Option to disable GBP transactions to block dynamic currency conversion


#101

@NFH, nice for you to quote Revolut’s presentation of this, but I’m sorry, it effectively amounts to a fee. On average, rates won’t move, though of course they could move up one weekend and/or down the next (difference between Friday and Monday). On average they won’t move. But Revolut pockets the markup every weekend.


#102

No, I’m not quoting Revolut. I’m giving you my analysis as an FX subject matter expert. When markets are closed for the weekend, there’s no guarantee that Monday’s open will be close to Friday’s close. Revolut, like any other liquidity provider offering tradable prices when markets are closed, needs to add a margin to protect itself. It’s not a fee because there is no market rate.


#103

@NFH
I’m not sure what it takes to be an FX subject matter expert, I would’ve thought it’s a pretty simple subject.
Of course there are no tradable prices on the weekend, and of course there is no guarantee that Monday’s open is near Friday’s close. Any events or data on the weekend could make the rate move either way at Monday’s open. Extreme volatility and movements may occur after dramatic events related to wars, terrorism, financial stability issues, etc.
However:

  1. Wild movements are likely to be rare;
  2. It’s a zero sum game: One currency moves up, another down. It’s all relative;
  3. Revolut’s exposure on the weekend will be a reflection of the currency spent and the currency held to finance this expenditure in users’ Revolut accounts;

In the end, you cannot say that Revolut doesn’t make money off this 0.5% or 1% margin they charge on weekends. On average (taken over a year, say), the currency movement on weekends is likely to be (extremely close to) zero and is equally likely to be beneficial to Revolut than it is to be a liability (to more accurate predict which way this may swing would be quite hard but would require data on currencies being spent and used to finance this expenditure, relative inflation levels, interest rates and perhaps even long-term currency appreciation/depreciation trends in light of PPP valuations, national current accounts, etc).

Of course, in the case of wild (expected) currency movements on the weekend people might want to take advantage of the suddenly attractive Revolut rate. I doubt that this has been an issue for Revolut but I’ll certainly give it some thought should North Korea decide to send a nuke somewhere on a weekend or other catastrophe!


#104

I’m a former FX trader at a tier one investment bank, and I now design FX trading systems for tier one and two investment banks. Although FX is the simplest asset class, it is surprisingly misunderstood by many, both inside and outside the banking industry.

It’s unlikely that Revolut holds balances in each currency, except to match its customers’ balances. It’s more likely that Revolut back-to-backs its customers’ transactions with its liquidity providers, so there’s no FX market risk for Revolut. At the weekend, Revolut is committing to a price without this commitment being mirrored by its liquidity provider. This creates an exposure for Revolut, but Revolut is not an FX position taker. Therefore it’s necessary to estimate a worse-case rate for Monday’s open; the way to do this is to add a comfortable margin to Friday’s closing rate.

I would prefer that Revolut postpone the FX until Monday morning, giving uncertainty over the rate but avoiding any protective margin. Anyway we’re now going way off-topic.


#105

@jdp
End of the day it’s bussines,and they need to be profitable.
You can’t just pressume that markets won’t move,and pressumption like this could cost a fortune.
You can always get the perfect rate Monday to Friday,and can pre purchase currency anyway.
Don’t think it’s a huge disadvantage.

Like @NFH said, getting off topic.

Btw is DCC present on contactless payments? Like shopping abroad.

Other day crashed local Starbucks system by making contactless payment when card frozen.
Either staff didn’t notice that my card was rejected or went thru half way.Not sure.
Got my coffe and sandwich,and no money deducted.Realised only when i got home.
Offered to pay again but got it waved :smiley:


#106

@Ares, yes, I’ve seen this happen in Spain with contactless. An option came up to select the currency after returning the terminal to the waiter in a restaurant. He selected GBP contrary to instructions, which caused a big argument.


#107

Hello! Agree with @NFH, i used my Revolut Card in PayPal Spain and when i bought something in EUR i was charged in GPB making a very bad change.
I called PayPal and i was told that my card was issued in GPB and there was nothing to do. This is PayPal, not a small store.

(Sorry about my english :wink: )


#108

This is a common problem with PayPal. You can opt out of dynamic currency conversion with PayPal but it’s not obvious and is in small print. Even when you opt out, you can still sometimes be charged without explanation in the currency of your card’s country of issue.


#109

I’ve allready did it. Let’s see what happen next time. Thank you.


#110

Is Revoult looking into disabling GBP transactions? For 3 days now in Poland i came accross issue where the card terminal does not allow to pay in local currency and charge higher rate in GBP. Pointless to use their card in that case …


#111

Where have you faced this kind of problem? I live in Poland and I’ve never been in such situation.


#112

Spain is the country where this happens the most. The Spanish authorities have done little to tackle the problem, and card terminals in Spain often allow the merchant to change the currency and amount after authorisation.


#113

If I understood @PNG1964 well he is writing about another situation. He is writing about impossibility of paying in PLN because of technical issue but you are writing about unfair merchant’s actions.


#114

I live in Poland and use revolut card often. Always if POS/ATM give me DCC option I am able to change it by myself to pln on POS


#115

Yesterday in Krakow few shops i.e RED IS BAD jumper cost 169 zl charged in GBP (equal to 181 zl). Katowice shoes cost 349 zl charged in GBP (equal to 372 zl) and few other places. Card terminal does not give option to choose currency.

Card terminal was ESERVICE on both occasions


#116

So same terminals (eservice, brand of PKO BP) are in LSS shop, different merchant, same POS company, and on display I always have information about GBP, and information Accept-yellow, Decline Conversion - red (x), after pressing red on display is amount in PLN and PIN verification informtion


#117

No info on conversion. Price provided in PLN once entered PIN transaction going tru in GBP.


#118

It has never happened to me. Almost always (except ones) when I am asked about PIN I see price in currency which is used to payment. For me this is proof that merchant has provided proper currency. If I see GBP I cancel the payment procedure and I’m asking about local currency payment. Only ones I have had the situation when merchant has provided info about currency AFTER PIN.
My advise is asking about local currency payment each time where you are not in GB BEFORE you are starting to pay. It has always worked when I was abroad.


#119

I did ask in RIB and the guy told me they dont have that option. Apparently terminal is choosing “better” option itself… Biedronka, Zabka any other grocery always ask which currency before hand.


#120

This needs to be brought to MasterCard’s attention. It is against their rules. It is also considered fraud in many jurisdictions.