Ten firms produce identical products at average and marginal cost of ten dollars. They agree to sell for twelve dollars. The agreement is a contract in restraint of trade not enforceable in the courts, at least in Anglo-American legal systems. Will it hold?
I am now in London. The ATM's give about $1.50/pound, when the official exchange rate is $1.25/pound. I decided to try cash instead of Visa, got 80 pounds for $100, which is very close to the official exchange rate.
Information costs for buyers are very high. A tourist has limited time and doesn't want to spend it shopping for better exchange rates (or walking blocks to another bank or ATM). So overcharging loses very little business.
I wonder if there are not banking regulations setting the surcharge for currency exchange. That's a remarkably consistent, and I note remarkably round, number charged, enough so that it feels set and not evolved as it were.
Similar experience here with home currency as euro: unless travelling to some undeveloped area, it is both cheaper and easier to not lift local currency but pay everything with card.
We're with USAA (Legacy from my father) who obviously has customers stationed all around the world (Military and Foreign Service.) They charged no fee for ATM withdrawals or debit card purchases, though in China I found in convenient to pay cash, that DID make me an anomaly in the mostly cashless Mainland. Sometimes they balked at the "Foreign" card, but a coworker created little "UnionPay" stickers in Photoshop that got us past the cursury visual barrier.
There were a few things that theoretically Would have required an on-shore bank—electronic payments via my phone—but the added tax (a foreign account is an audit flag, both for taxes and money laundering) made cash Just Easier.
They Did charge 12% on ordinary credit cards. Not sure what we'd do if China had abolished cash by then.
Normally at the ATMs in Lisbon (like many places in Europe) they will ask you if you want them to charge your card in your own currency or in euros. If you choose the "euros" option they will show you all kinds of dire warnings about how you are not locking in the exchange rate and might be changed almost anything. But the exchange rate if you ask for your account to be charged in euros is determined by your own bank (or more likely by some intermediary chosen by your bank, directly or indirectly) and because you are their customer, they have an incentive to give you a good rate. The ATM operator has no such incentive. So it's very unlikely that you'll get a better FX rate from the ATM provider than you do from your own bank; ignore the warnings and charge your account in euros.
Massive caveat: some debit cards impose a foreign transaction fee of around 3% which eats in to the exchange rate advantage. In the UK or rather travelling from the UK it pays to open a separate bank account with one of the new internet-only banks which tend not to do this, and charge it up with as much money as you think you will spend.
Usual advice is also: if offered the choice of being billed in local currency or dollars, go for local.
I am now in London. The ATM's give about $1.50/pound, when the official exchange rate is $1.25/pound. I decided to try cash instead of Visa, got 80 pounds for $100, which is very close to the official exchange rate.
Information costs for buyers are very high. A tourist has limited time and doesn't want to spend it shopping for better exchange rates (or walking blocks to another bank or ATM). So overcharging loses very little business.
I wonder if there are not banking regulations setting the surcharge for currency exchange. That's a remarkably consistent, and I note remarkably round, number charged, enough so that it feels set and not evolved as it were.
Use Revolut or other similar service. Exchange rates always very close to the official ones, regardless of where you are.
Similar experience here with home currency as euro: unless travelling to some undeveloped area, it is both cheaper and easier to not lift local currency but pay everything with card.
We're with USAA (Legacy from my father) who obviously has customers stationed all around the world (Military and Foreign Service.) They charged no fee for ATM withdrawals or debit card purchases, though in China I found in convenient to pay cash, that DID make me an anomaly in the mostly cashless Mainland. Sometimes they balked at the "Foreign" card, but a coworker created little "UnionPay" stickers in Photoshop that got us past the cursury visual barrier.
There were a few things that theoretically Would have required an on-shore bank—electronic payments via my phone—but the added tax (a foreign account is an audit flag, both for taxes and money laundering) made cash Just Easier.
They Did charge 12% on ordinary credit cards. Not sure what we'd do if China had abolished cash by then.
Normally at the ATMs in Lisbon (like many places in Europe) they will ask you if you want them to charge your card in your own currency or in euros. If you choose the "euros" option they will show you all kinds of dire warnings about how you are not locking in the exchange rate and might be changed almost anything. But the exchange rate if you ask for your account to be charged in euros is determined by your own bank (or more likely by some intermediary chosen by your bank, directly or indirectly) and because you are their customer, they have an incentive to give you a good rate. The ATM operator has no such incentive. So it's very unlikely that you'll get a better FX rate from the ATM provider than you do from your own bank; ignore the warnings and charge your account in euros.
Massive caveat: some debit cards impose a foreign transaction fee of around 3% which eats in to the exchange rate advantage. In the UK or rather travelling from the UK it pays to open a separate bank account with one of the new internet-only banks which tend not to do this, and charge it up with as much money as you think you will spend.
Usual advice is also: if offered the choice of being billed in local currency or dollars, go for local.
A handy household hint. Thanks.