Sending money overseas and buying foreign cash, will be the focus of a new ACCC inquiry into foreign currency conversion services.
ACCC chair Rod Sims said small businesses are being urged to share their experiences as part of the investigation.
“We are keen to hear from small businesses on their experience on a range of issues, including transparency of pricing, costs, barriers to entry, and other factors affecting competition in the sector.”
The inquiry comes amid reports from The World Bank that Australia is the third most expensive G20 country for small business to send money from.
“Whether you’re buying Euros from your bank for an upcoming trip, sending money to family in Indonesia, or you’re a small business trading with suppliers in New Zealand, foreign exchange services are used by Australians every day,” Sims said.
“The World Bank has reported that Australians sent around AU$8.8 billion overseas in 2016. Yet they also found that Australia is the third most expensive G20 country for consumers and small business to send money from,” Sims said.
“This means that if you send AU$1000 overseas from Australia, on average you'll pay AU$9 more than if you sent an equivalent amount from the United Kingdom, and AU$23 more than if you sent it from the United States.
“We will be examining why major companies in Australia, including the big four banks, seem to be able to consistently charge high prices.”
The ACCC's inquiry is initiated under Part VIIA of the Competition and Consumer Act (2010) and will afford the ACCC with compulsory information gathering powers.
It will examine price competition amongst suppliers of foreign currency conversion services and consider how easily potential entrants to the market can compete.
Sims said the four banks will be a key focus.
“The exchange rate you google is not the exchange rate you get from the big four banks. The difference is known as the ‘mark-up’, and it’s often a big part of the price consumers pay when converting currency.
“Many consumers have complained to the ACCC about these high mark-ups, as well as the transaction fees that often apply on top of that."
The ACCC has released an issues paper today, encouraging all parties to provide their views and experiences to the inquiry by 22 October 2018.
The issues paper can be found at Foreign currency conversion services inquiry, and written feedback can be sent to forex@accc.gov.au.
The ACCC is expected to provide its final report to the Treasurer in May 2019.