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## dunnersdude

143 posts

Master Geek

# 245065 17-Jan-2019 00:55

Just went to Amazon to place an order and to my surprise Amazon Currency Converter didn't appear to the ripoff I have previously thought it to be?

Last time I looked (which admittedly was at least 4 years ago), it was in the order of 5-6% higher than the "mid-point" exchange that I would look up on XE.com.

However tonight I had an order costing \$75.48 USD

When I looked at XE.com, I found 1 NZD = 0.6764 USD, and as luck would have it the NZD had slid gradually over the past 6 hours.

I did some basic calculations based on what I could find at ANZ credit cards.

1 NZD = 0.6652 USD for "buying USD" at ANZ.co.nz - I presume that this is what I would be charged if I did the transaction in USD?

That would be 75.48/0.6652 = \$113.47 x 1.025 = \$116.31 (the 2.5% being the foreign currency conversion fee charged by ANZ).

Amazon Currency Converter offered me this for \$114.86

Based on XE's rate, 75.48/0.6764 = \$111.60

So Amazon's \$114.86 represents a 2.9% premium over the "mid-point" rate from XE - that's pretty good right??

Any catches I am missing here?

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## eracode

Overarching undertones
3841 posts

Uber Geek

Subscriber

# 2162368 17-Jan-2019 03:22

When banks quote ‘buy’ and ‘sell’ rates, the convention is that (using USD as an example) a bank’s buy rate is the rate at which the bank will buy USD from you in exchange for NZD. The bank’s sell rate is the rate at which the bank will sell you USD in exchange for NZD.

However on their website ANZ potentially confuse the issue by showing rates as ‘you buy’ and ‘you sell’. This may be a bit easier to understand - but it’s sort of the reverse of what would be shown if they were following the standard ‘bank buys’ and ‘bank sells’ convention.

The ANZ approach can cause confusion when talking about buy and sell because (at least at the consumer/personal level) they quote rates the other way round from other banks. Having said that, maybe other banks also do it like ANZ ( haven’t checked other websites) but BNZ do it the ‘proper’ way.

These screenshots show the difference:

## SirHumphreyAppleby

952 posts

Ultimate Geek

# 2162376 17-Jan-2019 06:57
One person supports this post

Amazon is probably not the worst offender, but every time I've checked (which is most of the time when buying from Amazon), I have always been better off letting the card provider do the conversion and letting the bank extract their pound of flesh. Amazon bills on shipping, so it's always interesting to see what the final bill is.

## timmmay

15230 posts

Uber Geek

Trusted
Subscriber

# 2162378 17-Jan-2019 07:15

I've also checked a few times, including letting a transaction go through in NZD to double check, and every time it works out better for me to have my credit card do the currency conversion. I suggest not using the Amazon currency converter.

## CrashAndBurn

338 posts

Ultimate Geek

# 2162381 17-Jan-2019 07:28

Same here. Better rates on ALL my Amazon purchases when conversion is left with my credit card.

## trig42

Banana?
4855 posts

Uber Geek

Subscriber

# 2162388 17-Jan-2019 08:24

I got a couple of items this week, and for the first time ever, I let it do the conversion. Normally I would change to charge in USD as the banks conversion rates are better, but this time, it was pretty close to the same, and I thought after conversion fees etc it would actually cost me more to charge in USD than have Amazon charge in NZD.

## sbiddle

28266 posts

Uber Geek

Moderator
Trusted
Biddle Corp

# 2162393 17-Jan-2019 08:36

dunnersdude:

Any catches I am missing here?

Yes.

The initial conversion from USD to NZD is at the Visa / Mastercard rate, not the bank rate. The actual rate charged by Visa or Mastercard is at a rate which will be very close to the mid market rate. This will vary throughout the day but in my experience will be no more than around .20 percentage points.

The 2.5% bank margin (in the case of ANZ - other banks differ and range from 1.85% - 2.75%) is then added onto the converted NZD amount.

This means the Amazon rate is a bad one since it's around .25 percentage points more than simply letting the bank and Visa/Mastercard convert the rate.

The only situation I've ever come across where it doesn't pay to use the foreign currency and let the bank handle coversion is flights on United Airlines. If you book flights on the US site for US domestic flights you can choose to book in USD or NZD however the NZD amount they use is priced exactly at the mid market rate and then has no bank conversion fees on top.

## dunnersdude

143 posts

Master Geek

# 2162394 17-Jan-2019 08:37

I was surprised myself that Amazon looked to be cheaper so was checking to see if I had it wrong.

When I checked ANZ it appeared to be a "live rate" (they say estimates of course) and it did change slightly a few minutes later (so did seem to be live).

Based on the ANZ rate I was sure it would be more expensive - a real surprise.

In the past I could never know what the bank would charge BUT based on the XE rate Amazon appeared overly expensive. However on this occasion it appeared only 3% higher than the mid market rate (which is an impossible rate to get of course). And given I wouldn't have to pay 2.5% currency conversion fee it seemed a no brainer.

## dunnersdude

143 posts

Master Geek

# 2162396 17-Jan-2019 08:38

sbiddle:

dunnersdude:

Any catches I am missing here?

Yes.

The initial conversion from USD to NZD is at the Visa / Mastercard rate, not the bank rate. The actual rate charged by Visa or Mastercard is at a rate which will be very close to the mid market rate. This will vary throughout the day but in my experience will be no more than around .20 percentage points.

The 2.5% bank margin (in the case of ANZ - other banks differ and range from 1.85% - 2.75%) is then added onto the converted NZD amount.

This means the Amazon rate is a bad one since it's around .25 percentage points more than simply letting the bank and Visa/Mastercard convert the rate.

The only situation I've ever come across where it doesn't pay to use the foreign currency and let the bank handle coversion is flights on United Airlines. If you book flights on the US site for US domestic flights you can choose to book in USD or NZD however the NZD amount they use is priced exactly at the mid market rate and then has no bank conversion fees on top.

Are you sure ANZ would charge me close to the mid market rate? The FX rate quote on the website was as per the screenshot someone else posted above. Which was way off the mid market rate.

Based on XE's mid market rate at the exact time I purchased this, the most I stand to lose would be 47c (2.9% vs 2.5%).

Based on previous online purchases I don't believe ANZ is anywhere near close to mid market rates but will look at this closer in future.

## sbiddle

28266 posts

Uber Geek

Moderator
Trusted
Biddle Corp

# 2162417 17-Jan-2019 09:24

dunnersdude:
sbiddle:

dunnersdude:

Any catches I am missing here?

Yes.

The initial conversion from USD to NZD is at the Visa / Mastercard rate, not the bank rate. The actual rate charged by Visa or Mastercard is at a rate which will be very close to the mid market rate. This will vary throughout the day but in my experience will be no more than around .20 percentage points.

The 2.5% bank margin (in the case of ANZ - other banks differ and range from 1.85% - 2.75%) is then added onto the converted NZD amount.

This means the Amazon rate is a bad one since it's around .25 percentage points more than simply letting the bank and Visa/Mastercard convert the rate.

The only situation I've ever come across where it doesn't pay to use the foreign currency and let the bank handle coversion is flights on United Airlines. If you book flights on the US site for US domestic flights you can choose to book in USD or NZD however the NZD amount they use is priced exactly at the mid market rate and then has no bank conversion fees on top.

Are you sure ANZ would charge me close to the mid market rate? The FX rate quote on the website was as per the screenshot someone else posted above. Which was way off the mid market rate.

Based on XE's mid market rate at the exact time I purchased this, the most I stand to lose would be 47c (2.9% vs 2.5%).

Based on previous online purchases I don't believe ANZ is anywhere near close to mid market rates but will look at this closer in future.

The ANZ rate is their rate for cash / bank cheque / TT - it is not the rate that credit card transfers are done at. This initial conversion is done by Visa / Mastercard.

If you want to do some basic math (I'm a bit busy right now and on my phone) I've just paid for a US hotel about 15 mins ago which is a total of USD\$434.34 and has just appeared on my ANZ card as a total of NZD\$654.83 I can't give you the full breakdown and actual rate used as this won't appear until tonight.

## SirHumphreyAppleby

952 posts

Ultimate Geek

# 2162419 17-Jan-2019 09:34

sbiddle:

If you want to do some basic maths (I'm a bit busy right now and on my phone) I've just paid for a US hotel about 15 mins ago which is a total of USD\$434.34 and has just appeared on my ANZ card as a total of NZD\$654.83 I can't give you the full breakdown and actual rate used as this won't appear until tonight.

Exchange rate was approximately 0.679868820915352.

## rendezvous

148 posts

Master Geek

Subscriber

# 2162445 17-Jan-2019 10:14

If you use MasterCard, their exchange rate calculator is here:
https://www.mastercard.us/en-us/consumers/get-support/convert-currency.html
Don’t forget to add in the bank fee, mine is 2.5%
I’ve usually noticed that it comes out cheaper if I buy from Amazon in USD and let the conversion happen with MasterCard.

## dunnersdude

143 posts

Master Geek

# 2162474 17-Jan-2019 11:05

SirHumphreyAppleby:

sbiddle:

If you want to do some basic maths (I'm a bit busy right now and on my phone) I've just paid for a US hotel about 15 mins ago which is a total of USD\$434.34 and has just appeared on my ANZ card as a total of NZD\$654.83 I can't give you the full breakdown and actual rate used as this won't appear until tonight.

Exchange rate was approximately 0.679868820915352.

0.677646 is what XE is showing right now.

Does that imply that ANZ gave Steve an even better rate than the mid market rate?

I'm now quite confused.

## nzkiwiman

2260 posts

Uber Geek

# 2162477 17-Jan-2019 11:18

I always let Amazon do the conversion for me. That way I know exactly what I am paying when the order ships in a few days, and I don't have to worry about extra fees by the bank
I also have some another form of proof of value in case customs jumps in and wants their cut

## SirHumphreyAppleby

952 posts

Ultimate Geek

# 2162527 17-Jan-2019 12:28

dunnersdude:

Does that imply that ANZ gave Steve an even better rate than the mid market rate?

The card processor determines the exchange rate used, not the bank. ASB defines the exchange rate as being from "a range of wholesale exchange rates available or, if applicable, the government-mandated rate". There isn't one rate per se.

I'm not familiar with ANZ card processing, but does that charge, which will still be pending, include the 2.5% bank fee? If not, the exchange rate would be closer to 0.66.

## Oblivian

3356 posts

Uber Geek

# 2162554 17-Jan-2019 13:36

SirHumphreyAppleby:

dunnersdude:

Does that imply that ANZ gave Steve an even better rate than the mid market rate?

The card processor determines the exchange rate used, not the bank. ASB defines the exchange rate as being from "a range of wholesale exchange rates available or, if applicable, the government-mandated rate". There isn't one rate per se.

I'm not familiar with ANZ card processing, but does that charge, which will still be pending, include the 2.5% bank fee? If not, the exchange rate would be closer to 0.66.

Yes it seems it does.

My July purchase while in aus states 'converted at .9181 This includes any currency conversion charges'

Which is outlined as "2.5% of the NZD amount" No futher end of month catchup on fees etc

So guess you have to whack 2.5% off and work backwards from that value to find true rate.

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