Online Shoppers Could be Charged €80 Million in Fees By Irish Banks

Online shopping continues to grow at a fast rate in Ireland .
Irish consumers have done even more of their shopping online during the coronavirus pandemic. Before you start spending online – it can be useful to know what is the cheapest way to pay when purchasing in non-euro currencies.

According to the Central Bank of Ireland, e-commerce accounted for 41.8% of total card spending in Q1 2020.
Total e-commerce expenditure amounted to €1.9 billion in March 2020, an increase of 11 per cent (or €185 million) from March 2019 . (This includes retail as well as online transactions such as utility bills , insurance etc)

How Much Are The Banks Charging ?

Irish banks are charging their customers millions of Euro in foreign currency fees when shoppers use their debit or credit cards to purchase on non-Euro currency websites.

We estimate those charges could total about €80 million in 2020.

A survey in 2018,on behalf of Paypal , forecast that Irish consumers would spend €10 billion online in 2020. (These figures will definitely be a lot bigger now because of the pandemic.)

How Much of the Online Spending is Done Outside Ireland ?

According to UCD research – the total retail online spend by Irish shoppers was €5 billion in 2018. They estimated that 60% (€3 billion) of that was spent outside Ireland.

We estimate that the majority of the 60% of Irish online spending that goes outside Ireland is spent on UK websites. A smaller proportion will be spent on USA sites and maybe some Chinese and other EU sites. So we think that at least 40% of all Irish online retail spending is going outside the Eurozone.

Therefore , 40% of the forecast 2020 online spend of €10 billion works out at €4 billion …. possibly being spent outside the Eurozone .

Bank Charges on Foreign Currency Transactions

When paying by a debit or credit card in a non Euro currency – the “main” Irish banks charge fees of around 2% .
That could work out at a total of €80 Million in charges over the year.
Someone spending a €1000 Euro on UK websites could end up paying €20 in bank card conversion fees.

(See exactly what each bank charges here)

How to Avoid Bank Currency Charges

Fee Free Debit Cards

N26 is one online bank available in Ireland that provides a debit card without any foreign currency spending fees.

Bunq is another EU licenced bank that provides a “Travel Card” that also has no foreign spending fees. Read our Review of the Bunq Travel Card

A popular prepaid debit card is also available in Ireland from Revolut . It has no fees when spending in non Euro currencies.

Avoid The Amazon Currency Converter

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 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 a Euro 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)

Avoid Using Paypal

Using Paypal will work out more expensive than a debit card when it involves a 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 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 you used 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 (N26 for example) – it would have cost just £1405 GBP – a saving of £53 pounds !

Summary :

If you want to avoid contributing to the estimated €80 Million of currency charges to banks in Ireland in 2020 – 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.
  • 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.

A Detailed Comparison of Current Bank Account Charges in Ireland