverseas
Anumberofinternationalregulatoryauthoritiesandorganisationshaveconsideredtheproblem
ofde-bankingandrespondedwitharangeofinitiativestoaddressnon-bankIMTproviders’
accesstobankingservicesBoxsetsoutsomeofthemeasurestakenintheUKTheACCChas
consideredthosemeasuresandthepotentialsolutionsraisedinAustraliapreviously

incomingto
Recommendationbelow
 Wenotethattheissueofde-bankinghasbeenrecognisedandattemptstofindasolutionhavebeenmadebyanumberof
stakeholdersincludingtheWorkingGrouponRemitterAccountClosures(box)TheRBArecognisedtheissueinthe
contextofcorrespondentbankingservicesintheSouthPacificandproposedanumberofrecommendationstoresolve
itReserveBankofAustraliaDevelopmentsinCorrespondentBankingintheSouthPacificJunehttpswwwrba
govaupublicationsbulletinjundevelopments-in-correspondent-banking-in-the-south-pacifichtmlviewed
March

Foreign currency conversion services inquiry—Final report
Box 2.5 The UK’s responses to the problem of de-banking
TheFinancialConductAuthority(FCA)commissionedresearchinJulyintothenature
scaleandimpactofde-bankingactivitiesintheUKThereportfoundthatwhilede-bankinghas
particularlyaectedmoneyremitterscharitiesandfintechcompaniesthenumberofde-banking
decisionsaresmallcomparedwithoverallclosureratesofbankaccountsInresponsetothereport
theFCAengagedwithUKFinanceatradeassociationfortheUKbankingandfinancial
servicessectortodevelopprinciplestoimprovehowbankscommunicatewiththeircustomers
whenrefusingorceasingtoprovidebankingservicesTheprinciplespublishedinJune
emphasisedthatbanksshouldtreatcustomersfairlymakeappropriateandproportionate
decisionsandcommunicateclearlywiththecustomerbeforeandafterreachingaconclusionon
whethertode-bankthecustomer
theFCAhasworkedwithotherregulatorsandinternationalbodiestodeliveraglobalresponse
tode-bankingForexampletheFCAparticipatedintheAnti-MoneyLaunderingExpert
GroupoftheBaselCommitteetoupdateguidanceonmanagingtheriskincorrespondent
bankingThisguidanceincludesalistofindicatorsthatbanksshouldconsiderwhenassessing
thelevelofmoneylaunderingandfinancingofterrorismriskofaparticularcorrespondent
bankingrelationship
InadditiontheUKPaymentServicesRegulations(PSRs)werepublishedonJuly
Oneregulationrequiresthatifacreditinstitutionrefusestograntorwithdrawsaccesstopayment
accountsservicesofapaymentserviceprovider(whichincludesIMTsuppliers)itmustnotifythe
FCAandprovide‘dulymotivatedreasons’fortherefusalorthewithdrawalofaccess
InMarchtheUKFinancialStabilityBoard’s(FSB’s)RemittanceTaskforce

published
theStocktakeofremittanceserviceproviders’accesstobankservicesreportwhichincludes
recommendationsinseveralkeyareastoimprovetheaccessibilityofbankingservicestoIMT
suppliersForexamplethereportrecommends
theintroductionofaprivatesectorcertificationorperiodicindependentauditstodemonstrate
AMLCTFcompliance
thatnationalauthoritiesshouldpublishguidanceontherisk-basedapproachandthebankingof
IMTsuppliersontheirregulatoryandsupervisoryexpectationsforAMLCTFcompliancebyIMT
providersand
thedevelopmentofacodeofconductbytheremittancesectorcoveringriskmanagement
processes
SourceArtingstallDetalFebruaryDriver&ImpactsofDeriskingAstudyofrepresentativeviewsanddataintheUK
byJohnHowell&CoLtdfortheFinancialConductAuthorityhttpswwwfcaorgukpublicationresearchdrivers-impacts-
of-deriskingpdfpp––
UKFinanceJunePrinciplesforexitingacustomerhttpswwwukfinanceorguksystemfilesPrinciples-for-Exiting-a-
Customerpdf
BaselCommitteeonBankingSupervisionJuneGuidelinesSoundmanagementofrisksrelatedtomoneylaunderingand
financingofterrorismhttpswwwbisorgbcbspubldpdfpp–
PaymentServicesRegulations(UK)
FinancialStabilityBoardMarchStocktakeofremittanceserviceproviders’accesstobankingserviceshttpswwwfsb
orgwp-contentuploadsP-pdfpp–
  TheFSB’sRemittanceTaskforcecomprisesmembersrepresentingjurisdictionsandfiveinternationalorganisations
andstandard-setters

Foreign currency conversion services inquiry—Final report
Aduediligenceschemeisrequired
Weconsiderthataduediligenceschemewouldhelpaddressthecompetitionissuesarisingfrom
de-bankingbyfacilitatingmoreecientandcontinuedaccesstobankingservicesandpaymentsystem
infrastructurefornon-bankIMTsuppliersbyproviding
amechanismthroughwhichIMTsupplierscandemonstratetobanksandprovidersofpayment
servicesinfrastructuretheadequacyoftheirAMLCTFsystemsandcontrolsamongothermatters
amechanismthroughwhichanyspecificdeficienciesinanIMTsupplier’ssystemsandcontrolscan
bedrawntoitsattentionforremediation
arobustbestpracticestandardandindependentassessmentprocessthatshouldreducetheinitial
duediligencecostforbanksinprovidingservicestoanIMTsupplierandreducethecostofany
periodicriskreviewsofthatIMTsupplier

Asafirststepthescheme’sdesignshouldbeinformedbyapublicconsultationprocessPartofthat
processshouldbetoinformanassessmentofthepotentialforunintendedadverseconsequencesfrom
theschemeincludingforsmallIMTsuppliers
Thereshouldalsobeconsultationwithingovernmenttoensuretherearenoadverseeectsforlaw
enforcementandintelligenceagencyfunctionswhichrelatetoAMLCTFmatters
Recommendation 2.1 Access to banking services for non-bank IMT suppliers
TheAustralianGovernmentshouldformaWorkingGrouptaskedwithconsultingonthe
developmentofaschemethroughwhichIMTsupplierscanaddresstheduediligence
requirementsofthebanksorprovidersofpaymentsysteminfrastructureincludinginrelationto
anti-moneylaunderingandcounter-terrorismfinancing(AMLCTF)requirements
TheWorkingGroupshouldstartapublicconsultationprocessonthemeritsanddesignofsucha
schemebyDecemberandconcludethatprocessbyJuneTheWorkingGroup
shouldconsideranyalternativesolutionstoaddresstheissueofde-bankingthatareraisedby
stakeholdersduringthepublicconsultationprocess
ByDecembertheschemeshouldbeoperationalortheWorkingGroupshouldhaveset
outanyalternativeapproachitwillinitiatetoensurethatnon-bankIMTsuppliersareabletoobtain
ecientaccesstothebankingandpaymentservicestheyneedinordertocompeteinthesupply
ofIMTservicestoAustralianconsumers
Howaduediligenceschememightproceed
Ifthegovernmentdecidestoproceedwiththeduediligenceschemeweconsiderthatitshouldbe
basedonanindependentassurancemodelThisisconsistentwiththerisk-basedapproachtakenunder
Australia’sAMLCTFlawsandtheARCPAscheme
Acentralfocusinthescheme’sdevelopmentshouldbeonagreeingthebestpracticestandards
againstwhichduediligenceassessmentswouldbecompletedImportantlythesestandardswillneed
toaddressinsucientdetailthekeyriskareasandregulatorycomplianceobligations(including
AMLCTF)forthebanksandprovidersofpaymentservicesinfrastructureThestandardsshouldalso
disciplinethebankstoexcludefromtheirpoliciesandproceduresanyrequirementsthatarenot
genuinelybasedonmanagingtherisksposedbyIMTsuppliercustomers
bringgreaterclaritytohowAustralia’sAMLCTFlawsapplytotheprovisionofbankingservicesand
paymentservicesinfrastructuretoIMTsuppliers
WeenvisagethattheschemewouldbevoluntaryEachIMTsupplierandtheirbank(orprospective
bank)woulddecidewhethertouseitandinwhatcircumstances
  Likeallbusinessesnon-bankIMTsuppliersneedtorecovertheircoststoremainviableandanyincreaseintheircostbase
potentiallyflowsthroughtotheirpricesThishamperstheirabilitytocompeteonpriceandasnotedinsectionhaving
lowerpricesthanexistingsuppliersisoneofthewayssomenewerentrantshavebeenabletowinIMTcustomerstodate

Foreign currency conversion services inquiry—Final report
Importantlywedonotseetheduediligenceschemereplacinganyofthedutiesandobligationsan
IMTsupplierhasunderAMLCTFlawstoidentifyprioritisetreatcontrolandmonitoritsriskRather
amongotherthingsitwouldprovidearigorousandconsistentframeworkthatwouldenableanIMT
suppliertodemonstratetoabankthatithasrobustsystemsandcontrolsinplacetoenableittomeet
theseobligations
Weconsiderthattheeectivenessandcredibilityofaduediligenceschemeislikelytobedependent
ongovernmentparticipationinthedesignandadministrationoftheschemeWhileultimatelya
matterfortheAustralianGovernmentweconsiderthatareformedWorkingGrouponRemittance
AccountClosures(box)withtheadditionoftheDepartmentofHomeAairsandtheACCCor
asimilarlyconstitutedworkinggroupcouldbetaskedwithleadingtheworkonthescheme’sdesign
andimplementation
TheDepartmentofHomeAairs’participationintheWorkingGroupalongwiththatofAUSTRAC
willensuretheWorkingGrouphasaccesstoexpertsonAMLCTFmatters
TheACCC’sparticipationintheWorkingGroupwillensurethatanysolutionsformulatedbythe
WorkingGroupremainfocusedonaddressingthecompetitionissuesrelatedtode-banking
identifiedduringthecourseofthisinquiry
Intermsofthescheme’soperationitistheACCC’sviewthat
theschemeshouldbeadministeredbyanindependentagencywithrelevantexpertisenotingthatin
recognitionoftheprimacyofAUSTRAC’sroleastheAMLCTFregulatorAUSTRACshouldnotbe
theschemeadministrator
whiletheschemecouldberunonacost-recoverybasistheWorkingGroupshouldconsider
whetherthereisacaseforatleastpartofthescheme’sinitialandongoingcoststobepublicly
fundedgiventhepotentialbenefitslikelytoflowfromincreasedcompetitioninthesupplyofIMTs
theduediligencesign-oonanIMTsupplier’ssystemsandcontrolsshouldonlybeprovidedbya
suitablyqualifiedindependentexperta‘fitandproper’standardcouldbesetfortheseexpertsas
partofthescheme
recognisingthatduediligenceisacontinuingrequirementtheACCCenvisagesthatIMTsuppliers
couldobtainaninitialassessmentundertheschemeandalsobeperiodicallyre-assessedasagreed
betweenabankanditsIMTsuppliercustomer
FurtheractionfromtheACCC
Ifaduediligenceschemeisimplementednon-bankIMTsupplierswhohaveasatisfactoryduediligence
assessmentshouldinformtheACCCifthey
aredeniedaccesstobankingservices
aredeniedaccesstoaNPPdirectparticipant’spaymentgatewayor
haveexistingbankingserviceswithdrawn
TheACCCwillthenconsiderwhetherthatdenialorwithdrawalofbankingorpaymentservicesmay
raiseconcernsundertheCCA

Foreign currency conversion services inquiry—Final report
Barrierstoconsumerswitching
DespitesomeIMTsuppliersoeringlowerpricesthanthebigfourbankscustomerscontinuetousethe
bigfourbanks(seechaptersection)Werecognisesomeconsumersarenotswitchingbecause
theyhaveactivelyevaluatedalternativeoeringsandhavedecidednottoswitchbecausetheservice
oeredbytheirbankmeetstheirneedsWeconsidersuchconsumersareintheminorityConsumers
donotswitchforanumberofotherreasonsincludingoneormoreofthefollowing
alackofengagementwithfinancialproductsandalmostnoresearchintoalternatives
theperceivedriskinusinganewsupplierespeciallywhentransferringlargesumsofmoney
highinformationcoststheycanfacewhichmakeitdiculttosearchforabetterdeal
perceptionsthataconsiderableamountoftimeandeortisrequiredtoswitchtoanewsupplier
Eachofthesepointsisdiscussedfurtherinchapter
Behindmanyofthereasonsoutlinedaboveforconsumersnotswitchingsuppliersarethecoststhey
incurintheprocessThosecostscanbeintermsofmoneytimeeortoracombinationofthethree
Theseswitchingcostsaectconsumers’willingnesstoswitchbetweenIMTsuppliersSwitchingcosts
couldactasanimpedimentto
theentryofnewsuppliersbyreducingthesizeofthepotentialcustomerpooltheycancontest(at
leastinitially)Theprospectofsustainedlossesduetotheextendedperiodoftimebeforeanew
entrantcanreachcommercialscaleortheprospectofnotreachingscaleatallmaydiscourage
entryand
theexpansionofnewandexistingsuppliersbyincreasingthemarketingexpenditurerequiredto
gainmarketshareIfanewentrantwishestoenticecustomersawayfromanexistingsupplieritmay
needtoincreaseitsmarketingexpenditurebeyondwhatwouldbeneededifcustomerswerebetter
abletocomparepricesandengageinswitchingbehaviourInthewordsofonenon-banksupplierit
is‘expensive’fordisruptors

‘toactivelyacquirecustomersfrombanksortraditionalproviders’
Ourviewisthatsomenewentrantshavebeenabletogrowdespitetheseswitchingcostsbecausethey
havebeensuccessfulinattractingprice-sensitivecustomersThisisdemonstratedbyanewerentrant
whohasgrownbywinningcustomerswithitslowerpricesandnon-pricefeatures(section)
 Price competition in foreign cash, travel cards and
payment cards
InadditiontoourobservationthatnewentryischangingthecompetitivedynamicforIMTs(section)
weobservethatnewentryisalsohavinganimpactoncompetitionfortheotherinquiryservices
Aforeigncashinquirysupplierhasloweredpricesandimprovednon-priceaspectsofitsserviceto
competewithanewerentrant
QantasandVelocity(VirginAustralia’sfrequentflyerprogram)haverapidlygrowntheircustomer
basefortravelcardssincethosecardswereintroducedinSomeofthebigfourbankshave
regardedQantasandVelocityaskeyandparticularlyeectivecompetitorsfortravelcards
AlthoughthebigfourbankssupplythevastmajorityofpaymentcardsinAustraliaweobservethat
someofthebigfourbankshaveintroducedpaymentcardswithnoforeigntransactionfeesafter
andseeminglyinresponsetothereleaseofno-feecardsbyothercardissuers
 ThesupplierlistedfirmsasdisruptorsinthedocumentSomeofthemaresupplierssuchasCurrencyFairWorldRemit
andOrbitRemit

Foreign currency conversion services inquiry—Final report
Foreigncash
Newerentrantssupplyingforeigncashserviceshavecausedexistingsupplierstolowertheirpricesand
improvethenon-priceaspectsoftheirservicesForexampleinanexistingsupplierofforeign
cashservicesnotedTravelMoneyOz’srateofgrowth

andthecompetitivethreatposedbyTravel
MoneyOzThatsuppliercommentedinanOctoberinternalpresentationonitscompetitors
It[TravelMoneyOz]isadangerouscompetitorinFXretailasprovenbytheirrecentsuccesses
[Locations]closetonewTMOz[TravelMoneyOz]storesfeeldetrimentalimpact(down
[Redacted]inrevenue)
InresponsetothecompetitivethreatfromTravelMoneyOzthesupplierquotedabovetrialledchanges
toitspriceandnon-priceoeringinrelationtoforeigncashservicesovertheperiod–The
trialincluded
areductionintheretailmarginonselectedcurrenciesofapproximatelybasispoints
cosmeticchangesinthewayitsrateboardsdisplayedpricestomakethepresentationmore
consumerfriendly
Thesupplierfoundthatreducingretailmarginsbybasispointsresultedinanincreaseintransaction
volumeofbetween–percentatthreeofitsstoresHoweverthesupplieralsonotedthatan
increaseinsalesvolumesof–percentwasrequiredto‘fullybreak-evenonrevenue’atthosestores
giventhereducedmarginatwhichitwassellingtheforeigncashInrelationtothechangesinrate
boardsasurveyofcustomersatthesamethreestoresfoundthatpercentofconsumersfoundthe
newpresentationtobe‘clearandhelpful’
ThesupplierhastoldtheACCCthatasaresultofthetrialswhichconcludedinlateithastaken
actionsincluding
reducingitsretailmarginformultiplecurrenciesbyapproximatelybasispointsatanumberofits
stores
improvingthepresentationofitsrateboards
Travelcards
ThelargestsuppliersoftravelcardsinAustraliaweredierentfromthelargestsuppliersoftheother
inquiryservicesBasedonconsumerresearchfromAprilheldbyatleastonebigfourbanktwoof
thethreelargestsuppliersoftravelcardsinAustraliawereQantasandVelocity(chaptersection)
QantasandVelocityhavebuiltuptheircustomerbaseinarelativelyshortperiodoftimeOneofthebig
fourbankshasnotedthat
the[travelcard]markethasdislocatedwiththeentranceofairlinesQantasandVelocity
enteredthemarketinandhaveseenrapidgrowth
Bywayofcomparisononeofthebigfourbanksalsointroduceditstravelcardinbutisyetto
achievethesamerateofusageasQantasorVelocityMarketresearchfromAprilindicatesthe
bankhadaboutaquarterofthenumberofcustomersusingitstravelcardcomparedwithQantasand
abouthalfthenumberofcustomersasVelocity

Thismaybebecausethebankoerstravelcards
onlytoitsexistingcustomers
WeobservethatsomeofthebigfourbankshaveregardedQantasandVelocityaskeyandparticularly
eectivecompetitorsfortravelcardsbecauseofthefrequentflyerpointsoeredinconjunctionwith
  TravelMoneyOzprimarilysuppliesforeigncashbutalsooerprepaidtravelmoneycardsandIMTservicesItisa
subsidiaryofFlightCentreLimitedandcameintoexistenceinwhenitpurchasedNationwideCurrencyServices
(NCS)BetweenandTravelMoneyOzdoubledinsizeItnowhasoverstoresinAustraliaNewZealand
andAmerica
SourceFlightCentreTravelGroupOurbrandsTravelMoneyOzhttpwwwfctglcomour-brandsothertravel-
money-ozviewedMarch
  ThemarketresearchwasobtainedbyatleastonebigfourbankItwasbasedonaconsumersurveyconductedbya
consultingfirminApril

Foreign currency conversion services inquiry—Final report
travelcardsForexampleoneofthebigfourbankshasnotedthe‘aggressivepointearnacquisition
oers’tonewcustomersbyQantasandVelocity
QantasandVelocityappeartohavedierentiatedthemselvesfromothertravelcardsuppliersbased
onnon-priceaspectsoftheiroeringWhileQantaswasoneofthecheapersuppliersforconsumers
seekingtoloadUSDontoatravelcardinFebruarythepricesofQantasANZCBAand
WestpacwereallwithinAUDofeachother

Paymentcards
AccordingtotheProductivityCommission’sCompetitionintheAustralianFinancialSysteminquiry


thereareoverdierentpaymentcardsavailableinAustraliaAsnotedinchapter(section)the
bigfourbankssupplythelargemajorityofpaymentcards
Whilethebigfourbankssupplythelargemajorityofpaymentcardsthereisevidenceofsomeofthem
respondingtothepricesofothersuppliersForexampleduringthereviewperiod
oneofthebigfourbanksintroducedacreditcardwithnoforeigntransactionfees‘inresponse
tothecompetitiveenvironmentandothersuppliers’creditcardoeringsinvolvingnoforeign
transactionfees’
anotherbanklaunchedadebitcardwithnoforeigncurrencyfeescashback

andincludedtravel
insuranceforreasonswhichincluded‘trendsinthecompetitivelandscapemoregenerally’
Thesame
bankremoveditsinternationalconversionfeesandoverseasATMwithdrawalfeeinrelationtooneof
itsexistingdebitcardsfollowingitsobservationthat‘increasedcompetitionandpublicfocuswillalso
placedownwardpressureonfees’
Thepricingofpaymentcardsconstrainsthepricingoftravelcards
Asdiscussedinchapter(section)consumersusedierentFXservicesfordierentpurposesand
insomecasesdierentservicesareusedforthesamepurposeWeconsiderthatwhiletheremaybe
sometransactionswhereonlyonepaymenttypeispossiblecarryingmorethanonepaymenttype
enablesconsumerstomorereadilysubstitutebetweenthem
Thisisborneoutintheresearchheldbyonebigfourbankwhichfoundthat
percentofcustomersusemorethanonepaymenttypewhentravellingoverseas
travelcardsare‘partofamixedwalletwhentravelling’alongwithcashdebitandcreditcards
Furthertwoofthebigfourbanksviewtravelcardspaymentcardsandforeigncashassubstitutes
orpartialsubstitutesforeachotherformanyconsumerstravellingoverseasOnebankspecifically
identifiedpaymentcardsasacompetitorproductforitstravelcardoering
Theabilityofconsumerstosubstituteservicesforeachotherappearstohavebeenafactorinthe
pricingoftravelcards

Wehaveobservedthreeinstanceswherethepricingofpaymentcardshas
beenaconstraintorinfluenceonthepricingoftravelcards
OneofthebigfourbankswasconsideringremovingitsAUDfeeforissuinganewtravelcard
throughitsdigitalchannelfollowingdecliningsalesItconsideredthedeclineintravelcardsaleswas
becauseof‘outofmarketpricingoftheissuancefeeandincreasedcompetitionacrosspre-paid
debitandcreditcardproductsoeringfavourableinternationaltransactionfees’Thebankultimately
decidedtoremovethefee
 ReportedpricesareasimpleaveragecalculatedbytheACCCoverthepricedatacollectionperiodThedatacollectedfor
theACCCwassourcedfrompubliclyavailableinformationAppendixB(sectionB)setsouthowthisdatawascollected
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemhttpswwwpcgovauinquiries
completedfinancial-systemreportfinancial-systempdfp
  Cashbackreferstoanincentiveoeredbycreditanddebitcardissuerswherebycardholdersearnapercentageincash
rewardsforeacheligiblepurchaseorpurchasesaboveacertaindollarthreshold
SourceTheMoneyAdviceServiceCashbackcreditcardshttpswwwmoneyadviceserviceorgukenarticles
cashback-credit-cardsviewedMay
  Wehavenotobservedanyinstancesofpaymentcardpricingortravelcardpricingconstrainingthepriceofforeign
cashservices

Foreign currency conversion services inquiry—Final report
ThesamebigfourbankconsideredremovingitsinternationalATMfeesontravelcardstemporarily
foramarketingcampaignThebankrecognisedthatitstravelcardsalesvolumesweredown
year-on-yearandwerebehinditstargetsalesvolumeItstatedthat‘theslowdowncanbepartly
attributedtoincreasedcompetitionfromcreditanddebitcardoeringintheAustralianmarket’
AdierentbigfourbankconsideredremovingthereloadfeeonitstravelcardItnotedthat
chargingareloadfeeplaceditatacompetitivedisadvantagecomparedwithothertravelcardsIt
alsonotedthat‘[t]hereloadfeemakesthetotalcostofusinga[travelcard]moreexpensivethana
[redactedbank]CreditorDebitproductforoverseaspurchases’Ithassinceremovedthisfee
Howeverweobservethatpaymentcardpricingmaynotcloselyconstraintravelcardpricingbecause
someconsumerschoosetousetravelcardsevenwhentherearelowercostpaymentcardoptions
availableMarketresearchobtainedbythebigfourbanksfromaresearchfirminnotesthat
someconsumersmaynotbeawareofallthedierentfeesassociatedwithusingtravelcardsandas
aresultmaynotregardpaymentcardsaslow-feeoptionsThetravelcardfeesofwhichconsumers
maybeunawareincludedinternationalcashwithdrawalfeesandcurrencyconversionfees
consumersmayvaluenon-pricefeaturesoftravelcardsandmayconsiderthattravelcardsaremore
convenientthanpaymentcardsForexamplesomeconsumersvaluetheabilitytolockinexchange
ratesinadvanceoftravellingoverseas—afeatureavailableontravelcardsbutgenerallynoton
paymentcardsMarketresearchobtainedfromaresearchfirmbyonebigfourbankfoundthis
featurewasanimportantconsiderationforaboutpercentofitstravelcardcustomers

Foreign currency conversion services inquiry—Final report
. Challenges facing consumers
Keypoints
Consumersstandtomakethemostsavingsbypurchasingfromthesupplierthatoersthemost
competitivetotalpricecomparedwithmakingpurchasedecisionsbasedonfeesalone
Suppliersshouldtakestepstoensurethatconsumerscaneasilyunderstandandcompareprices
forinquiryservicesInparticulartheACCCseesmeritinmeasuresthat
– present to consumers the total price of an IMT or foreign cash transaction
– allow consumers to easily make price comparisons.
IMTstransactedthroughcorrespondentbankingnetworkscanresultinfeesthatunknowntothe
consumeratthetimeofsendingwillbedeductedfromthesumbeingtransferredTheACCC
considersthatIMTsuppliersshouldtakethenecessarystepstoinformtheircustomersup-front
ofthetotalpriceofanIMTincludingcorrespondentbankingfees
Someconsumersarebeingchargedaninternationaltransactionfeeinsituationswherethey
expectthatapaymentcardtransactionwilltakeplacewithinAustraliaforexamplewherea
merchant’swebsitehasa‘comau’domainnametakespaymentinAUDandorhasabusiness
presenceinAustraliaThefeeoccursbecausethemerchanthasthetransactionprocessed
overseasInthesesituationstheACCCexpectsmerchantstodisclosetoconsumersthat
thetransactionwillbeprocessedoverseasandthereforemaybesubjecttoaninternational
transactionfee
Someconsumersperceivethatsendingmoneyoverseasinvolvesariskthatfundsmaynotreach
theintendedrecipientTheACCCdidnotobserveevidenceofamaterialriskinthisregard
TheAustralianGovernmentcontributesfundingtotworemittancepricecomparisonwebsites
wwwsaverasiacomandwwwsendmoneypacificorgTheACCCconsidersthattheeectiveness
ofthesewebsitesforconsumerswouldbeimprovedbyensuringtheyprovideliverate
comparisonsforthemajorsuppliersincludingthebigfourbanksandWesternUnion
Thechapterbuildsonchaptersandandexaminestheinquiryservicesfroma
consumerperspective
sectionexamineswhysomeconsumersdonotswitchsuppliersevenwhentheywould
savemoney
sectionoutlinesthewaysinwhichpricesarediculttocompareandtheresultingimplications
forconsumers
sectionoutlinesthedicultiesarisingforconsumersfromuncertaincorrespondentbankingfees
sectionaddressesunexpectedpaymentcardfeeswhenshoppingonline
sectiondiscussesconsumeruncertaintyaboutIMTpaymentsecurity
TheGuideforConsumersabovedrawsonthefindingsfromthischaptertoprovideusefuladvice
andinformationtoconsumersusingFXservicesAversionoftheGuideisalsoavailableonthe
ACCC’swebsite
 Despite the savings available, some consumers do
not switch
Consumerscontinuetousethebigfourbanksforinquiryservicesdespitetheavailabilityofcheaper
alternatives
Thissectionexplorestheextentofthatbehaviourandwhyitoccurs

Foreign currency conversion services inquiry—Final report
Howmuchcouldconsumerssave?
ManyIMTcustomersofthebigfourbankscouldsavemoneyiftheyswitchedtoacheaperIMTsupplier
ForcommoncurrencycorridorssuchasAUD–USDandAUD–GBPweobservethatthebigfourbanks
weremoreexpensivethanmanyotherIMTsuppliersForexampleourpricedatacollectionshowsthat
IMTcustomersofthebigfourbankssendingIMTsinGBPtotheUKinFebruarycouldhave
paidapricethatwasuptopercenthigherthanthatchargedbythecheapestIMTsupplierin
oursample

ifIMTcustomersofthebigfourbanksswitchedtothecheapestsupplier(s)inoursampletheycould
havecollectivelysavedaroundAUDmillionforIMTsmadeinUSDin –andintheorderof
AUDmillionforIMTsmadeinGBPin–

Consumersalsopaidrelativelymoreforforeigncashserviceswhenmakingapurchasethroughabig
fourbankcomparedwithmanyothersuppliers(forexampleseechapterfigure)Weobservethat
thelowestpricedsuppliersofforeigncashservicesatnon-airportlocationswerearound–percent
cheaperthanthebigfourbanksforUSDandGBPdependingupontheamount

Thebigfourbanksappeartobeawarethattheirinquiryserviceshavegenerallybeenmoreexpensive
thanmanyothersuppliersForexample
chapterdetailsthebigfourbanks’awarenessoftheirIMTservicepricingbeinghigherthanmany
oftheirrivalsandhowtheyhaveresponded(seechaptersectionsand)
internalanalysisconductedinJanuarybyonebigfourbankonretailexchangerates
showedthatitsratesweremoreexpensivethansomeoftheotherbigfourbanksaswellas
OFXTransferWiseandWesternUnionandthatifacustomertransferredAUDinUSDto
theUSthebeneficiarywouldreceiveUSD(AUD)

(netoffees)lesswhenusingitrather
thanTransferWise
Whatdrivesconsumerbehaviourandchoices?
ThereareanumberofreasonswhyconsumersmaynotswitchtoacheapersupplierTheProductivity
Commissionfoundthatwithrespecttofinancialservicesproductsingeneralmanyconsumersdonot
readilyswitchbetweenproductsornegotiatewithsuppliersevenwhendoingsowouldhavebenefits
forthem

TheProductivityCommissionfoundthiswasbecauseoftheperceivedhighswitching
costsconsumersceasingtoshoparoundoncetheyhavechosenaproductandconsumershavinga
preferenceforthestatusquo
ManyfactorsdriveconsumerbehaviourItispossiblethatconsumersmaybeactivelychoosingto
remainwiththeirbigfourbankbecauseforexamplethebank’sservicesadequatelymeettheir
preferencesHoweveritisalsopossiblethatsomeconsumersarenotengagedinseekingbetter
oersandarepassivelyremainingwiththeircurrentsupplierbecauseforexampletheymaynotbe
sucientlyawareofalternativesuppliers
  ReportedpricesarebasedontransactionsundertakenviaonlinechannelsonlyPricescalculatedbytheACCCasa
simpleaverageoverthepricedatacollectionperiodandincludewhereapplicablethemaximumcorrespondentbanking
feesleviedonGBPIMTssentduringFebruaryWherecorrespondentbankingfeesapplythesearetypically
deductedbythecorrespondentbankfromthesumtransferredtotherecipientThecorrespondentbankingfeesusedin
thispricecomparisonhavebeenconvertedfromAUDtoGBPbytheACCCusingindividualsuppliers’retailexchangerate
informationcollectedduringFebruaryBasedoninformationobtainedfromsupplierwebsitesinformationprovided
bysuppliersanddatacollectedfortheACCCAppendixB(sectionB)setsoutthedetailsofthedatacollectedfor
theACCC
  ACCCanalysisofdataprovidedbythebigfourbanksanddatacollectedfortheACCCAppendixB(sectionB)setsout
thedetailsofthedatacollectedfortheACCC
  ReportedpricesarebasedonpurchasesofUSDUSDGBPandGBPReportedpricesrepresentin-store
purchasesatnon-airportlocationswiththeexceptionoftwosuppliers(seechapterfigure)Pricescalculatedbythe
ACCCasasimpleaverageoverthepricedatacollectionperiodusingdatacollectedfortheACCCThedatacollectedwas
sourcedfrompubliclyavailableinformationAppendixB(sectionB)setsouthowthisdatawascollected
 FortheconversionofUSDintoAUDwehaveusedanexchangerateofasreportedbytheRBAasat
JanuaryReserveBankofAustraliaExchangeRates—Daily—toCurrenthttpswwwrbagovaustatistics
tablesxls-hist-currentxlsviewedJuly
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemFinalReportCanberrah t t p s 
wwwpcgovauinquiriescompletedfinancial-systemreportfinancial-systempdfppand

Foreign currency conversion services inquiry—Final report
Ourreviewoftheinternaldocumentsofinquirysuppliershasidentifiedthatbothactiveandpassive
factorscouldhelptoexplainwhysomebigfourbankcustomersdonotswitchtocheapersuppliersof
inquiryservices
Awillingnesstopayforconvenienceeaseofuseandsecurity
Convenienceeaseofuseandsecurityareservicefeaturesthatappeartobevaluedbyconsumers
ofFXservicesForexampleresearchconductedbyonebigfourbankfoundthatpercentofits
customersstatedthatconvenienceandeaseofaccess(suchasviaamobileapplication)werekey
factorsinchoosingasupplierofFXservicesInaMarchinternalmemoanotherbigfourbank
statesthat
whilebankpricingistypicallyhigherthannon-bankpricingitcanbearguedthatbanksoera
moreappealingvaluepropositiontomanyconsumersOurresearchsuggeststhatwhensending
largesumsofmoneyoverseascustomersvaluethechoiceconvenienceandsecurity(trust)
oeredbybanks
TrustisanimportantaspectofmanyfinancialtransactionsandrelationshipsFXservicesareno
exceptionAsdiscussedinsectionbelowthereisaperceptionamongsomeconsumersthatbanks
aremoretrustworthythanothernon-banksuppliersAninternalpresentationofonebigfourbank
referstoresearchshowingthatconsumersconsiderthatbanksremainthemosttrustedcompaniesto
dealwiththeirmoney
Totheextentthereareservicefeaturesvaluedbyconsumersthatarenotwidelyavailablefrom
supplierstherewillbesomeconsumerswhoarewillingtopayapricepremiumforserviceswith
thosefeatures
Lowlevelsofengagementwithfinancialproducts
Researchconductedbyoneinquirysupplierfoundlowlevelsofconsumerengagementwithfinancial
productsandalmostnoactiveresearchintoalternativesTheresearchalsofoundthatdespitethe
changingtechnologyandservicelandscapesrelationshipstofinancialservicesremainrelatively
unchangedThesupplierfoundthatpeopleprefertoonlyhaveafewbankaccountsmostlywiththe
sameorganisationasaddingadditionalaccountsover-complicatestheirfinanciallives
MarketresearchfromAprilobtainedbyatleastonebigfourbankindicatesalackofconsumer
engagementwithtravelcardpurchasingdecisionsTheresearchsuggeststhatconsumersmaystick
withtheircurrentsupplierfortravelcardsbecausetheyarenotawareoffeestructureswiththeir
existingserviceandthereforearenotawarethatcheaperalternativesexist

ThewillingnessofconsumerstostickwithabigfourbankforFXservicesmaybeinpartdrivenby
aviewthatFXservicesareafeatureofgeneralbankingservicesnotastandaloneproductHence
consumerpreferencestostaywiththeoneorganisationfortheirbankaccountsextendstotheir
purchasesofFXservices
  TheresearchwasbasedonaconsumersurveyconductedbyaconsultingfirminAprilThesurveyinvolved
individualswhohadtravelledoverseasinthepreviousmonthsandusedatravelcard

Foreign currency conversion services inquiry—Final report
Perceptionsofthetimeeortandexpenserequiredtoswitchsuppliers
Thefinalfactorthatmaybeinfluencingconsumerpreferencestoremainwiththeirexistingbigfour
banksupplieristheperceivedeortinvolvedinsearchingoutabetteroerandthetimeeort
andexpenseinvolvedinswitchingtoanewsupplierPricesthatarediculttocompareacross
supplierscontributetotheeortconsumersmustmaketoseekoutabetteroerandarethefocusof
section
Newcustomersign-upprocessestaketimeandeortandcandeterconsumersfromswitching
suppliersForexampleallinquiryIMTsuppliershaveasign-upprocessconsumersneedtocomplete
beforetheycanusethatsupplier’sonlineIMTservices(seechaptersection)Weobservethat
theseprocessesaresimplerandseeminglylesstimeconsumingatsomesupplierscomparedwith
others(seechapterbox)
Whilesomeconsumersparticipatinginresearchundertakenbyoneinquirysuppliersuspectedthey
couldobtainbetteroersbyswitchingsupplierstheydidnotthinkthesavingswouldbebigenough
towarranttheeortThesupplier’sresearchfoundthatevenconsumersthatconsiderthemselvesto
bepricesensitivewillonlyactonswitchingsupplierswhenthepotentialgainsarelargeforexample
whentheyundertakerelativelylargeandfrequentIMTtransactionsOnlythoseresearchparticipants
whousedIMTservicesatleastmonthlyhadactivelyconsideredalternativesupplierstobanksasthey
assumedcumulativesavingswouldmakethecostofswitching(suchasresearchoreort)worthwhile
Itappearsthatforsomeconsumersthechoiceofwhethertoswitchsuppliersisoneofassessinghow
theymightotherwisespendtheirtimeResearchconductedbyoneinquirysupplierfoundthatmany
consumersassumeestablishingandbecomingfamiliarwithanewsystemserviceorinterfaceisgoing
tobetoodiculttojustifythetime
Reducing the time and eort involved in finding cheaper suppliers
Consumersneedtobeabletoreadilyandeasilycomparepricesandservicefeaturesiftheyaretomake
informedchoicesonFXservicesBestPracticeGuidance(seebelow)identifiesstepsthatsuppliers
shouldtaketoenableconsumerstobetterunderstandthepricesofinquiryservicesThesemeasures
arealsolikelytoreducethesearchcostsforconsumersinsourcingandcomparingdierentoers
 Prices are difficult to compare
Theeasewithwhichconsumerscancomparethepricesofdierentsuppliersisanimportant
contributortoeectivepricecompetitionWhenconsumersareabletoeasilycomparepricesand
arewillingtoactonthatknowledgesuppliersareincentivisedtooerlowerpricestoattractnew
customersandretainexistingonesAdditionallyincreasedtransparencyoverpriceinformationcan
assistnewentrantsorfringecompetitorstoenterthemarketandcompete
Theinquiry’sIssuesPapersoughtviewsfromstakeholdersonwhetherconsumersareabletoeectively
comparepricesfortheinquiryservicesSubmissionsreceivedfromconsumersandsmallbusinessesas
wellasresponsestotheACCCconsumerandsmallbusinessquestionnairehighlightedthechallenges
thatconsumerscanfacewhencomparingpricesbetweensuppliers
Theissuesthatconsumersidentifiedrelateto
howpricesaredisplayedandpresentedbydierentsuppliersconsumersappeartofinditdicult
tocompareprices(includingtheretailexchangeratesandfees)acrossdierentsuppliersas
informationisnotpresentedinaconsistentorequallyprominentwayForexampleinformation
aboutsomefeesisdisclosedonlyintermsandconditions
complexityofoeringssomeconsumersdonotappeartounderstandthedierencebetweena
retailexchangerateandawholesaleexchangerateandthedynamicnatureofexchangerates
inadequatedisclosureconsumersindicatedthatsomesuppliersdidnottransparentlydisclosefees
onFXtransactionsConsumersalsoexpressedconcernthattheydidnotknowwhatthetotalprice
foratransactionwouldbeup-front

Foreign currency conversion services inquiry—Final report
Inrelationtohowpricesarepresentedtoconsumersoneconsumersubmittedthat
Currencyconversionalwaysfeelslikeagamble-youneverknowhowmuchtheendtotalwillbe!
Therearealwaysextrafeesandchargesor“discounts”forexchanginglargervaluesIt’sreally
hardtocomparedierentservicesandoptionsastheyonlyshowthenominalexchangerateand
notthetotalwithotherfees&chargesthatcanhaveamarkeddierenceinhowmuchyouend
upgettingforyourcash!

Thecommentsofonesmallbusinessshowhowconfusingthedierencebetweenaretailexchangerate
andawholesaleexchangeratecanbeforsmallbusinessandconsumers
Duringmyresearchoncurrencyconversionsforacontractbidthe[]bankstated‘thedailyrate’
appliedplusafixedfeeofThisismisleadingadvertisingWhatwasnotclearlystatedwas
thatthe‘rate’tobeappliedbythebankwasthebanksowninternal‘retailrate’‘Dailyrate’implies
theForexrateThismeantthatforasingletransactionofapproximately()
the‘fees’amountedtoverynearlyfivehundreddollars()Thisrepresentsthisbank
takingfivepercentoutofmymicrobusinessesincomeinadditiontothefixedfee

Anotherconsumersummeduptheirexperiencewithusinginquiryservicesas
Opaquelackofdisclosurenocomparisonavailabletoocomplicatedandnoteasyecientto
usecompetitorsoeringcheaperrates

SomesuppliersalsostatedthatconsumersfinditdiculttocomparepricesinthemarketTransferWise
arguedinitssubmissionthatconsumersfindithardtocomparealternativesassomesuppliers‘hide’
costsintheretailmarginwiththeadvertisedfeeasmallportionofthetotalpricetotheconsumer

AsubmissionfromFindercomauacommercialcomparisonwebsitehighlightedtheresultsfromits
JanuarysurveyofoverAustraliansInrelationtoIMTservicesitssurveyfoundsignificant
confusionamongconsumersaboutwherethebestretailexchangeratescouldbefoundwith
percentofrespondentssayingthatthey‘didnotknow’wheretofindthebestexchangerates

Someofthebigfourbanksareawareofconsumerconfusionaboutprices
forFXservices
TheACCCfoundevidencethatatleastthreeofthebigfourbankswereawareofconsumerconfusion
ordicultyunderstandingthepricesofthedierentinquiryservices
Acreditcardsatisfactionstudyundertakenbyabigfourbankindicatedthatpercentofits
customersdidnotunderstandinternationaltransactionfees(alsoknownasforeigncurrency
transactionfees)
AnotherbigfourbankrecognisedthatinrelationtoIMTsandtravelcards
Customerscurrentlydonotreceiveacompletepicture(inonelocation)ofallpotentialfees
andcoststheymayface(regardlessofwhetherornot[thebank]imposesorhascontrolover
thosecharges)
 ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
 SmallBusinessSubmissiontotheIssuesPaperhttpswwwacccgovausystemfilesSmallbusinesspdfp
 ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
 TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWisepdf
ppand
 FindercomauSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesFinderpdfp

Foreign currency conversion services inquiry—Final report
Athirdbigfourbankfoundwhenmakingpricingcomparisonsbetweenitselfanditscompetitorsin
relationtoIMTsthat
Comparingtheexchangeratesandfeeschargedbycompetitorsischallengingbecausethere
aremanyvariablestoconsidersuchastheexchangerateupfrontfeebeneficiarybankfee
destinationoriginationchannelandtypeofserviceoered
ThatthirdbankseparatelyconcludedaspartofitsreviewintoitsFXfeesandpricingthatit
providedclearandaccuratedisclosuretoitscustomers
Inourviewdisclosurealonedoesnotovercomethechallengethatconsumersfaceinseekingto
comparepricesWeconsiderthatconfusionaboutpricescausessomeconsumerstomakedecisions
basedonsimpleindicatorssuchasfeesortodisengagefromfindingacheapersupplierWeseevalue
insupplierspresentingpricesinawaythatmakesiteasyforconsumerstocompareBestPractice
Guidance(sectionfurtherbelow)setsoutourviewsonhowsuppliersmightbestdothis
Theproblemwithfocusingonfees
Somesubmissionsraisedconcernsthatconsumersarelikelytobeattractedby‘nocommission’or‘fee
free’advertisingwithoutunderstandingtheimportanceoftheretailexchangeratethatisused

The
NSWSmallBusinessCommissioner(NSWSBC)highlightedtheadverseimpactofundisclosedand
‘hiddenfees’noting
Unsophisticatedoperatorsareunlikelytoappreciatethata‘nofee’servicehassimplybuiltallfees
intotheexchangeratechargedabovethewholesalerateandwillnotnecessarilyoerbetter
valuethanaproviderwithamoretransparentfeestructure

Similarlyaconsumersubmittedthat
Customersarelikelytobeattractedbyoersthatare“commissionfree”butdon’trealisehow
importanttheexchangerateusedisorthatthatislikelytobemuchmoredisadvantageousto
themthanthe“removed”commissionorfeeIt’shardtoknowwhetherthisisentirelybecause
ofalackofnumeracyortowhatextentbehaviouraleconomicsplayapartItisprobablyboth
Thislackofconsumerunderstandingisaggravatedbysophisticatedandoftenmisleadingselling
techniquesevenbywell-knowninstitutionsbothhereandabroad

Weconsiderthatafocusonfeesattheexpenseofassessingthecompetitivenessoftheretail
exchangerateoeredcanadverselyaectconsumersServicesadvertisedas‘nofee’or‘feefree’can
givetheillusionthatthepriceislowerthanitreallyisAsaresultaconsumermaygiveuponsearching
forbetteroptionsorchoosealessthanoptimalsupplierwhenmakingpurchasedecisionsbasedon
feesalone
AspartofourpricedatacollectiontheACCCfoundthatconsumersstoodtomakethemostsavings
fromsearchingoutthemostcompetitivetotalpricecomparedwithmakingdecisionsbasedonfees
aloneForexampleforaUSDIMT
thedierencebetweenthehighestandlowesttotalpricewasuptoAUD
thetwosuppliersinoursample(TransferWiseandInstaReM)withthehighestup-frontfeeshad
thecheapesttotalpricewhiletheIMTsupplierwithnoup-frontfee(ANZ)wasuptoAUDmore
expensivethanthecheapestsupplier(seetable)
 SeeforexampleConsumerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
Consumerpdfp
 ConsumerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesConsumerpdf
p
 NSWSmallBusinessCommissionerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
NSWSmallBusinessCommissionerpdfpp–
 ConsumerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesConsumerpdf
p

Foreign currency conversion services inquiry—Final report
Table 3.1 Price* to send a USD7000 IMT through selected suppliers^
Average over 5 business days: 6–12 February 2019
Conversion(AUD) Up-frontfee
(AUD)
Correspondentbanking
fee(AUD)
Price(AUD)
TransferWise $9 847 $50 $0 $9 897
InstaReM $9 850 $49 $0 $9 899
OFX $9 999 $5 $0 $10 004
ANZ $10 189 $0 Up to $36
b
Up to $10 225
c
NAB $10 288 $10
a
$0 $10 298
CBA $10 417 $12 Up to $9
b
Up to $10 438
c
Westpac $10 399 $10 Up to $37
b
Up to $10 446
c
*ReportedpricesarebasedontransactionsmadeviaonlinechannelsonlyPricescalculatedbytheACCCasasimpleaverage
overthepricedatacollectionperiod
^WesternUnionwaspartofoursampleforthepricemonitoringdatabutdoesnotfeatureinthischartasitdoesnotallow
customerstosendIMTswithavalueexceedingAUDviaitsonlinechannel
aNABabsorbscorrespondentbankingfeesforIMTsinitiatedbyindividualconsumershoweverinsomeinstancesbeyond
NAB’scontroloverseasbanksmaydeductfeesfromtheamountsent
bWherecorrespondentbankingfeesapplythesearetypicallydeductedbythecorrespondentbankfromthesum
transferredtotherecipientCorrespondentbankingfeesmaydierforothercurrencycorridorsandtransactionvalues
ThecorrespondentbankingfeesusedinthispricecomparisonhavebeenconvertedfromUSDintoAUDbytheACCCusing
individualsuppliers’priceinformationcollectedduringFebruary
cThepricechargedbythissupplierincorporatesthemaximumcorrespondentbankingfeeleviedonUSDIMTssent
duringFebruarythroughthissupplier’scorrespondentbankingnetwork
SourceInformationobtainedfromsupplierwebsitesinformationprovidedbysuppliersanddatacollectedfortheACCC
AppendixB(sectionB)setsoutthedetailsofthedatacollectedfortheACCC
Stakeholdersuggestionsonimprovingpricepresentation
Submissionstotheinquirysuggestedwaysinwhichpricescouldbedisplayedtoimproveeaseof
comparisonThissectionexplorestwooftheseproposals
displayingtheretailexchangeraterelativetoareferencerate
providingatotalup-frontprice
Displayingaretailexchangeraterelativetoareferencerate
SomestakeholdersdrewtheACCC’sattentiontolowlevelsofconsumerawarenessabouthowretail
exchangeratesaresetSomeraisedconcernsthatbecauseofthewayretailexchangeratesare
sometimesdisplayedsomeconsumersaredeterredfromshoppingaroundastheycannottellwhether
theywillbepayingmoreforaservicethantheyneedto
Othersubmissionssuggestedthatenhanceddisclosuresabouttheretailmarginshouldbeincluded
inpricequotesandthatthiswouldassistconsumerstomakemoreinformeddecisionsaboutthe
best-valueservice

ForexampleTransferWiseproposedthatsuppliersshouldfullydisclosetheretail
marginsrelativetoareferenceratearguingthat
[t]hebestwaytoimproveconsumerunderstandingandthereforepromoteswitchingand
subsequentlyeectivecompetitionisforallparticipantstousethesametransparentmethod
Thiswouldbeachievedbyforcingallplayerstoincludethecostofexchangeratemark-ups
(comparedtoareferenceratesuchasReuters)whensummarisingtheirtotalfee

Oneconsumersuggestedintheirsubmissionthatpricedisclosuresshouldinsteadprovideconsumers
withthepercentagerateaboveorbelowareferencerateThepercentageratewouldincludeallmark-
upsandfeesThisconsumerconsideredthatthisproposalwouldbeeasierforconsumerstocompare
beexchangerateneutralandfluctuatelesscomparedwithexchangerates

 NSWSmallBusinessCommissionerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfiles
NSWSmallBusinessCommissionerpdfp
 TransferWiseSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesTransferWisepdfp
 ConsumerSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesConsumerpdf
p

Foreign currency conversion services inquiry—Final report
The ACCC’s view
TheACCCconsidersthatrequiringsupplierstodisplayapricerelativetoareferencerate(asamargin
percentageorotherwise)couldcausefurtherconfusionforconsumersConsumerswouldstillneed
tomaketheirowncalculationstodeterminewhatthisdierencemeanstothemintermsofthetotal
priceofatransactionForlesssophisticatedorfinanciallyliterateconsumersthereisalsoariskof
introducingadditionalcomplexitybyprovidinginformationthattheymaynotfindusefulwhenchoosing
betweensuppliers
ThewaysinwhichsupplierscurrentlyexplaintheretailexchangeratetoconsumersvariesForexample
allofthebigfourbanksprovidedisclaimersontheirwebsitesthatretailexchangeratesareindicative
andsubjecttochange

TransferWiseadvertisesthatitchargescustomersa‘mid-market’retailexchangerate

while
generatingrevenuefromthefeescharged
WesternUnionexplainsonitswebsitethatitsretailexchangerateincludesaretailmargin
bydisclosing
WesternUnionalsomakesmoneyfromcurrencyexchange

Theseexplanationsarenotproblematicinthemselvesasbusinessesarenotusuallyexpectedtodisclose
themarginstheymakeontheirproductsorservices
Providingthetotalpriceaconsumerwillpay
Somestakeholdershavearguedthatconsumersusinginquiryservicesaremorelikelytobeinterested
intheamountofforeigncurrencytheywillreceiveorinthecaseofIMTservicestheamountthat
willreachtheIMTrecipientThesestakeholdersdonotconsiderthatitisnecessaryforconsumers
tounderstandthecomponentsofthepriceaslongastheycanknowtheexactamountofforeign
currencytheyarepurchasingForexampleFindercomaucommented
[t]heabilitytoshowcustomersthe“amountreceived”bytherecipientreducestheneedfor
themtofullyunderstandfeesmarginsandexchangerates

WenotethatinthecaseofIMTservicesitmaynotalwaysbepossibleforsupplierstoshowthe
amountthatwillbereceivedbytherecipientOnereasonforthisisthatthefeeschargedbythe
receivingbankmaybeoutsidethecontrolofthesupplier(seechaptersection)
OtherstakeholdershavearguedthatallofthecomponentsofthepriceshouldbedisclosedFor
exampleWesternUnionsubmittedthatgiventhedynamicnatureofpricesandthecomplexityof
someoftheseproductsandservicesthefocusshouldbeonensuringthatallofthecomponentsofthe
pricearedisclosedtoconsumersinawaythatallowstheconsumertocompareequivalentservices

 AustralianandNewZealandBankingGroupLimitedCurrencyexchangerateshttpswwwanzcomaupersonal
travel-internationalforeign-exchange-ratesviewedJuly(“CurrentexchangeratesarebasedonAUDand
indicativeonly”)
CommonwealthBankofAustraliaForeignExchangeRateshttpswwwcommbankcomaupersonalinternational
foreign-exchange-rateshtmlviewedJuly(“Theratesquotedaboveareindicativeonlyandmaynotreflectthe
specificratethatwillapplytoyouoryourtransactionRatesaresubjecttochangeattheBank’sdiscretionYoushould
confirmthelatestsituationwiththeBankpriortomakingadecision”)
NationalAustraliaBankLimitedForeignexchangerateshttpswwwnabcomaupersonaltravel-and-overseas-
bankingforeign-exchange-ratesrateviewedJuly(“Indicativeratesasat[timeanddate]”)
WestpacBankingCorporationForeignexchangerateshttpswwwwestpaccomaubusiness-bankingservicesforeign-
exchange-ratesviewedJuly(“Theexchangeratesareindicativeonlyasatthetimeanddateshownaresubject
tomarketmovementsandthereforechangecontinuouslyTheymayalsovarydependingonthetypeofthetransaction
involvedandmaybedierentfortransactionsoveracertainamountTheyshouldnotberelieduponasanaccurate
representationofanyfinalpricingYoushouldcontactWestpacforup-to-datepricingpriortodealing”)
 TransferWiseHomepagehttpstransferwisecomauviewedMarch
 WesternUnionSendmoneyfromAustraliawwwwesternunioncomauensend-moneyhtmlviewed
March
 FindercomauSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesFinderpdfp
 WesternUnionSubmissioninresponsetotheIssuesPaperhttpswwwacccgovausystemfilesWesternUnionpdf
p

Foreign currency conversion services inquiry—Final report
The ACCC’s view
TheACCCconsidersthatprovidingconsumerswiththetotalprice

ofFXserviceswouldbethe
bestwaytoensurethatpricescanbereadilyandeasilycomparedThatisbecausewhenconsumers
understandexactlywhattheyarepayingforaserviceandexactlywhattheyaregettingforthatprice
theyarewellpositionedtodrawcomparisons
Wealsoconsiderthatdisclosingpricesinthiswaywillassistinreducingthetimeandeortconsumers
expendinseekingtocomparepricesThatisbecauseconsumerswouldnolongerneedtounderstand
thepricestructureofeachsupplierorhowpricecomponentsfittogethertomakeatotalpriceor
makeanycalculationsAsnotedinsectionreducingthetimeandeortinvolvedwithcomparing
suppliers’serviceswillsupportconsumerengagementwithFXservicespricing
BestPracticeGuidancesetsouttheACCC’sviewsonthepreferredapproachestopricedisclosure
fortheinquiryservicesInformingtheseviewstheACCChasbeeninformedbytheinternational
approachestoandresearchintoaddressingtheissuescausedbytheopaquepricingofFXservices
theinternationalapproachesandresearcharediscussedimmediatelybelow
Internationalapproachestoimprovingpricetransparencyand
comparability
PricetransparencyandtheabilitytoeasilycomparethepriceofFXservicesareissuesthatarebeing
consideredbyotherjurisdictionsincludingtheUSUKandtheEuropeanUnion(EU)Thesejurisdictions
haveconsideredvariousproposalstoimprovethedisclosureofpricesforvariousinquiryservices
IntheUSimplementedapricedisclosuremodelforIMTserviceswhichrequiresthattherebea
‘clearandconspicuousdisclosure’bythesupplieroftransferfeesandtaxestheexchangeratesand
thetotaltobereceivedbytherecipient

HoweverUSfinancialinstitutionswereconcernedthatthis
modelwouldbediculttoapplyinthecontextofIMTswherefeesareleviedbythirdpartiessuchas
correspondentbanks

Asaresultatemporaryexceptionwasenactedallowingcertainsuppliers
toprovideanestimateofthird-partyfeeswhereit‘cannotdeterminetheexactamountsforreasons
beyonditscontrol’

Thisexceptionwillexpirein

TheUKhasimposedspecificregulationsgoverningpriceindicationsgivenbyin-personforeigncash
suppliersTheseregulationsrequirethatexchangeratesbevisibletocustomersenteringstoresandthat
theapplicablefeeandorcommissionbedisplayedasprominentlyastheretailexchangerate

Inthe
EUsuppliersmustdiscloseinadvanceallfeespayablebytheconsumertothesupplierinadditionto
theretailexchangerate

 Thepricesconsumerspayforinquiryservicesaremadeupoffees(includingcorrespondentbankingfeesinthecaseof
IMTs)andtheretailexchangeratewhichincorporatesaretailmargin(seechaptersection)
  CFRPart(RegulationE)(b)()
  BureauofConsumerFinancialProtection‘CFRPart’FederalRegistervolnopp–
  CFRPart(RegulationE)(a)()Thisestimatemaybebasedon‘representationsofthedesignated
recipient’sinstitutionandtheinstitutionsthatactasintermediariesinanyoneofthepotentialtransmittalroutesthat
itreasonablybelievesarequestedremittancetransfermaytravel’CFRPart(RegulationE)(c)()
(ocialinterpretation)
CFRPart(RegulationE)(a)()AreviewbytheConsumerFinancialProtectionBureauresponsible
foradministeringtheregulationsundertheDodd-FrankActfoundthat‘therearesignificantchallengesinaccurately
determiningwhatconsumersdowiththesedisclosuresandthatsomeoftheavailableevidenceisconflicting’Bureau
ofConsumerFinancialProtectionAprilRemittanceRuleAssessmentReportWashingtonDChttpswww
consumerfinancegovdocumentsbcfpremittance-rule-assessmentreportcorrected-pdfp
  PriceIndications(BureauxdeChange)[No]Regulations(UK)
  Directive(EU)onpaymentservicesintheinternalmarketamendingDirectivesECECand
EUandRegulation(EU)NoandrepealingDirectiveEC[]OJLArticle–

Foreign currency conversion services inquiry—Final report
Overloadingconsumerswithtoomuchinformationcanlowerengagement
anddecision-makingquality
ResearchcommissionedbytheUKGovernmentinwarnedoftheriskofover-complicating
consumerchoicesthroughprovidingtoomuchinformationThestudyconfirmedthedicultyfacedby
consumerswhentheyarepresentedwithabreakdownofalloftheapplicablefees(seebox)
Box 3.1 Findings from the UK’s Behavioural Insights Team report
IntheBehaviouralInsightsTeam(BIT)conductedastudyfortheUKGovernmentwhich
measuredtheimpactofdierentdisclosureformatsonconsumerbehaviourinrelationtoIMTsThe
studyinvolvedanonlineexperimentTheexperimentinvolvedasimulationinwhichparticipants
wereaskedtocalculateacurrencyconversionfromGBPtoUSDDierentpriceinformation
disclosureformatsweretested
Thesepriceinformationformatsrangedacross
lowtransparencyshowingtheretailexchangerateflatfeeandcommission
mediumtransparencywithinformationdisclosedaboutthewholesaleexchangerateaswellas
explainingthedierencebetweenthewholesaleexchangerateandretailexchangerateinterms
ofpoundsforeveryGBPexchanged
hightransparencywithfulldisclosureoftotal‘fee’informationwhichbreaksdowneachfeeinto
anamountinpoundsandsumsthedierentfeesupintoatotalfigure
Thestudyfoundthatonlypercentofparticipantswereabletoidentifythebestoptionwhen
thelowtransparencyformatwasusedIncontrastpercentofparticipantsidentifiedthebest
optionwhenthemediumtransparencyformatwasusedandthedierencebetweenthewholesale
exchangerateandtherateoered(expressedintermsofpoundslostperGBPexchanged)
wasdisclosedStudyparticipantsperformed(slightly)poorerwiththehightransparencyformat
TheBIThypothesisedthatresultsobservedcouldbebecauseprovidingconsumerstoomuch
informationcouldleadto‘choiceoverload’whereanexcessofinformationin(complex)choice
situationscanlowerengagementanddecision-makingquality’Thissuggeststhatanyproposed
pricedisclosureregimewouldneedtostrikeanappropriatebalancebetweenproviding
transparencyandavoidingoverloadingconsumerswithunnecessaryinformation
SourceTheBehaviouralInsightsTeamMarchTheimpactofimprovedtransparencyofforeignmoneytransfers
forconsumersandSMEsFinalreporthttpswwwbiteamwp-contentuploadsThe-impact-of-improved-
transparency-on-foreign-money-transfers-for-consumers-and-SMEsWEBpdf
Theroleofcomparisonwebsites
Comparisonwebsitescanhelpconsumersfindsuppliersandservicesthatsuittheirpreferencesby
displayingrelevantinformationinasinglelocationAnumberofcommercialandgovernment-funded
websitescurrentlycompareinquiryservices(seetable)
Mostcomparisonwebsitesprovideinformationontheretailexchangeratefeesandthetotalamountof
foreigncurrencyacustomerwouldreceiveforagiventransactionalthoughthedetailvariesdepending
onthecomparisonsiteThecompletenessofthisinformationalsovariesasforexamplecomparison
websitesdonotprovideinformationaboutcontingentfeesorotherchargesthatareunknowntothe
supplier(suchascorrespondentbankandrecipientbankfees)
ComparisonwebsitesmaynotcompareallavailableoersproductsandsuppliersforaparticularFX
serviceInadditionsomewebsiteoperatorsmayhavecommercialrelationshipswiththebusinesses
featuredorpromotedonthesewebsitesandmayreceiveacommissionwhentheconsumerclickson
thelinkofthebusinessviathewebsiteorwhenatransactionisundertakenfollowingareferralfromthe
websiteThefactthatcommissionsarepayableandcommercialarrangementsareinplaceshouldbe
disclosedonthecomparisonwebsites

Foreign currency conversion services inquiry—Final report
Table 3.2 Foreign currency conversion service comparison websites
Website Informationavailable
BestExchangeRates.com Providers are ranked in order of best value to worst. The site shows the retail exchange
rate, any additional fees, delivery speed and distribution channel (for example, online, in
branch, delivery).
For IMTs, a customer rating, the amount of foreign currency received, retail exchange rate,
fees, the total price of that provider, methods of transfer and transfer speed are compared.
For travel cards, a customer rating, the amount of foreign currency received, retail
exchange rate, fees and the total price of that provider are compared.
For foreign cash, a customer rating, the amount of foreign currency received, exchange
rate, fees, the total price of that provider, methods of transfer and transfer speed are
compared.
Currencyshop.com.au For IMTs, the retail exchange rate, fees, transfer time and the total sum the recipient would
receive with the dierent providers are compared.
For foreign cash, the site compares the retail exchange rate, fees, locations for pick-up and
the total sum the customer would receive with dierent providers.
FXcompare.com Lists IMT providers in order of best value to worst. The site shows the retail exchange rate,
amount of foreign currency a customer would receive and the average transfer speed.
Finder.com.au For IMTs, the site displays the transfer fee and exchange rate, and the net amount received
by the recipient.
For travel cards, fixed fees (ATM fee, reload fee, initial load fee) are displayed, with more
fees including unsupported currency conversion fee if selected.
For credit cards, the international transaction fee (as a percentage of transaction value),
ATM withdrawal fee, cash advance fee and annual fees are displayed.
Foreign cash only displays the commission fee.
Sendmoneypacific.org Compares IMT services with a range of dierent transfer methods.
Shows the type of operator (bank etc.), method of transfer, fees, total price (in AUD and as
a percentage), the amount received, transfer speed and network coverage.
Includes both live (online) rates and oine rates, which are updated periodically.
This site is jointly funded by the Australian and New Zealand governments.
Saverasia.com Compares IMT services with a range of dierent transfer methods, including bank transfer,
debit transfer and cash.
Shows the method and speed of transfer, amount the recipient will receive, the exchange
rate and fees (if applicable).
Includes both live (online) rates and oine rates, which are updated periodically.
This site is jointly funded by the Australian and Canadian governments through the
International Labour Organization’s ‘Triangle in ASEAN (Association of Southeast Asian
Nations)’ program.
SourceInformationobtainedfromwebsitesaslisted

Foreign currency conversion services inquiry—Final report
Globaleortstoimprovepricetransparencythroughuseofcomparisonwebsites
GovernmentsfromaroundtheworldhavesponsoredthedevelopmentofWorldBank-accredited
remittancepricecomparisonwebsites

toincreasetransparencyanddrivecompetitioninremittance
servicesaspartofglobaleortstoreduceremittanceprices

Theseactionsfollowanagreementby
theG

countriesintotakestepstoreduceremittancepricesThisledtoajointreportinby
theWorldBankandtheGCommitteeonPaymentandSettlementSystemsonwaysthatcountries
couldimprovetheirremittancemarkets

Akeyrecommendationofthatreportwasthatincreasedtransparencycouldhelpdrivecompetition
inremittanceservicesIntheGcountriesendorsedthegoalofreducingthecostofsending
remittancestopercentinfiveyears(the‘xtarget’)TheG

leadersociallycommittedto
thesamextargetinIntheGsetatargetofreducingthecostofremittancesto
percentandeliminatingremittancecorridorswithcostshigherthanpercentby(Sustainable
DevelopmentGoalfromtheAgendaforSustainableDevelopment)
AspartofthisgrowinginternationalcommitmenttheWorldBankhasbeencollectingdataon
remittancessinceTheWorldBankhasalsodevelopedalistofminimumrequirementsfora
nationalremittancepricedatabasetobegrantedWorldBankcertificationtointroduceameasureof
consistencyindatagatheringTheminimumrequirementsincludeprovidingdataonthetotalamount
ofidentifiedcostsaminimumofpercentofmarketcoveragepercorridorindependenceofthe
researchersanoadvertisingorsubscriptionpolicyandatransparentandaccountablefundingprocess
thatpreservestheimpartialityofthedatabase

ActionbytheAustralianGovernmenttoreduceremittanceprices
TheAustralianGovernmenthascommittedtoreducingthepriceofsendingremittancesparticularlyfor
migrantsandseasonalworkersinthePacificregion(seebox)
 RemittanceservicesareatypeofIMTwhichinvolvessendingsmallamountsofmoneyoverseasTheyaretypicallyinitiated
bymigrantworkersWorldBankRemittancePricesWorldwidehttpsremittancepricesworldbankorgenabout-
remittance-prices-worldwideviewedApril
 WorldBankRemittancePricesWorldwidehttpsremittancepricesworldbankorgenviewedApril
  GcountriesortheGroupofEightincludeFranceGermanyItalytheUKJapantheUSCanadaandRussia
 CommitteeonPaymentandSettlementSystemsandtheWorldBankJanuaryGeneralprinciplesforinternational
remittanceserviceshttpswwwbisorgcpmipubldpdf
 TheGorGroupofTwentyisaninternationaleconomicforumcomprisingthegovernmentsandcentralbanksofthe
world’slargesteconomiesandtheEuropeanUnion
 WorldBankRemittancePricesWorldwidehttpsremittancepricesworldbankorgennational-and-regional-databases-
certified-by-the-world-bankviewedApril
WorldBankRemittancePriceComparisonDatabasesminimumrequirementsandoverallpolicystrategyh t t p s 
remittancepricesworldbankorgsitesdefaultfilesStandardsNationalDatabasespdf

Foreign currency conversion services inquiry—Final report
Box 3.2 The impact of remittance prices on migrants and seasonal workers
ReducingremittancepricesparticularlytothePacificisaForeignPolicyWhitePapercommitment
andanimportantpriorityforAustralia’sinterestsRemittancesareanimportantsourceof
incomeformanyPacificIslandcountriesTheyhelpcoverbasicneedsandcushiontheeectsof
shockssuchaseconomicdownturnsandnaturaldisastersReducingaveragepricescouldhave
sizeabledividendsforgrossdomesticproductinthosecountriesparticularlythosethatarehighly
dependentonremittances
AccordingtotheWorldBank’smigrationandremittancesdatamigrantsresidinginAustralia
remittedUSDbillion(AUDbillion)overseasinAddingtothisAustraliahasexpanded
labourmobilityopportunitiestokeyPacificIslandnationsthroughthePacificLabourSchemeand
theSeasonalWorkerProgrammeTheseinitiativesalongwithexistingmigrantcontributionswill
likelyseehigherremittanceflowsbetweenAustraliaandPacificIslandcountriesLoweringtheprice
ofremittanceswouldmaximisedevelopmentimpactsintheregion
TheAustralianGovernmentisengagedininternationalforumssuchastheGGlobalPartnership
forFinancialInclusiontoaddresshighremittancepricesandde-bankinginourregionWhile
remittancetransfercoststothePacifichavefallenbyaroundpercentsincethestartof
theyremainabovetheglobalaverageofpercent(Q)
SourceInformationprovidedbytheDepartmentofForeignAairsandTradeandAUSTRAC
WorldBankNovemberMigrationandRemittancesDatahttpwwwworldbankorgentopic
migrationremittancesdiasporaissuesbriefmigration-remittances-dataviewedApril
ReserveBankofAustraliaExchangeRates—Daily—tohttpswwwrbagovaustatisticstablesxls-
hist-xlsviewedJuly
GlobalPartnershipforFinancialInclusionHomepagehttpswwwgpfiorgviewedApril
WorldBankRemittancePricesWorldwidehttpsremittancepricesworldbankorgenviewedJune
TheAustralianGovernmentcontributesfundingtotworemittancepricecomparisonwebsites
wwwsaverasiacomandwwwsendmoneypacificorgoperatedbyDevelopingMarketsAssociates

Thesitesenableconsumerstoobtainreliableandup-to-dateinformationonIMTservicesavailabletoa
numberofSouth-EastAsiancountriesandPacificIslandcountriesThesewebsitesprovideinformation
ondierentsuppliersincludingthefeeschargedthetotalpriceincludinganyfeesandcurrency
conversiontheamountexpectedtobereceivedinthelocalorpayoutcurrenciesspeedoftransferand
themethodoftransferandnetworkcoverage(wheremoneycanbecollected)SaverAsiaalsohelps
migrantworkersfindfinancialservicesandconnectthemwithlocalsupportorganisations
ThesesitesprovidetwosourcesofpricecomparisonThemainpriceinformationis‘mysteryshopped’
priceswhichmembersofthecommunityprovideonaregularbasis(fortnightlyormonthly)covering
mostofthemarketThemysteryshoppingexerciseisundertakeninaccordancewithWorldBank
guidelinesMorerecentlytheoperatorsofthesiteshavestartedpublishing‘liveprices’Theseliveprices
areprovideddirectlybysuppliersviaadatafeedwithsomesuppliersprovidingpricedatainrealtime
Inmostinstancesasupplier’slivepricesarepublishedonthewebsiteonlywherethesupplieragrees
tomaketheinformationavailabletothewebsiteoperatorAnumberofonlinesupplierssuchas
TransferWiseWorldRemitInstaReMandOFXmakeliveratesavailabletotheoperatorofthese
websitesHowevernoneofthebigfourbanksorWesternUnioncurrentlyprovidesaccesstoalivedata
feedoftherelevantprices
TheACCCconsidersthattheeectivenessofthesewebsitesforconsumerscouldbeimprovedby
ensuringthattheliveratecomparisontablereflectsmostofthesuppliersandcertainlythemajor
suppliersofIMTservicesinAustraliaTheACCChasconsultedwithavarietyofstakeholdersonthe
valueofthebigfourbanksandWesternUnionprovidingliveratedataNABhasindicatedthatitis
willingtoprovidelivedatatothesewebsitesANZWestpacCBAandWesternUnionhaveexpressed
interestindiscussingthelogisticsdirectlywiththewebsites’operatorTheACCChasprovidedcontact
detailstoassistthemtodoso
 FundingiscurrentlyinplaceuntilJuneforwwwsendmoneypacificorgandwwwsaverasiacom

Foreign currency conversion services inquiry—Final report
Supplierscanimprovetheirpresentationofprices
TheACCCconsidersthatsuppliersshouldtakestepstoensurethatconsumerscaneasilyunderstand
andcomparepricesforinquiryservicesInparticularweseemeritinmeasuresthat
calculateforconsumersthetotalpriceofanIMTorforeigncashtransaction
allowsimplecomparisonstobemadeacrosssuppliers
SuchmeasuresformthebasisofBestPracticeGuidance(section)Thatguidanceappliesto
theinquiryservicesgenerallyalthoughinsomecaseswehavehighlightedspecificserviceswhere
consumersarelikelytoreceivegreaterbenefitfromtheguidancebeingprovidedForexamplewedo
notconsiderthattravelcardservicesorpaymentcardFXserviceslendthemselvestopricecomparison
toolsinthesamewayasIMTservicesorforeigncashservicesThisisbecausetravelcardsandpayment
cardshavefeesthatareeithercontingentonhowthecardisusedorthatareunrelatedtoFXservices
(forexampleanannualfeeoncreditcards)Thismeansthatmeaningfulcomparisonscannotbedrawn
forthesecardsonatransaction-by-transactionbasisinthesamewaytheycanbedrawnforforeign
cashservicesandIMTservices
 Uncertain correspondent banking fees for IMTs
FeesforIMTstransactedthroughcorrespondentbankingnetworkscanbeuncertainThisisaconcern
formanyconsumersSomesuppliershavetakenstepstoaddresstheircustomers’concernsbutothers
havenot
ItistheACCC’sviewthatsuppliersshoulddisclosethetotalpriceoftheIMTtotheextentpossible
includingallfeespayablebythecustomerup-frontUncertainfeesareharmingconsumers
becausethey
makeitimpossibleforconsumerstodeterminewhichIMTsupplieroersthebestvalue
makeitdiculttoensurethatabeneficiaryreceivestheamountofmoneyintendedbythesender
thishasparticularimplicationsforIMTsmadeinpaymentforthepurchaseofgoodsorservices
Theeectsofuncertainfeescanbeparticularlypronouncedwheretheamountofmoneybeingsent
overseasisrelativelysmallTherecanalsobealargecumulativeeectonthoseconsumerswhosend
IMTsfrequently
Whyarecorrespondentbankingfeesuncertainforconsumers?
Supplierstypicallydisclosetheup-frontfeestheychargeforIMTservicesontheirwebsitesHowever
thepossibilityofconsumersincurringcorrespondentbankingfeesisoftendisclosedonlyinthefine
printandnotquantifiedForexample
ANZPleasebeadvisedthatoverseasbanksmaychargefeesforprocessingthistransferwhich
maybedeductedfromtheamountyouaresending

CBAOverseasbankcharges(whichmayvaryfromcountrytocountry)couldapplyinaddition
tothechargeslistedabove

WestpacOverseasbanksmayimposefeesandchargesorconvertthecurrencyofthepayment
Westpacmightnothaveanycontroloverthefeeschargesorforeigncurrencyconversions
imposedbytheseinstitutionsAnyoverseasfinancialinstitutionhandlingchargeswillbydefault
bebornebytherecipientoftheInternationalPaymentanddeductedfromthepaymentamount
unlessotherwiseorganised

 AustraliaandNewZealandBankingGroupLimitedInternationalMoneyTransferwwwanzcominternet-banking
helppay-transferinternational-servicestransfer-overseastabtabviewedMarch
 CommonwealthBankofAustraliaFeesandchargesforInternationalMoneyTransfers(IMTs)wwwcommbankcom
aupersonalinternationaltransfer-moneyfees-and-chargeshtmlviewedMarch
 WestpacBankingCorporationSendmoneyoverseaswwwwestpaccomauinternational-travelinternational-transfers
send-moneyviewedMarch

Foreign currency conversion services inquiry—Final report
ThecorrespondentbankingfeesapplyingtoanIMTwillvarydependingonthenumberof
correspondentbanksneededtocompletethetransactionandthefeeschargedbyeachofthese
banks(seechapterfigureforfurtherdetailsaboutcorrespondentbankingarrangements)
Correspondentbankingfeescanvarybecauseoffactorsincludingthesizeofthetransactiontheretail
exchangerateandthesupplier’srelationshipwiththecorrespondentbank

Theamountofthefeecan
alsovarybecauseoftheIMTdestinationandpathofdelivery
Insomecasesthecorrespondentbankingfeesbecomeknowntothesupplieronlyoncethe
transactioniscompletedNABexplainedthesituationasfollows
IMTsinvolveatransferbeingsettledviaanetworkofcorrespondingbanksAttheoutsetthe
originatingbankwillnotnecessarilyhavevisibilityovertheidentityandnumberofcorrespondent
banksthatwillbeinvolvedinsettlementofthetransactionTheoriginatingbank(NAB)willnot
alwayshavevisibilityoverthechargestobeleviedbysubsequentrecipientbanks

Someofthebigfourbankshavenotedthattheyareabletoprovidetransparencyofcorrespondent
bankfeeswhentheyhavedirectrelationshipswiththeotherbanksinthecorrespondentbankingchain
Wenotethateachofthebigfourbankshaveorpreviouslyhadrebatearrangementswithsomeof
theircorrespondentbanks(seebox)Inourviewthefactthatbankshavebeenabletonegotiate
rebatesforcorrespondentbankingfeesforsomecurrenciesanddestinationsdemonstratesthatthese
banksshouldbeabletoascertainwhatcorrespondentbankingfeesmightapplytoatleastsomeIMTs
Box 3.3 Correspondent bank rebate arrangements
Whereanoriginatingbankhasarebatearrangementinplacewithacorrespondentbankthe
originatingbankreceivesaproportionofthefeesacorrespondentbankchargesforprocessingthe
IMTTheamountofthecorrespondentbankingfeeandtheproportionofthefeethatisreturnedto
theoriginatingbankunderarebatearrangementvariesbetweencorrespondentbanks
Asnotedinchapteracorrespondentbankcansometimesdeductfeesfromtheamounttransferred
evenifthesupplierspecificallyinstructsthemnottodoso

Thisisonereasonwhysuppliersmaynot
oertransparencyofcorrespondentbankingfeesforIMTssentviaparticularcorridors
Dierentsuppliershavedierentapproachestohowcorrespondentbankingfeesareincorporatedinto
thepricespaidbyconsumersForexample
somesuppliersdisclosethetotalpriceofanIMTup-frontandabsorbanycorrespondentbanking
feesOnewaysupplierscangiveeecttosuchanarrangementisbyinstructingtheircorrespondent
bank(s)nottodeductanyfeesfromtheamounttransferredandinsteadtoclaimthesefeesback
fromthesupplierthesupplierthenabsorbsthesefees

othersupplierschargeanup-frontfeeandleaveanycorrespondentbankfeesfortherelevant
correspondentbankstodeductfromthesumbeingtransferredInthesecasestheconsumermay
beunawareofthetotalpriceoftheIMTincludingcorrespondentbankingfees
Theimpactofuncertainfeesonconsumers
WhenacorrespondentbankdeductsfeesfromthesumtransferredtherecipientoftheIMTmay
receivelessmoneythanthesenderintendedespeciallywherethesefeeswereunknownoruncertain
tothesenderatthetimetheIMTwassentCorrespondentbankingfeescanvaryfromcurrencyto
currencywhichiswhyconsumerscanbeuncertainaboutthetotalpriceforIMTsTogiveanideaof
 NationalAustraliaBankLimitedOctoberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovau
systemfilesNABpdfp
 NationalAustraliaBankLimitedOctoberSubmissioninresponsetotheIssuesPaper
httpswwwacccgovau
systemfilesNABpdfp
 NationalAustraliaBankLimitedNovemberAGuidetoFees&Charges—PersonalBankingFeeshttpswwwnab
comaucontentdamnabrwddocumentsguidesbankingpersonal-banking-fees-and-charges-guidepdfp(“In
mostcasesNABwillpayoverseasbankchargesonyourbehalfHoweverinsomeinstancesbeyondNAB’scontrol
overseasbankswilldirectlydeducttheseoverseasbankchargesfromthemoneyyousendinstead”)
 SeeforexampleNationalAustraliaBankLimitedOctoberSubmissioninresponsetotheIssuesPaperhttpswww
acccgovausystemfilesNABpdfp

Foreign currency conversion services inquiry—Final report
thescaleofthesefeestheACCChasbeeninformedbythebigfourbanksthatforanIMTsenttothe
USinUSDcorrespondentbanksmaydeductfeesofbetweenUSDtoUSD(AUDtoAUD

)per
transactionThefeescanbehigherorlowerforothercurrencies
Theimpactofthesefeescanbesignificantparticularlywhensmallamountsaretransferredas
highlightedintheexamplesinbox
Box 3.4 Consumer experiences with correspondent banking fees
ConsumerSubmission
trying[sic]tosendasagifttoafamilymemberinRomaniaOnceallfeesweretaken
outtherecipientreceivedintotalapproximatelyAustraliandollarsChallenge[sic]the
bankandtheysaidthat’swhatitcostthemtosendthemoney
ResponsetoACCCconsumerquestionnaire
IneededtosendaspecificamountinNZDforrugbyticketsItoldthelocalbanksta
memberofthisIwasgiventheexchangerateandthebankfeeforthetransactionandwas
giventhetotalchargeinAtomeetmyNZDtransferamountAdaylaterIwascontactedby
myNZcounterpartytosaythatmypaymentwasNZDshortIwentbacktothebranch
toaskwhathadhappenedbutneitherthebanktellerIhaddealtwithnorhersupervisorcould
tellmeIeventuallyreceivedatelephonecallfromanfxmanagertosaytheshortfallwasdue
toafeetakenbytheir“correspondentbank”ToaddinsultIwastoldthatifImadeanother
transfertomakeupthedierenceIwouldhavetoagainpaythecorrespondentbankfee—
althoughtheydidsaytheywouldwaivethelocalfee
SourceConsumerSubmissiontoIssuesPaperandconsumerresponsetoquestionnairehttpswwwacccgovausystem
filesConsumerpdf
ConsumerresponsetoConsumerandsmallbusinessquestionnairehttpswwwacccgovausystemfiles
ConsumerandsmallbusinessquestionnaireresultsXLSX
Thebigfourbanksareawarethatcorrespondentbankingfeetransparencyhasbeenaconcernfor
manycustomersInadditiontoconcernsthatthelevelofthesefeesisuncertainandasaresultless
moneymayarriveatthereceivingbankthanthecustomerintendedonebankstatedthatitreceived
complaintsthatcorrespondentbankingfeesweretoohighAnotherbanknotedinthat
[t]hecustomerexperienceisnotgreatAcustomersendingapaymentmaybechargeda
numberoffeesbythevarious[financialinstitutions]thatthesepaymentspassthrough[w]ith
theintroductionofdigitaldisruptors(egTransferWise)andgreaterregulatoryandcompliance
focusplacedonglobalpaymentsthereispressureonbankstoreducecostsandincrease
transparencyoffees
Wenotethateachofthebigfourbanksinternallyreferredtovariousprinciplessuchas‘fairness’‘fair
pricing’or‘fairvalue’aspartoftheirpricingandfeestrategiesfordierentinquiryservices
Weconsider
thatfairnessrequiressupplierstotakeallreasonablestepstoensurethatcorrespondentbankingfees
aretransparentandthetotalpriceoftheIMTismadeknowntoconsumers
SomeofthebigfourbanksoeroptionsthatdoprovidetotalpricetransparencyForexamplesince
NovemberCBAhasallowedcustomerstomakeanup-frontpaymentinadditiontotheup-front
feefortheIMTtocovercorrespondentbankingfeesforcertaindestinationsinspecificcurrencies
wheretheIMTisorderedinbranch

Thefeevariesbydestinationcountryandcurrentlyranges
fromAUD(foranIMTtotheUKwithaconversiontoGBP)toAUD(foranIMTtotheUKwith
 FortheconversionofUSDintoAUDwehaveusedanexchangerateofasreportedbytheRBAasat
FebruarytheconclusionofthepricedatacollectionperiodReserveBankofAustraliaExchangeRates—
Daily—toCurrenthttpswwwrbagovaustatisticstablesxls-hist-currentxlsviewedJuly
 CommonwealthBankofAustraliaFeesandchargesforInternationalMoneyTransfers(IMTs)httpswwwcommbank
comaupersonalinternationaltransfer-moneyfees-and-chargeshtmlviewedMay
InadditiontoIMTsinitiatedinbranchthisarrangementisalsoavailableforinstitutionalcorporateandbusinesscustomers
throughCommBiz

Foreign currency conversion services inquiry—Final report
aconversiontoEuros)

MorerecentlyinNovemberNABbeganabsorbingcorrespondent
bankingfeesforIMTssentbyindividualconsumerssothesefeesarenotdeductedfromtheamount
transferredNABchargesanAUDup-frontfeeforpaymentssentviaonlinechannelsUp-frontfees
arehigherforIMTsorderedinbranch

SomeofthebigfourbanksareconsideringfurtherimprovementstopricetransparencyforIMT
servicesTheACCCwelcomesthesemoveswhichweconsiderwillassistconsumerstocompareprices
andshouldpromotecompetitionamongIMTsuppliersHoweveroverallweexpectthatsuchmoves
wouldnotresultinhigherprices
ImprovementstotrackingofIMTs
ThebigfourbankshaveadvisedtheACCCthatasatJunetheyhaveeitherimplementedorare
intheprocessofimplementingSWIFTgpi(seebox)ThenewSWIFTgpimessagingsystemwill
improvetheflowofinformationthroughfinancialinstitutionsinthecorrespondentbankingnetwork
HoweveritwillnotgivesupplierscertaintyoncorrespondentbankingfeesinadvanceofanIMT
takingplace
Box 3.5 Developments in the SWIFT network
TheSocietyforWorldwideInterbankFinancialTelecommunication(SWIFT)messagingserviceis
theprimarycommunicationschannelforfinancialinstitutionsengagedincorrespondentbanking
aroundtheworldSWIFT’smessagingframeworkusesastandardisedsystemofcodestoallow
correspondentbankstoexchangepaymentinformationandinstructionsItconnectsmorethan
bankingandsecuritiesorganisationsmarketinfrastructuresandcorporatecustomersin
morethancountriesandterritories
UntilrecentlyIMTpaymentmessagessentthroughSWIFT’ssystemweredicultforsuppliersto
trackOnebigfourbanknotedthattoinvestigateapayment’sprogressitwouldsendamessageto
thecorrespondentbankthroughSWIFTwhichtheninvestigatesandrespondstothemessage
InJanuarySWIFTlaunchedSWIFTglobalpaymentsinnovation(SWIFTgpi)whichaimsto
improvecustomerexperienceincross-borderpaymentsbyincreasingtheirspeedtransparency
andtraceabilitySWIFTgpihasbeenadoptedbymorethanbanksaroundtheworldandmore
thanUSDbillioninSWIFTgpimessagesarebeingsenteverydayenablingpaymentstobe
creditedtoendbeneficiarieswithinminutesorsecondsSWIFTgpibankstodayareabletotrack
alltheirpaymentsonSWIFTend-to-endwithcreditconfirmationprovidedifthebeneficiarybanks
arealsousingSWIFTgpiByallSWIFTbankswillberequiredtoprovideconfirmationintheir
paymentswiththeamountcredited
SWIFThasadvisedtheACCCthattransparencyonthefees(suchasthefeeleviedby
correspondentbanks)isavailableintheSWIFTgpi‘Tracker’onlyafterthepaymenthasbeen
processedSWIFTiscurrentlypilotingaprojectthatwouldenablechargestobepredictedhowever
thisisstillinthedevelopmentstage
SourceSWIFTDiscoverSWIFThttpswwwswiftcomabout-usdiscover-swiftmessaging-standardsviewedJuly
SWIFTThedigitaltransformationofcross-borderpaymentshttpswwwswiftcomour-solutionsglobal-financial-
messagingpayments-cash-managementswift-gpiabout-swift-gpiviewedJuly
SWIFTcorrespondencetotheACCCdatedMarch
SuppliersshouldprovidethetotalpriceofIMTs
IntheACCC’sviewtheinadequatedisclosureofpricesincludingcorrespondentbankingfeescould
contravenetheAustralianConsumerLawTheACCCexpectssupplierstoclearlyandprominently
disclosetoconsumersifcorrespondentbankingfeesmaybedeductedfromthesumstransferred
ShouldanIMTsupplierbeunabletoinformconsumersofthetotalpriceup-frontreasonableestimates
 CommonwealthBankofAustraliaStandardfeesandchargesforinternationalpaymentsandtravelfundshttpswww
commbankcomaucontentdamcommbankpersonalapply-onlinedownload-printed-formsADBpdf
 NationalAustraliaBankLimitedOctoberSubmissioninresponsetotheIssuesPaperhttpswwwacccgovau
systemfilesNABpdfp

Foreign currency conversion services inquiry—Final report
ofalladditionalfeesshouldbeprominentlydisclosedalongwithawarningthattheremaybe
additionalfees
ConsumersshouldcontacttheACCCifanunexpectedlyhighfeeisdeductedfromanIMT
Weconsiderthatthetake-upofourBestPracticeGuidance(below)willsupportcompetitioninthe
supplyofIMTservicesbyfacilitatingconsumercomparisonsofsuppliers’pricesonalike-for-likebasis
Indoingsoitwillmakeiteasierforconsumerstoshoparoundandinturnwillleadtogreaterpressure
onsupplierstoensuretheirpricesaretransparentandcompetitive
TheACCCacceptsthatinformingconsumersofthetotalpriceup-frontmayrequirechangestohow
somesupplierstreatcorrespondentbankingfeesandthatthesefeesmaynotbefullyknownpriortoan
IMTtakingplaceHowevertheACCCnotesthat
thereisinformationavailabletosupplierssuchaspasttransactiondatathatshouldallowthemto
predictorreasonablyestimatecorrespondentbankingfeesinadvancefortheircustomersOther
sourcesofsuchinformationincludethatgatheredforthenegotiationofrebatearrangementswith
correspondentbanksTheavailabilityofthisinformationtosuppliersisoneofthereasonstheACCC
considersthattheyarebetterplacedthanconsumerstomanagetheriskanduncertaintyassociated
withcorrespondentbankingfees
asdiscussedaboveandinchapter(section)numeroussuppliersoerIMTserviceswhere
correspondentbankingfeeswillnotbedeductedfromthesumstransferredInadditionsome
suppliersareplanningtomovetoinformingcustomersofthetotalpriceofanIMTup-front
indicatingthatthisapproachiscommerciallyviable
theACCCacceptsthatitismoredicultforsupplierstoestimatecorrespondentbankingfeesfor
lesscommonlyusedcombinationsofcurrenciesandIMTdestinationsOntheotherhandthese
destinationsandcurrencycombinationswouldaccountforasmallerproportionofthesuppliers’
revenuereducingtheimpactofasuppliermiscalculation

Foreign currency conversion services inquiry—Final report
Best Practice Guidance 3.1 Price presentation
Up-frontdisclosureofIMTpricesincludingcorrespondentbankingfees
TheACCCcallsonsupplierstotakethenecessarystepstoinformtheircustomersup-frontof
thetotalpriceofanIMTincludingcorrespondentbankingfeesAsuppliermaycontravenethe
AustralianConsumerLawwherethereisaninadequatedisclosureoffees
Digitaltoolstocomparethetotalprice
IMTs
MostconsumersmakeIMTsusingonlinechannelsSuppliersshouldensurethatdigitaltools
areavailabletocalculatethetotalpriceofthoseIMTsTotheextentthatconsumersmakeIMTs
throughotherchannelssuppliersshouldusetheirdigitaltoolstoinformconsumersofthetotal
pricePresentinginformationinthiswaywillallowconsumerstomoreeasilycompareoersfrom
dierentsuppliers
SuppliersshouldensurethattheirIMTpricetoolsare
easytouse
designedtocalculatethetotalamountthatwillbedeliveredtotherecipient
inclusiveofthecurrencyconversionandallfeesthatwillaectthetotalprice
customisabletotheconsumers’intendedIMTvalueanddestination
Insituationswherethesupplier’sservicemayinvolvefeesorchargesthatareunknowntothe
supplierpriortothetransactiontakingplacesuppliersshoulduseinformationtheyholdsuchas
transactiondatatoestimateunknownfeesandprovidethatestimatetoconsumers
ManysuppliersalreadymakesuchtoolsavailabletoconsumersSuppliersshould
continuetorefinethesetoolstoensuretheyareuser-friendlyandreflectthetotalpriceof
thetransaction
makethesetoolsavailabletoprospectiveornewcustomerstoallowcomparisonsbetween
suppliersthiswouldrequiresomesupplierstoallowconsumerswhoarenotexistingaccount
holderstoaccesstheirtools
Totheextentthatsupplierswishtooerapreferentialpricetocertainconsumersastatementto
thateectthatshouldbeincludedatthesamelocationasthepricetool
Foreigncash
Consumerpurchasersofforeigncashservicesarealsolikelytobenefitfromatooltoenablethem
tocalculateandcomparethetotalpriceofpurchasingaspecifiedamountofforeigncurrency
Supplierswhooertheirforeigncashservicesonlineshouldalsomakeanonlinecalculator
availableItshouldcalculatethetotalpriceinclusiveofthecurrencyconversionandallfees
Totalpricecomparisonsin-store
Manyforeigncashtransactionstakeplacein-storeWhilesomeconsumersmaycompareoers
onlinepriortomakingtheirpurchasemanywillnotSuppliersshouldensurethattheyprovideprice
informationthatwillenableconsumerstounderstandthetotalpriceofforeigncashtransactions

Foreign currency conversion services inquiry—Final report
Onewaytoachievethiswouldbetomakedigitaltoolstocomparethetotalpriceavailablein-store
Anotherwayistopublishalongsideany‘consumerbuyrates’thetotalpricetopurchasethe
equivalentofAUDofthegivencurrencyWeconsiderAUDasausefulpointofreferenceas
itapproximatestheaveragetransactionsizeacrosstheinquirysuppliers
SomeforeigncashsupplierschargefeesinadditiontotheretailexchangerateOthersprovide
discountsforlargertransactionsTotheextentthattheproportionoffeeschangesfromAUD
toAUDsuppliersshouldpublishthetotalpricetopurchasebothamountsThiswillallow
consumerstomoreeasilyunderstandtheimpactoffees
 Unexpected fees when shopping online
Whatistheinternationaltransactionfee?
Whereapaymentcardtransactionisinternationalinnaturetheinternationalcardschemes(for
exampleVisaandMastercard)chargethecardissuerafeetoprocessthetransaction

Mostcard
issuersincludingthebigfourbanksthenchargetheircustomersaninternationaltransactionfee
(sometimesreferredtoasaforeigntransactionfeeorforeigncurrencyconversionfee)Asnotedin
chapter(section)therearesomepaymentcardswithnointernationaltransactionfees
ThebigfourbankshaveeachadvisedtheACCCthattheinternationaltransactionfeewasnotcharged
purelyorsolelytorecovertheapplicableinternationalcardschemefeesTheinternationaltransaction
feeswereabovethelevelnecessarytorecoverthecostsoftheschemefees
ThebigfourbanksVisaandMastercardareawarethatcustomerscanincurunexpectedinternational
transactionfeeswhenshoppingonlineusingpaymentcardsAllofthebigfourbanksreported
receivingcomplaintsfromconsumerswhohaveraisedconcernswithrespecttotheunexpected
applicationofinternationaltransactionfees
Somebanks’termsandconditionsnotethatconsumersmaybechargedinternationaltransactionfees
incircumstanceswhereitisuncleartotheconsumerthatthetransactionisinternationalinnatureFor
exampleANZ’stermsandconditionsstatethat
ItmaynotalwaysbecleartoyouwhenuseofyourANZaccountisanInternationalTransaction
forexamplewherethemerchantorfinancialinstitutionprocessingachargeorcreditislocated
outsideofAustralia

TheACCCacceptsthatitwilllikewisebeuncleartothecardissuerNonethelessboththecardissuer
andthemerchant’sbankwillbeawareofthecircumstancesinwhichaconsumerwillbeentitledto
arefund
AnumberofconsumersubmissionstotheIssuesPaperandresponsestotheACCCconsumerand
smallbusinessquestionnaireraisedconcernsaboutunexpectedlyincurringaninternationaltransaction
feewhenshoppingonlineusingpaymentcardsThesameissuehasalsobeenraisedincontactstothe
ACCC’sInfocentreTheexamplesinboxdescribewhatappearstobeasharedexperienceformany
consumerswhenshoppingonline
 NationalAustraliaBankLimitedJuneNABCreditCardshttpswwwnabcomaucontentdamnabrwd
documentsterms-and-conditionsbankingnab-credit-cards-tcspdfp
 NationalAustraliaBankLimitedOctoberSubmissioninresponsetoIssuesPaperhttpswwwacccgovausystem
filesNABpdfp
 AustraliaandNewZealandBankingGroupLimitedDecemberANZpersonalbankingAccountfeesandcharges
httpswwwanzcomaucontentdamanzcomaudocumentspdfpersonal-account-fees-chargespdfp

Foreign currency conversion services inquiry—Final report
Box 3.6 Examples of unexpected fees when using payment cards online
Example
Ipurchasedairticketswith[anairline]for[anamount]onthe—itwasinvoicedin
AUDandpaidforinAUDThe[bank]chargedmeinforeigncurrencyconversionfees
whichIfailtoseehowtheycanjustifygivenitwasbilledandpaidforinAUD
Example
Werecentlypaid[redacted](acruisecompany)Beforepaying[thefee]inAUDbycredit
cardweaskedwhethertherewereanyfeespayablewewereadvisedtherewerenot
Onreceivingourbankstatements[frombankandbank]therewasachargelevied
[Thecruisecompany]oeredtorepayusWedeclinedandreceivedarefundfromthebanks
afterIwepointedasked‘DoesthatmeaneverytimeIdealwithavendorinAUDshouldIask
wheretherecipientbankislocated?”
Example
OnJulyIpurchasedaplaceonaprofessionaleducationcourse
ThecoursewastobedeliveredinSydneyAustralia
ByanAustraliancompany(ABN[redacted])
WhoissuedmeaninvoiceinAustraliandollars
Including(Australian)GST
AndstatedanAustralianphonenumberwhichIcalledtomakemycreditcardpayment
OnmyAustralian-basedcreditcard
IhadnoexpectationthatthispurchasewouldattractaforeigncurrencyfeeItseemedtobe
atransactionconductedentirelywithinAustralianandinAustralianDollarsHoweverwhen
thetransactionappearedonmy[bank]creditcardstatementa“ForeignFeeAUD”
hadbeenaddedtotheAUDpurchaseamount
SourceConsumerSubmissionsandtoIssuesPaperavailableathttpswwwacccgovauabout-usfocus-areas
foreign-currency-conversion-services-inquirysubmissions-received
Whatisoccurringinthesecases?
Inallofthesecasestheconsumerisnotawarethattheonlinepaymentinvolvesaninternational
transactionwhichwillincurafeefromtheircardissuerThisissueariseswhentheconsumerexpectsthe
transactiontotakeplacewithinAustraliabutthemerchanthasthetransactionprocessedoshore

A
consumermayreasonablyexpectthatthetransactionwilltakeplaceinAustraliabecauseforexample
themerchanthas
publishedapriceonawebsiteinAUDandor
awebsitewitha‘comau’domainnameandor
aphysicalpresenceinAustralia
Inthesecircumstancestheconsumermayhavenobasistosuspectthatthereisaninternational
elementtothetransactionHoweverthecustomer’scardissuerwillconsiderthetransactiontobean
internationaltransactionifthemerchant’spaymentfacilityislocatedoverseasUnlessthemerchant
disclosesthatthetransactionwillbeprocessedoshorethecustomerisunlikelytobeawarethat
 TheACCCisalsoawarethatunexpectedinternationaltransactionfeescanapplyinsituationswhereaconsumerisusinga
VPN(virtualprivatenetwork)whichestablishesasecureconnectiontoaremotenetworkIncircumstanceswheretheVPN
isconnectedtoanoverseasnetworkamerchant’swebsitemayidentifythecardholderasbeingoshoreandroutethe
transactiontothenearestmerchant’sacquirerresultinginaninternationaltransactionfeebeingapplied
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Foreign currency conversion services inquiry—Final report
theywillincuraninternationaltransactionfeeuntilthepaymentisprocessedandtheyreviewtheir
cardstatement
DynamicCurrencyConversion
Anothersituationinwhichconsumersmayunexpectedlyincuraforeigntransactionfeeiswhenthey
useaDynamicCurrencyConversion(DCC)serviceEventhoughthesetransactionstakeplaceinAUD
theyoccuroshoreandcanbesubjecttoaninternationaltransactionfeedependingonthecard
issuers’fees(seebox)
Box 3.7 Dynamic Currency Conversion
DynamicCurrencyConversion(DCC)isaservicethatallowsconsumerstochoosetheirown
currency(forexampleAustraliandollars)whenmakingacardpaymentforanoverseastransaction
Thischoiceisoftenprovidedtoconsumersintouristareas(suchasairports)andsometimeswhen
shoppingonlinefromanoverseasretailer
Whenaconsumerchoosestopayintheirowncurrencytheoverseasentityprocessingthe
transactionperformstheforeigncurrencyconversionatthetimeofthetransactionIncontrasthad
theconsumerchosentotransactinaforeigncurrencytherelevantinternationalcardschemewould
havedeterminedtheretailexchangeratethatappliedtothetransactionBothMastercardand
VisarequirethatcardholdersbeoeredachoicetoacceptordeclineDCCUndertheirrulesDCC
cannotbeimposedonacardholder
DCCunlikeinternationalcardschemecurrencyconversionsprovidestheconsumerwiththe
benefitofbeingabletoseetheretailexchangerateortheforeigncurrencyamountconverted
intoAustraliandollarsatthetimeofthetransactionHoweverconsumersmaypaymorefor
transactionsthatinvolveaDCCastheDCCretailexchangeratescanincludehighermark-upsthan
theretailexchangeratesappliedbyinternationalcardschemesWhileconsumersmightexpect
thatbecausetheyhaveelectedtohavethetransactionprocessedinAUDtherewouldnotbeany
internationaltransactionfeesleviedthisisnotthecaseasinternationaltransactionfeescanstillbe
appliedwheneverthecardholder’sfinancialinstitutionandthemerchant’sfinancialinstitutionarein
dierentcountries
SourceAustraliaandNewZealandBankingGroupLimitedANZPersonalBankingGeneralFeesandChargeshttpswww
anzcomaucontentdamanzcomaudocumentspdfpersonal-account-fees-chargespdfviewedJuly
CommonwealthBankofAustraliaWhatisaninternationaltransactionfee?httpswwwcommbankcomausupportcredit-
cardswhat-is-an-international-transaction-feehtmlviewedMay
NationalAustraliaBankLimitedPersonalBankingFeesandChargeshttpswwwanzcomaucontentdamanzcomau
documentspdfpersonal-account-fees-chargespdfviewedJuly
WestpacBankingCorporationCombinedConditionsofUseandCreditGuidehttpswwwwestpaccomaucontentdam
publicwbcdocumentspdfpbConsumerConditionsofusepdfpviewedMay
Theresponsibilitiesofmerchantsinrelationtointernationaltransactionfees
TheACCCconsidersthattheprimaryresponsibilityforwarningconsumersaboutunexpected
internationaltransactionfeeslieswiththemerchantThatisbecausethemerchantisbestplacedto
knowwhetherafeewillapplygiventheyholdinformationontheirlocationaswellasthelocationof
theiracquiringbankandpaymentprocessor
IntheACCC’sviewmerchantsmaybeengaginginmisleadinganddeceptiveconductiftheydo
notdisclosetoconsumersthatatransactionwillbeprocessedoshorepriortoenteringintothat
transactionInparticularweconsiderthatwhereamerchant’swebsitehasa‘comau’domainname
takespaymentinAUDandorhasabusinesspresenceinAustraliathemerchantislikelytogive
consumerstheoverallimpressionthatitisadomestictransactionandthereforenointernational
transactionfeeswillbepayable
HavingsetBestPracticeGuidanceformerchantstofollowtheACCCwillcontinuetomonitorthis
issueandmayinvestigatefurtherandtakeenforcementactionwherewarranted
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Foreign currency conversion services inquiry—Final report
Best Practice Guidance 3.2 Disclosure of card transactions being processed oshore
Merchantsshouldalertconsumerspriortoenteringatransactionifthetransactionislikelytoattract
internationaltransactionfees
Thiscouldbeassimpleasaprominentstatementduringanonlineorderprocesspriortotaking
paymentinformingconsumersofthecountryinwhichpaymentswillbeprocessedanddirecting
consumerstocontacttheirfinancialinstitutiontocheckwhetherinternationaltransactionfeeswill
applytotheirpurchase
Theroleoftheinternationalcardschemes
BothVisaandMastercardhaveSchemeRulesinplacetoaddresstheissueofunexpectedfeesin
internationaltransactions(seeappendixE)

BecauseoftheseruleswebelieveVisaandMastercard
alsohavearoletoplayinaddressingtheissueofunexpectedinternationaltransactionfees
Theinternationalcardschemesshouldensurethatmerchants’acquirersmeettheirobligationsunder
theirrespectiveschemerulesWeencouragetheinternationalcardschemestoundertaketargeted
focusedreviewstoensurethatmerchantsaremakingadequatedisclosuresthatwouldallowconsumers
toidentifywheninternationaltransactionfeesmightapply
TheschemesshouldalsoenforcetheirruleswhererequiredTomaximisetransparencywewould
encouragethecardschemestoreportpubliclyontheoutcomesofthesereviews
 Uncertainty about IMT payment security
Consumersperceivethatsendingmoneyoverseasinvolvesadegreeofuncertaintyandariskthatfunds
maynotbereceivedResponsestotheACCCconsumerquestionnaireshowedthatreliabilityandspeed
ofservicewasimportanttoconsumersItwasthethirdhighestpriorityamongindividualconsumers
Onecustomerofanon-banksupplierstated
Iwasbit[sic]nervoususing[thenon-banksupplier]forsecurityreasonsasI’dneverheardofit
Itriedjustsendingasmalleramountanditworkedwell
Researchundertakenbysomeinquirysuppliersshowsthatatleastsomeconsumersperceivethebig
fourbankstobesafermoresecureormoretrustworthythanalternativeIMTsuppliersOnereasonthat
consumersmaybelievebanksaresaferisthatIMTservicesarean‘experienceservice’Thismeansthat
certainattributesoftheservicesuchassecurityarediculttoobserveorgaugepriortousingthe
serviceConsumerswithlimitedinformationonsecurityforexamplemightbelikelytodefaulttohow
securethesupplierisinotheraspectsoffinancialservicesIneecttheyusethatasaproxyforhow
securetheirIMTservicesarelikelytobeThatmayconferanadvantageonthebigfourbanksasthey
arebetterknownandcorrespondinglyadisadvantageonlesserknownsuppliers
AnotherwaytounderstandtheissueisthroughthelensofbehaviouraleconomicsBehavioural
economicshasshownthatformanypeoplelossesloomlargerthangainsleadingthemtobe
characterisedbylossaversionInthecontextofchoosingbetweenafamiliarandknownsupplieranda
newuntestedsuppliermanypeoplehaveanaturaltendencytostickwithwhatisknown
Thesebehaviouralfactorsareknownas‘lossaversion’andthe‘familiarityheuristic’Togethertheycould
explainwhysomeconsumersexhibithighlevelsofanxietyaboutlosingmoneyandwhytheystickto
‘knownbrands’orthetriedandprovenWewouldexpecttheseconcernstodissipateovertimeaswhat
arecurrently‘newer’brandsbecomebetterknown
Asnotedinchapter(section)ourviewisthatifbank-initiatedIMTsareindeedsaferthanthose
initiatedbynon-banksuppliersitisduetoregulationcodesofconductandproductfeaturesthatare
notaimedprimarilyatprotectingIMTservicecustomersorensuringthesafedeliveryofIMTsRather
thesemeasureshaveotherobjectivessuchasprotectingdepositorsandensuringthesafetyofonline
bankingtransactions
  AlthoughneitherVisanorMastercardhavedirectcontractualrelationshipswithmerchantstheycanensuremerchant
compliancewiththeirrulesthroughthemerchant’sacquirer
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Foreign currency conversion services inquiry—Final report
WhathappenstounsuccessfulIMTs?
GenerallyfundssentviaIMTareeithersuccessfullydeliveredtotherecipientorarereturnedtothe
customerinitiatingtheIMTThereareanumberofreasonswhyanIMTmaybeunsuccessfulincluding
furtherdetailsbeingrequiredfromthecustomertocompletetheIMT(thisincludessituationswhere
theinitiatingcustomerprovidesincompleteorincorrectaccountdetailsfortherecipient)
anoverseasbankrejectingthetransaction
thetransactionbeingblockedbecausefraudissuspectedorduetoanti-moneylaunderingor
terrorismfinancingconcerns
therecipientbeingunabletoprovidevalididentificationtocollectthefunds
ShouldconsumersbeconcernedaboutthesecurityofIMTs?
AppendixCsetsouttherelevantregulatoryobligationsthatapplytovariousIMTsuppliers
Forexample
IMTsuppliersincludingnon-bankIMTsupplierswhoholdanAustralianFinancialServicesLicence
areobligedtoprovidefinancialservicesecientlyhonestlyandfairly
banksarealsosubjecttoprudentialrequirementsdetailingthelevelsofliquidassetsandregulatory
capitaltheymustholdinrelationtotheirbankingactivities
mostbanksarevoluntarysubscriberstotheePaymentsCodewhichamongotherthingsprovides
fraudprotectionsforconsumers
Inthecourseofundertakingtheinquirywedidnotobserveevidencethatwouldsuggestconsumers’
IMTfundsarelostbyinquirysuppliersincludingbothbankandnon-banksuppliersAlthoughinstances
ofIMTsgetting‘lost’appeartobelowtheePaymentsCode(seeappendixC)couldaordconsumers
someadditionalprotectionsshouldaproblemoccurwithanIMT
Currentlymostnon-bankIMTsuppliersarenotsignatoriestotheePaymentsCodeTheProductivity
CommissionrecommendedthattheAustralianGovernmentshouldgiveASICthepowerbyend
tomaketheePaymentsCodemandatoryforanyorganisationthatsendsorreceiveselectronic
payments

TheACCCnotesthatthisrecommendationifacceptedwouldseetheePaymentsCodeextend
toIMTsuppliersWeseevalueintheconsumerprotectionmeasurescontainedinthecodebeing
consistentlyappliedandenforcedacrossallIMTsuppliersHoweveruntilsuchtimeasamandatory
codeisinplacenon-bankIMTsuppliersshouldconsiderbecomingsignatoriestoaordtheircustomers
additionalprotections
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemFinalReportCanberrah t t p s 
wwwpcgovauinquiriescompletedfinancial-systemreportfinancial-systempdfRecommendation(p)
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Foreign currency conversion services inquiry—Final report
Appendix A: Notice to the ACCC
TheNoticeissuedbytheTreasureronOctoberiscopiedbelowOnMarchtheTreasurer
extendedtheduedateforthefinalreporttoJuly

Foreign currency conversion services inquiry—Final report
Appendix B: Data collection
AspartofthisinquirytheACCCsoughtdataonthepricesofdierentinquiryservicesovertimeand
thecostsinquirysuppliersincurinprovidingtheinquiryservicesThisappendixsetsouttheACCC’s
approachtocollectingpricedataandinquirysuppliercostdata
B. The collection of price data for the inquiry services
TheACCCengagedaconsultanttocollectpricedataon
internationalmoneytransfer(IMT)services
foreigncashservices
paymentcardservices
travelcardserviceseachasdefinedinchapter(section)
ThepricedatawascollectedanonymouslybytheconsultantfortheACCCprimarilybyusingsupplier
websitesortelephoneenquiriesThedatawascollectedoverfiveconsecutivebusinessdaysfrom
February–February
Theconsultantcollectedpricedatainrelationtohypotheticalreferencetransactionsdesignedbythe
ACCCThereferencetransactionamountsforforeigncashpaymentcardsandtravelcardswerethe
equivalentofapproximatelyAUDandAUDThereferencetransactionamountsforIMTswere
theequivalentofapproximatelyAUDandAUDThereferencetransactionamountswere
chosenbytheACCCtoreflecttheneedsofarangeofconsumerswhousetheinquiryservices
PricedatawascollectedinrelationtofivecurrenciesUSDGBPEuroFJDandPHP(tableB)
Table B.1 Currencies and services on which price data was collected
Internationalmoney
transfers
Foreigncash Paymentcards Travelcards
USD
✓ ✓ ✓ ✓
GBP
✓ ✓ ✓ ✓
Euro
✓
FJD
✓
PHP
✓
Informationoncorrespondentbankingfees
TheACCCsupplementedtheIMTpricedatacollectedbytheconsultantwithadditionalinformation
oncorrespondentbankingfeesTheACCCsoughtdetailsofcorrespondentbankingfeesdirectly
fromsuppliersasinmostcasesthisinformationwasnotpubliclyavailableTheACCCsoughtthis
informationbecausecorrespondentbankingfeescanhaveamaterialimpactonthepriceofIMT
services(chapter(section)refers)

Foreign currency conversion services inquiry—Final report
Somepricesareindicativeonly
TheACCCinstructedtheconsultanttoreportadvertisedpricesThisapproachmeansthatcompared
withthepricesdetailedinthisreporttherewerepotentiallybetterpricesavailablefromthosesuppliers
thateitherallowconsumerstonegotiatepricesorthatprovidepreferentialratesforcertaincustomers
TheACCCsoughtdataonadvertisedpricesasthisistheinformationmostreadilyavailableto
consumerslookingtocompareprices
Thepricesreportedforpaymentcardtransactionsareindicativeonlybecauseofthedelaysthat
canoccurbetweenwhenapaymentcardtransactioniscompletedandwhenitisprocessedThe
internationalcardschemesapplytheexchangeratetopaymentcardtransactionsatthetimeof
processingandtheACCChasassumedtransactionswereprocessedonthesamedayastheywere
completedAnyprocessingdelayswouldresultinachangeinprice
B. The collection of cost data from inquiry suppliers
TheACCCsoughtdatafrominquirysuppliersonthecoststheyincurinprovidingtheinquiryservices
Thisdatawassoughttoinformanassessmentoftheextenttowhichcostsdieracrosssuppliersand
businessmodelsandinturntheextenttowhichthosecostdierencescontributetodierencesin
pricesInthecaseofIMTservicestheACCCanticipatedthattheanalysiswouldalsoconsiderwhether
AustraliansuppliersincurspecificcoststhatcontributetoAustralianIMTpricesbeingamongthe
highestintheworld

TheACCCwasunabletoobtaincomparablecostdatafrominquirysupplierstoundertakethisanalysis
Partofthereasonforthisisthatsomeinquirysuppliersdonotmaintaindataspecificallyinrelation
tothecostofsupplyingtheinquiryservicesincludingonthecostofsupplyingthoseservicesto
consumersandsmallbusinessesThismeantthattogivecostdatatotheACCCmostinquirysuppliers
hadtomakeanumberofassumptions
Thedieringbasisoftheinquirysuppliers’assumptionswhilegenerallyreasonableinthecontextof
eachsupplierproduceddatathatcouldnotbecomparedacrossinquirysuppliersTheriskofmaking
comparisonsbasedonthedatareceivedwasapparentinthelargevariationsinestimatedcostsof
similarinquirysuppliersthatcouldonlybeexplainedbydieringcostassumptions
 TheWorldBankRemittancePricesWorldwideIssueSeptemberhttpsremittancepricesworldbankorgsites
defaultfilesrpwreportseptpdf

Foreign currency conversion services inquiry—Final report
Appendix C: Regulation applying to
inquiry suppliers
TheinquirysuppliersaresubjecttoarangeofregulationThenatureandextentofthatregulation
dependsonasupplier’scharacteristicsincludingwhetherthesupplierisanauthoriseddeposit-taking
institution(ADI)
Prudential standards
ADIsaresubjecttoprudentialsupervisionbytheAustralianPrudentialRegulationAuthority(APRA)An
ADIisacorporationwhichhasbeenauthorisedbyAPRAtocarryona‘bankingbusiness’inAustralia

AnADIisrequiredtomaintainsucientlevelsofregulatorycapitalandliquidassetstoactasabuer
againsttheriskoflossassociatedwithitsactivitiesThisistoensurethatanADIcanmeetitsfinancial
obligationsastheyfalldueandwithstandaperiodofsevereliquiditystressTheamountofregulatory
capitalandliquidassetsanADIisrequiredtoholddependsuponthesizecomplexityandriskprofileof
theinstitution

Australia’s Financial Services Licensing regime
EntitiesthatcarryonafinancialservicesbusinessinAustraliagenerallyneedtohaveanAustralian
FinancialServicesLicence(AFSL)Thisincludesnon-ADIsuppliersoftheinquiryservices
TheholderofanAFSLissubjecttoanumberofobligationsthatmustbemetandreportedontothe
AustralianSecuritiesandInvestmentsCommission(ASIC)Theseobligationsrelatetominimumfinancial
andliquidityrequirementsstangeducationandtraininglevelsriskmanagementsystemsconduct
requirementsandconsumerdisclosureinrelationtotheprovisionoffinancialservices

Theconsumer
disclosurerequirementsincludetheneedtoproduceaProductDisclosureStatement(PDS)aFinancial
ServicesGuide(FSG)orinsomeinstancesbothaPDSandFSGforeachfinancialproductorservice
andtoprovidethemtoconsumersusingeachproductorserviceAPDSmustinclude‘clearconcise
andeectivedisclosure’offeesandchargesfortheuseoftheproductAFSGmustincludeinformation
suchasthemeansbywhichtheserviceproviderisremuneratedfortheservicesbeingoered

AML/CTF laws
FinancialinstitutionsinAustraliaengaginginfinancialservicessuchasdeposit-takingservicesand
currencyconversion(includingIMTs)aresubjecttoAustralia’santi-moneylaunderingandcounter-
terrorismfinancing(AMLCTF)lawsTheselawsaimtodetectdeteranddisruptmoneylaunderingthe
financingofterrorismandotherseriousfinancialcrimes(amongotherthings)

Financialinstitutions
canfacehighpenaltiesiftheyfailtocomplywiththeselaws

Similarlawsalsoapplyinothercountries
UnderAustralia’sAMLCTFlawsrelevantfinancialinstitutionsmustdeveloprisk-basedsystemsand
controlsdependingonthenaturesizeandcomplexityoftheirbusinessandproportionatetothe
moneylaunderingandterrorismfinancingriskGloballyIMTservicesareconsideredtobeathigher
riskofbeingusedformoneylaunderingorterrorismfinancingpurposesLocallyAUSTRAChassaid
 BankingAct(Cth)s()
 SeeAPRAAuthoriseddeposit-takinginstitutionsstandardsandguidancehttpswwwapragovauadi-standards-and-
guidanceviewedApril
  ASICAprilYourAFSlicenceobligationsexplainedhttpsasicgovaufor-finance-professionalsafs-licensees
your-ongoing-afs-licence-obligationsviewedApril
 ASICOctoberRGDisclosureProductDisclosureStatements(andotherdisclosureobligations)ht t p s 
downloadasicgovaumediarg-published--october-pdfpparappara
 Anti-MoneyLaunderingandCounter-TerrorismFinancingAct(Cth)s()(aa)
 ForexampleinCBApaidamillionpenaltyforcontraventionsoftheAnti-MoneyLaunderingandCounter-
TerrorismFinancingAct(Cth)seeAUSTRACJuneAustracandCBAagreempenaltyhttpwww
austracgovaumediamedia-releasesaustrac-and-cba-agree-m-penaltyviewedMarch

Foreign currency conversion services inquiry—Final report
thatIMTservicesare‘vulnerabletoabuseandexploitationbycriminalandterroristgroupsformoney
launderingandterrorismfinancingpurposes’

RelevantfinancialinstitutionsmusthaveanAMLCTFprogramwhichassessestheAMLCTFriskof
thebusinessandimplementpoliciesandgovernancemeasurestocontrolthatriskThelawspecifically
requiresimplementationofaKnowYourCustomer(KYC)frameworksothebusinesscanidentifyits
customersandthenaturalpersonsbehindthemBusinessesmustreportontheircompliancewiththese
measurestoAUSTRAC

AswellastheabovetotheextentthattheinquirysuppliersprovideIMTservicesbutarenotfinancial
institutionstheymustalsoregisterwithAUSTRACToregistertheseorganisationsmustprovide
detailedinformationabouttheirbusinessandmustobtainandkeepnationalpolicecertificatesor
nationalhistorychecksforkeypersonnelRegistrationmayberefusedsuspendedorcancelledifthe
organisationhasan‘unacceptable’riskofmoneylaunderingterrorismfinancingpeoplesmugglingor
otherseriouscrime

ePayments Code
TheePaymentsCodeappliestoconsumerelectronicpaymenttransactionsincludingATMEFTPOS

andcreditcardtransactionsonlinepaymentsinternetandmobilebankingandBPAYTheePayments
CodealsoappliestoIMTsinitiatedonline
ThebigfourbanksandoneotherinquirysupplierhavevoluntarilysubscribedtotheePaymentsCode
andsoareboundbyit

TheCodeprovidessomeprotectionstoconsumersengagedinelectronic
transactionsincludingIMTsandoverseascardpaymentsTheseinclude‘clearandunambiguous’
disclosureofthetermsandconditionsofuseofthefacilityprovisionofreceiptsandtransaction
statementsonrequestnoconsumerliabilityforlossescausedbyfraudinsomecircumstancesandno
consumerliabilityforlossescausedbysystemorequipmentmalfunction

WheretheinquirysupplierisalsoanADIpursuanttotheCodeconsumerswillalsoreceivereasonable
assistancefromthesuppliertorecoupmistakeninternetpaymentsandtheabilitytoexporttheirdata
toanewsupplieroftheirchoosing

 AUSTRACNovemberhttpwwwaustracgovaunewsaustrac-statementviewedMarch
QuestionNoBEMaySenateStandingCommitteeonLegalandConstitutionalAairsAttorneyGeneral’s
Portfoliohttpswwwaphgovau~mediaCommitteeslegconctteestimatesbudAGDAGDBE-pdf
 AUSTRACDecemberAMLCTFprogramsoverviewhttpswwwaustracgovaubusinesshow-comply-
guidance-and-resourcesamlctf-programsamlctf-programs-overviewviewedApril
 AUSTRACEnrolorRegisterwithAUSTRAChttpswwwaustracgovaubusinessnew-austrac-start-hereenrol-or-
register-austracviewedJuly
 TheePaymentsCodedefinesEFTPOSas‘electronicfundstransferatthepointofsale—anetworkforfacilitating
transactionsatthepointofsale’
ASICePaymentsCodeMarchhttpsdownloadasicgovaumediaepayments-code-published--
march-pdf
 ANZCBANABPayPalandWestpachavesubscribedtotheePaymentsCodeSeeASICMarchePayments
Codehttpsdownloadasicgovaumediaepayments-code-published--march-pdf
 ASICAprilePaymentsCodesubscribershttpsasicgovaufor-consumersbankingepayments-code-
subscribersviewedApril
 ASICMarchePaymentsCodehttpsdownloadasicgovaumediaepayments-code-published-
-march-pdfchC

Foreign currency conversion services inquiry—Final report
Appendix D: The New Payments Platform
and the Bulk Electronic Clearing System
TheNewPaymentsPlatform(NPP)andtheBulkElectronicClearingSystem(BECS)aresystems
whichareusedtosettlepaymentsTheNPPisdesignedtosettlepaymentsinrealtime

TheNPP
alsoallowsuserstomakepaymentsusingpayeeidentificationdetailssuchasemailaddressesand
phonenumbers(whicharelinkedtoaPayID)aswellasthroughBSBandaccountnumbers

Future
innovationsinhowpaymentscanbemadethroughtheNPPareexpectedbyitsownerandoperator
NPPAustraliaLimited(NPPA)

RealtimesettlementandmoreconvenientaddressingofpaymentsusingPayIDaresignificant
innovationsnotavailablethroughBECSForthesereasonssuppliersmayprefertheNPPtoBECSasa
meansofdirectlyaccessingpaymentsysteminfrastructureHoweverNPPservicesarestillbeingrolled
outbymanyADIssoitisnotyetacompletealternative

AccessingtheNPPiscontingentonanapplicantsatisfyingcertainentryrequirementsForexample
asatJunedirectparticipantsintheNPPmustbeanADIorrestrictedADIholdanexchange
settlementaccount(ESA)withtheRBAandbeashareholderofNPPA

TheNPPAboardmustalso
approveapplicationsforparticipationintheNPPTheNPPAboardincludesrepresentativesfroma
numberofbankswhichcompetewithnon-bankIMTsuppliers
TherearealsoentryrequirementstoBECS

InorderforanIMTsuppliertobecomeaTierparticipant
inBECS(andobtaindirectaccesstoBECS)thesupplierwouldneedtoeitherbecomeanADIbecome
anESAholderordemonstratethatitissubjecttoadequateprudentialsupervisionandbeofsucient
financialstandingtobeaparticipant

 NPPAustraliaThePlatformhttpswwwnppacomauthe-platformviewedApril
ReserveBankofAustraliaNewPaymentsPlatformFunctionalityandAccessConsultationhttpswwwrbagovau
payments-and-infrastructurenew-payments-platformfunctionality-and-access-consultationhtmlviewedApril
 NPPAustraliaThePlatformhttpswwwnppacomauthe-platformviewedApril
ReserveBankofAustraliaNewPaymentsPlatformFunctionalityandAccessConsultationhttpswwwrbagovau
payments-and-infrastructurenew-payments-platformfunctionality-and-access-consultationhtmlviewedApril
 NPPAustraliaThePlatformhttpswwwnppacomauthe-platformviewedApril
 Seeforexample
CYeatesMarchLowetellsbanksslowpaymentrolloutcouldlimitcompetitionTheSydneyMorningHeraldh t t p s 
wwwsmhcomaubusinessbanking-and-financelowe-tells-banks-slow-payment-rollout-could-limit-competition-
-pachtmlviewedApril
CYeatesJanuaryWestpacfastpaymentsrollouta‘tippingpoint’TheSydneyMorningHeraldhttpswwwsmh
comaubusinessbanking-and-financewestpac-fast-payments-rollout-a-tipping-point--ptochtmlviewed
April
 ReserveBankofAustraliaJuneNPPFunctionalityandAccessConsultationConclusionsPaperhttpswwwrba
govaupayments-and-infrastructurenew-payments-platformpdffunctionality-and-access-reportpdfpp
viewedJune
 AustralianPaymentsClearingAssociationRegulationsforBulkElectronicClearingSystemFrameworkhttpswww
auspaynetcomausitesdefaultfiles-BECSRegulationsVersion-Eective
Januarypdfpart
 AustralianPaymentsClearingAssociationRegulationsforBulkElectronicClearingSystemFrameworkhttpswww
auspaynetcomausitesdefaultfiles-BECSRegulationsVersion-Eective
Januarypdfreg

Foreign currency conversion services inquiry—Final report
Changes to the NPP’s requirements for direct access have
been recommended by other reviews
TheProductivityCommissionobservedinitsinquiryintoCompetitionintheAustralianFinancialSystem
thataccessingtheNPPdirectlyrequirestheapprovaloftheNPP’sgoverningbodywhichincludes
representativesofsevenbanksTheProductivityCommissionstatedthatthis‘requiresnewcompetitors
tobeacceptedbytheinitialparticipantswhichcouldreasonablybeexpectedtoinvolveconflictsof
interest’

TheProductivityCommissionrecommendedthat
theNPPshouldbesubjecttoanaccessregimeimposedbythePaymentsSystemBoard
thePaymentsSystemBoardandACCCshouldinvestigatehowthefunctionalityoftheNPPcouldbe
improvedtopromotecompetitionwithintheNPPandacrossthepaymentssystemmorebroadly

TheRBAwithinputfromtheACCCstartedareviewintotheaccessrequirementsfortheNPP
andthefunctionalityoftheNPPinOctoberOnJunethatreviewmadeanumberof
recommendationsincluding
NPPAshouldappointathirdindependentdirectorandshouldreviewitsprocessesforapplications
foraccesstotheNPPWhereanapplicationhasbeenrejectedtheapplicantshouldbeableto
askforareviewofthedecisionbyanEvaluationPanelThispanelshouldbecomprisedofthree
independentdirectorsandtwoindependentexternalexpertsappointedbythoseindependent
directors

NPPAshouldassessandreportonoptionsforamendingtheNPPRegulationsandother
arrangementstoallowforanentitythatisnotanADItopotentiallybecomeanNPPParticipantThe
participationofnon-ADIswouldbesubjecttorequirementsappropriatelytailoredandcalibratedto
thekeyriskandoperationalconsiderationsessentialforparticipationintheNPP

NPPAshouldintroducemoregradationintotheshareholdingrequirementbycreatingatleastone
additionallowerbandsothatsubscriptionrequirementscanbemorecloselytiedtoanentity’ssize
orexpectedcontributiontoNPPtransactionvolumes

TheRBAwiththeassistanceoftheACCCwillconductanotherreviewofNPPfunctionalityandaccess
issuesstartingnolaterthanJulyThisreviewcouldtakeplaceearlieriftheRBAbecomesawareof
significantissuesorconcernsregardingNPPaccessorfunctionality
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemhttpswwwpcgovauinquiries
completedfinancial-systemreportfinancial-systempdfp
 ProductivityCommissionAugustCompetitionintheAustralianFinancialSystemhttpswwwpcgovauinquiries
completedfinancial-systemreportfinancial-systempdfp
 ReserveBankofAustraliaJuneNPPFunctionalityandAccessConsultationConclusionsPaperhttpswwwrbagov
aupayments-and-infrastructurenew-payments-platformpdffunctionality-and-access-reportpdfp
 ReserveBankofAustraliaJuneNPPFunctionalityandAccessConsultationConclusionsPaperhttpswwwrbagov
aupayments-and-infrastructurenew-payments-platformpdffunctionality-and-access-reportpdfp
 ReserveBankofAustraliaJuneNPPFunctionalityandAccessConsultationConclusionsPaperhttpswwwrbagov
aupayments-and-infrastructurenew-payments-platformpdffunctionality-and-access-reportpdfp

Foreign currency conversion services inquiry—Final report
Appendix E: Visa and Mastercard
BothVisaandMastercardhaveSchemeRulesinplacetoaddresstheissueofunexpectedfeesin
internationaltransactionsamongothermatters
Visa
RuleoftheVisaCoreRulesandVisaProductandServiceRules(VisaRules)requiresthat
merchantwebsitesclearlyandprominentlydisplaythecountryofthemerchant’sorpayment
facilitator’slocationatthe‘checkout’pointofatransaction

IfVisaidentifiesnon-compliancewithaVisaRulebyamerchantVisamayinitiateacomplianceaction
againstthemerchant’sacquirer(thefinancialinstitutionthatprocessescreditordebitcardpayments
onbehalfofamerchant)andrequestthatthemerchant’sacquirerbringitsmerchantintocompliance
withtheruleVisahasarightundertheVisaRulestoissueaNon-ComplianceAssessmentforviolations
oftheVisaRulesANon-ComplianceAssessmentcanincludewarningletterswithaspecificdatefor
correctionandmonetaryfeesVisaretainsadiscretionforrepeatedviolations
InVisaintroducedaMerchantLocationComplianceProgramtopromoteaccurateassignment
ofmerchantoutletlocationandmerchantwebsitedisclosurebythemerchant’sacquirerAspartofthe
programVisaremindedmerchants’acquirersthattheymustensurethate-commercemerchantsare
correctlyandprominentlydisplayingmerchantlocationinformationtothecardholder
VisaoerscardholdersamethodtonotifyVisaofmerchantswhoarenotcomplyingwithaVisaRule
Thatwouldincludeabusinesswhosewebsitedidnotclearlyandprominentlydisplaythecountryof
themerchantorpaymentfacilitatoratthe‘checkout’pointofatransactionWherecardholdersare
chargedanunexpectedinternationalfeebytheircardissueronpurchasesmadeonawebsitethatthe
cardholderthoughtwasinAustraliatheycanaswellasqueryingthefeewiththeircardissuernotify
VisaofthemerchantatusavisacomFormsvisa-ruleshtml
Mastercard
RuleoftheMastercardRulesstatesthatmerchants’acquirersmustensurethateachoftheir
merchantsprominentlyandclearlydisclosetothecardholderatallpointsofinteractionthelocation
ofthemerchantThisistoenablethecardholdertoeasilydetermineamongotherthingswhether
thetransactionwillbeadomestictransactionoracross-bordertransaction(andsowhetheran
internationaltransactionfeemightapply)Themerchantlocationmustbedisclosedbeforethe
cardholderispromptedtoprovidecardinformation

Mastercardstatesthattransactionsbeingsenttoitascross-bordertransactionsbutwherethe
cardholderthoughtthetransactionwasdomesticareinconsistentwiththeexpectationsithasofits
networkparticipants
Amerchant’sacquirerwhosemerchantsdonotcomplywiththeMastercardRulesmaybesubject
toanon-complianceassessmentwithalimitedtimetocuresuchnon-compliancebeforemonetary
assessmentsareimposedMastercardreservestherighttolimitsuspendorterminateparticipationin
itsschemeifthemerchant’sacquirerfailstocomplywiththeMastercardRules
 VisaAprilVisaCoreRulesandVisaProductServiceRuleshttpsusavisacomdamVCOMdownloadabout-visa
visa-rules-publicpdfr
 MastercardJuneMastercardRuleshttpswwwmastercarduscontentdammccomglobaldocuments
mastercard-rulespdfr

Foreign currency conversion services inquiry—Final report
MastercardhastoldtheACCCthatitsabilitytobringaboutbehaviouralchangeatamerchantlevelis
limitedOneactionMastercardtakesistofollowupcomplaintswiththemerchant’sacquirerremind
themoftheMastercardRulesandrequesttheytakeactionMastercardhasstatedtotheACCCthat
itcontinuallyreviewscompliancewithRuleItactsonreferralsfrombanksandhasanongoing
complianceprogramInthesecondhalfofMastercardwilltesttheaccuracyofmerchantclaims
abouttheirlocationincountriesandterritories