Remove 0.5%/1% weekend markup for card purchases by delaying FX until Monday's WMR 4pm London fix

#1

Spending on one’s Revolut card at weekends is expensive, because Revolut applies a markup of 0.5% or 1% (depending on the currency pair). This is in contrast to weekdays when Revolut gives the best possible FX rates.

The foreign exchange markets are illiquid, effectively closed, between Friday 5pm New York time and Monday 7am Auckland time. Therefore if you transact any FX between these times with Revolut, either changing money between currencies or spending on the card in a currency in which you do not hold a balance, then Revolut has no FX market rate to use. Consequently Revolut takes Friday’s closing rate and applies a markup of 0.5% for currency pairs containing any combination of USD, GBP, EUR, AUD, CAD, NZD, CHF, JPY, SEK, HKD, NOK, SGD, DKK, PLN or MXN, and 1% for any other currency pair. This markup protects Revolut against any market movement when the FX markets reopen on Monday morning. I hesitate to call it a fee, because it’s not for Revolut’s profit but a markup to protect Revolut against a loss.

Traditional credit card and debit card issuers charge transactions and carry out FX on the next business day or two following a card purchase transaction. But because Revolut debits card purchase transactions immediately from one’s balance in real time using a live market FX rate, it feels the need to do the same at weekends even when there is no live market FX rate. Consequently many of us avoid spending on our Revolut cards at weekends in currencies in which Revolut does not support holding a balance, because we don’t want to pay a 0.5% or 1% markup. For example on a recent trip to Brazil, I used Revolut on weekdays and a Tandem MasterCard credit card at weekends, which billed me in arrears using MasterCard’s FX rate. I would have liked to use Revolut at weekends as well, but I wasn’t willing to pay an avoidable 1% markup.

To solve this problem and to prevent Revolut losing business at weekends, I suggest that when a customer spends on a Revolut card at weekends in a currency in which the customer does not hold a sufficient balance, Revolut should:

  • Debit only a temporary indicative amount from the balance (perhaps using Friday’s closing market rate with a 2% or 3% markup);
  • Later convert the transaction amount to the balance currency at Monday’s WMR 4pm London fixing rate, which is a widely-used FX industry benchmark rate, ideal for such purposes with deep liquidity across all traded currency pairs; and
  • Adjust the temporary indicative transaction amount to a permanent transaction amount.

The reason that I suggest a hefty markup on the temporary indicative transaction amount is because it doesn’t matter and protects Revolut against overdrawn balances if FX markets become very volatile, unlike the existing 0.5% or 1% final markup which needs to be as competitive as possible.

I am not suggesting any change to the procedure at weekends for manual currency conversion or for sending bank transfers, because unlike card purchases, these activities can be easily avoided at weekends.

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#2

Total agree
Is also apply on holidays, so weekend + holiday, can really add up

2 Likes
#3

add 2-3 markup
And convert the payment then the marked are open
And release the rest of the reservated amount
Would be a great idea

#4

The only weekday holiday when the FX markets are totally illiquid, effectively closed, is New Year’s Day. Even on Christmas Day, Japan and a small number of other countries are trading. Although the global FX markets are much less liquid on UK holidays, markets are still open and trading and there are tradable prices available.

On Revolut’s fees page, I see that Revolut mentions “During FX market hours” and “Outside of [sic] FX market hours”, but it doesn’t define what “FX market hours” means. Based on the fact that the FX markets trade on every weekday except for New Year’s Day and the legal doctrine of contra proferentem, customers can reasonably understand that the 0.5% and 1% markups apply only at weekends and on New Year’s Day.

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#5

Most likely Revolut will leave it as it is. I believe they make profit with current system, regardless that some users might not use service in weekends due to this.

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#6

Making profit from FX surcharges is against Revolut’s business model. Such markups make Revolut less attractive to potential customers, who might as well stick with traditional card issuers, for example Halifax Clarity and Tandem for UK residents. Most travellers don’t want separate cards for weekdays and weekends, so they’ll just stick with the card that doesn’t have the markup.

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#7

I really like this idea.

#8

I gave up on repeating this proposal again and again. They wouldn’t lose anything by reserving the money with markup until Monday and then actually debitting it when it’s safe. I asked @AndreasK directly, several times, but never got a hint of intention to actually reply.

This is the main reason why I don’t use Revolut’s card, specially for business, as most of my transactions do happen on weekends. I actually believe they intentionally do it as an extra source of income, which is quite infuriating considering the marketing claims and that I already pay revolut a not minor monthly fee for my business account anyway.

I’ve tested when Monday is a bank holiday, and at 0:00 the markup is gone, and from Friday to Saturday.

Markup applies from 00:00 on Saturday until 23:59:59 UK time on Sunday regardless if the markets are closed or not.

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#9

Yes, this is a bit odd. At https://www.revolut.com/help/getting-started/exchanging-currencies/what-foreign-exchange-rate-will-i-get Revolut states:

On the weekend (Sat-Sun UTC) we fix the rate we provide to protect ourselves against fluctuations, this means we apply markups of:

  • +0.5% to all major currencies (ie. USD, GBP, EUR, AUD, CAD, NZD, CHF, JPY, SEK, HKD, NOK, SGD, DKK, PLN, and CZK); and
  • +1% to all other currencies including THB, RUB, UAH and TRY. (this means over the weekend THB, RUB, UAH, and TRY have a 2% markup.)

The FX markets close at 5pm NY time on Fridays, which is 21:00 UTC or 22:00 UTC, depending on the time of year. Therefore Revolut has a gap of 2 or 3 hours when it is using Friday’s closing rates without a markup to protect itself.

The FX markets open at 7am Auckland time on Mondays, which is 18:00 UTC or 19:00 UTC on Sundays, depending on the time of year. So Revolut could cease the markup at this time, at least in major currencies.

The operation times of the markup do not correlate with the closing and opening times of the FX markets.

4 Likes
#10

This all depends on the provider. An open market doesn’t do much when Revolut’s rate providers don’t deliver.

#11

True, but in that case, Revolut should avoid defining the period on another page as “During FX market hours” and “Outside of [sic] FX market hours”.

#12

That’s why I don’t believe them. It’s a half thought excuse for the deliberate decision of misleading people to get extra profit.

#13

Yes, I agree, it’s not 100 % transparent.

But besides how shady this is or not, let’s assume we would want to design this feature “fair”. It’s a little bit like gambling. We would collect lots of data, we would crunch some numbers, apply statistics and all that, and then we would come up with different markups per currency.

But now we want to design a product that is easy to understand. So we decide we don’t want markups that are different for every currency pair (so we might end up with different tiers). And then we would really want to make sure that we do not end with a loss. Due to the difficulty of predicting the future, we would have a buffer. And that would be on the “profit” side and not on the “loss” side of the predictive number our statistics shows us.

So when it comes to the question if any service provider would design such a system in a way to make either a loss or a profit, it’s naive to assume any service provider would accept the loss when it’s part of a free offering (it’s a different discussion when talking about paid plans.)

So is it deliberate to make profit? Of course. Is it misleading? Well, a little bit, but it’s complicated. I really have no idea how much they really make. It might be more with some currency, less with another. It’s just not possible to assess how “fair” it is without knowing the numbers.

But customers already have the option to avoid it by exchanging beforehand. So it’s cheap vs. convenient. Your choice. I assume that the overwhelming amount of transactions happens in currencies that can be exchanged and held on the platform.

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#14

I use :r: for collection accounts (getting paid) and I choose when to exchange, but for most people :r: is a travel card. many currencies don’t allow pre-exchanging, base currencies are not always the most convenient, and most travel transactions do happen over the weekend.

If revolut wants to create a fair system, reserving the marked-up funds and waiting until Monday for executing the exchange is the fairest for everyone

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#15

To me it looks like the terms “fair” and “transparent” are mixed up.

The basic Revolut product (free) has very limited opportunities for Revolut to make profit. Its fair usage limits like ATM withdrawals, fees for spare cards, shipping costs …

So when is a business model “fair”? When it doesn’t cost the customer at all? What free ATM limit would be fair? Maybe this limit should be zero, because every ATM withdrawal does cost Revolut something.

Or is a business model “fair”, where a company makes a profit and pays salaries, and what should be the income of an employee? And how much can a company earn to re-invest in development? What about customer service?

So from Revolut’s perspective, how would it be “fair”, in the literal sense, not very good or very bad – of average or acceptable quality, if the free account wouldn’t be sustainable?

Regarding travel destinations and currencies: I am skeptical that the majority of payments happens in countries that aren’t available on the platform. People also travel to a lot of places that are covered. Like the US, Canada, Japan, Spain, Italy, France. I am not saying I know the numbers. I would accept this point at any time when statistics showing the volume of transactions in “unsupported” currencies would emerge.

So back to the question if the markup is fair or not. I would argue that the method itself could be fair. But Revolut’s communication about it is not very transparent, or unfair, assuming they rip us off.

But what percentage would be a rip off? And what about the amount customers save due to the rates during the week compared to a card using Mastercard’s rates? Should that be considered?


This is slightly off topic, because it’s not related to “fair”. But Revolut obviously wanted to simplify FX transactions. You always get the rate you see in real time in the app. Not only when making payments, also when exchanging or doing a P2P transfer to another user. The markup is included in these live rates. So they don’t show you the costs, but you are always informed about what is going to happen. So this might not just a business decision but also a design decision. Delayed settling of FX would be a departure from that unique approach.

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#16

Of course revolut is a business and needs to make profits. Transferwise went for a transparent % as fee, Revolut went for a limited free tier and different paid levels under 12 months fixed fee contract. I chose the fixed fee.
The thing with the live rate is that, because of the marketing, people comes with the idea that it is 0%. Most people won’t start comparing exchange rates every time before making a transaction. You choose a card once and stick to it, trusting it will be the right choice during the whole season. At most “this card for cash withdrawals, that card for small purchases, and this other for big purchases”, not it’s midnight in London so now I have to switch to that other card, or now I have to compare the live rates of these 10 options. You either trust your card or you don’t use it or destroy it.
By fair I meant, best deal for users and no risk for revout of losing with the transaction.

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#17

Yes.

I think there are two unknowns. How is the actual income Revolut makes from the markup? Maybe, over currencies and years, this is very little. Then I would consider it as already fair.

From a consumer’s perspective, I could be lazy and live with the markup and still profit from the overall deal because savings during the week outweigh the bad rates during the weekend. Or I could spent more time figuring out how to exchange in advance and then beat another card – or not, because I unfortunately exchanged for a not so good rate in advance. Or I learn that for my use case, like with THB (?), Revolut is not offering competitive rates for whatever reason.

You write “I have to switch to that other card”, like getting always the best price for everything is a necessity. But products and services are rarely best in all categories.

The German banking market for example: old school highstreet banks often have monthly account fees. Online banks don’t. Then highstreet banks operate their own ATM networks. So plenty of opportunities to get cash for free. Online banks often have limits and fees. Highstreet banks have usually lower FX transaction fees for card payments. Online banks charge more for payments in other currencies. Isn’t it always about figuring out what works best for an individual use case?

Considering Revolut’s user numbers and the amount of complaints about weekend markup here in this forum and on social media, it doesn’t seem like there is a trust issue here. I agree that marketing language could and should be clearer, more “honest” and transparent. But it improved already. From the main website where features are explained, under “Spend Abroad” the link is highlighted and leads to the FAQ article that explains the markup brief and simple. So every user who even cares a little bit about finding out which rates are applied can find out quite easily.

2 Likes
#18

As a Revolut user from Switzerland, this sounds like complaining on a very detailed level.

High Street banks in Switzerland and their card issuing entities, and there is hardly anything else locally, charge a lot more, always. You usually get a FX markup of ›2% plus a fee for international transactions, the lower end is 1.5%, but it can go up considerably.
For my M-Budget MasterCard (this is an offering by one of the two large retailers in Switzerland), I compared transactions over two consecutive month last year. The result was, that I paid 4% more with the M-Budget card compared to Revolut.
Of that, 1.5% was charged directly by the card issuer, the rest came hidden as the FX rate markup.

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#19

I disagree. There are plenty of UK-issued cards that use MasterCard’s or Visa’s FX rates without any markup at all, including at weekends, because the FX is always carried out when the FX markets are open. I’m taking the example of the UK, not because that’s where I’m from, but because that is where Revolut is based and it ought to pay close attention to local competition. Given that the default choice for any knowledgeable UK-based traveller will be one of these cards, why would any UK resident want to use Revolut at weekends and be stung for an avoidable 1% on top?

Consider also that, more often than not, one pays hotel bills on a Saturday or Sunday, whether it’s at the end of a one-week trip, a two-week trip or a weekend trip. Hotel bills are often the largest item of expenditure during a trip. Therefore an additional 1% can be significant.

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#20

You are then lucky that you live in a competitive market. I’m sure there are quite a few other markets similar to Switzerland where it’s also a huge gain, even with that weekend markup.

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