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.