Irish Banks Charging Online Shoppers €62 Million a Year

Online shopping continues to grow at a fast rate in Ireland .
According to recent UCD research – the total retail online spend by Irish shoppers was €5 billion in 2018 – with 60% (€3 billion) of that spent outside Ireland.

So – What is the cheapest way to pay online ?

The banks are charging their customers millions of Euro in foreign currency transactions when Irish shoppers use their debit or credit cards to purchase on non Euro websites. We estimate that figure to be €62 million in 2019.

A recent survey on behalf of Paypal forecast that Irish consumers will spend €7.8 billion online in 2019 rising to €10.1 billion by 2020.

We estimate that the majority of that 60% of online spending that goes outside Ireland is spent on UK websites . A smaller proportion will be spent on USA and maybe Chinese and other EU sites. We estimate that 40% of all Irish online retail spending is going outside the Eurozone . (It is probably more than that ) .
So in 2019 – 40% of the forecast online spend of €7.8 billion works out at €3.12 billion spent online outside the Eurozone .

Bank Charges

When paying by a debit or credit card in a non Euro currency – the “main” Irish banks charge fees of around 2% . That will work out at a total of €62 Million in charges over the year.
In 2020 those charges could be as much as €80 million.
(See exactly what each bank charges here)

How to Avoid Currency Charges when Shopping on UK or US websites .

Fee Free Debit Cards
N26 is one online bank that provides a debit card that has no foreign currency spending fees.
A prepaid debit card is also available in Ireland from Revolut that also doesn’t charge fees when spending in non Euro currencies.

Amazon : Some people in Ireland may think they can avoid or reduce currency charges by paying in Euro on sites such as Amazon. But the exchange rate used by Amazon’s currency converter will end up costing you more than paying in Sterling.
An example from June 14th 2019.
Order total on Amazon UK = £512.49 GBP
Amazon converted that to €598.63 Euro.
But if you opted to pay in Sterling – with an Irish Visa Debit card you would end up paying just €577.45. (Plus card fees) . Even with a 2% card fee it would cost just under €589 (a saving of over €9)

Using Paypal:
Using Paypal will work out more expensive than a debit card when it involves currency conversion. If you are buying in Sterling and have Sterling in your Paypal account – then using that to pay will be fine.
But if you need to convert Euro to Sterling etc. with Paypal you will typically get a worse rate than Visa or Mastercard
A Real example : (Using a Sterling balance on Paypal to buy in Euros)

A purchase costing £1587 Euros paid with Paypal Sterling balance ended up costing £1458 GBP .

On the same day ( May 27th 2019), if using a Visa debit card with a 2% currency conversion fee capped at €11.43 – it would have cost £1416. A saving of £42.
If the Visa card had no currency fee – it would have cost just £1405 GBP – a saving of £53 pound .

Summary :
If you want to avoid being one of the people that will collectively end up paying an estimated total €62 Million of card currency charges to banks in Ireland in 2019 – then you need to know – What is the cheapest way to pay online ?

  • Do Get a debit card that does not charge fees on spending in a non Euro currency. N26 and Revolut are the two most popular in Ireland. Why not get both – they are free . See our comparison of Revolut and N26 here.
  • Don’t use Amazon’s currency converter – it will work out more expensive than using your card (even if your card adds fees)
  • Don’t use Paypal to convert currency when purchasing in non Euro currencies – it will always be more expensive than using your debit or credit card.

Comparison of Current Bank Account Charges in Ireland