Foreign money and NZ money

Visa takes cut of foreign currency refunds

When you’re shopping online and paying by credit card, the big five banks take a cut on every purchase made in a foreign currency – Kiwibank charges 1.85% at one end of the scale while ANZ and Westpac hit you for 2.5% at the other.

But ANZ, ASB and BNZ Visa cardholders also need to be aware they’ll pay currency conversion fees on any refunds they receive as well.


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One Consumer member discovered this when he bought a $2151 television from Harvey Norman using an international Visa card. The retailer’s website accepted the order and the money was taken from the card. But when the sales team reviewed the order, the company chose not to accept it and refunded the money four days later.

With his bank adding a 3% charge on the original transaction and the refund, our member was $118 out of pocket – with nothing to show for it.

We asked ANZ, ASB and BNZ why they applied fees to refunds as well as payments. All three said Visa (unlike Mastercard) charged fees to process payments and any credits – so they passed both on to cardholders.

Kiwibank and Westpac say when any customer (Visa or Mastercard) receives a full refund on their credit or debit card, they will be reimbursed for the currency conversion fees on the original payment – a fair approach. These banks primarily offer Mastercard, though some customers have Visa (credit or debit cards).

If you’re with ANZ, ASB or BNZ (and have the choice), using Mastercard over Visa when making an overseas purchase will avoid the risk of being stung twice if the transaction is reversed.

Otherwise, you could haggle with your bank. The Credit Contracts and Consumer Finance Act states all credit fees must be “reasonable”.

After we raised the issue with Visa, the company said it will discuss this issue with its clients (the banks) “to determine the most appropriate way forward in light of the impact on their customers” considering the recent growth of international transactions.

We hope to see Visa follow Mastercard’s example.

Visa and Mastercard conversion fees

  US$1000 purchase US$1000 refund Your credit card statement
Mastercard -$32.48 +$32.46 $0A 
Visa -$32.61 -$32.48   -$65.09 

GUIDE CONVERSION FEES were based on BNZ Mastercard and Visa exchange rates for a purchase made on December 13, 2017 and a refund on that purchase made on December 14, 2017. Conversion fees are charged in addition to the payment. Athe conversion rate is likely to change between the date of the purchase and the refund, so the refund amount in New Zealand dollars may differ from the purchase amount. On the dates we looked at, the refund was $10.30 less than the purchase for the Mastercard and $5.65 less than the purchase for the Visa.