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Travelling abroad? Don’t be tempted to pay your way using your home currency

<p>Part of the joy of travelling comes from experiencing the unfamiliar – a different climate, culture or cuisine. But when it comes to paying for things abroad, we might feel more comfortable using the currency we are most familiar with, the one we use at home.</p> <p>This has recently become a common – and expensive – option for tourists withdrawing money from cash machines, or paying electronically in shops and restaurants. </p> <p>When a restaurant bill arrives for example, foreign customers may be offered the choice on the card reader to pay in their home currency rather than the local one. This feature, known as “dynamic currency conversion” or “currency choice” sounds appealing at first – a service which has done the hard work for you, converting the bill to a currency you understand, giving you a better idea of how much money you are spending. </p> <p>But it comes at a price – as the fees charged for this convenience can be exorbitant. In fact, <a href="https://fil.forbrukerradet.no/wp-content/uploads/2017/07/input-from-ncc-to-the-european-commission-on-dcc-30062017.pdf">one study</a> shows that the average fee applied to this kind of conversion is a whopping 7.6%, more than double the cost of paying in the local currency (usually between 1.5% and 3%). </p> <p>So suppose a French traveller goes out for dinner in a British town, and the final bill comes to £88.43, the equivalent of €100. Paying in UK currency, which would then converted to euros by the French diner’s bank, would lead to a payment of around €102. But using the dynamic currency conversion to pay the restaurant bill directly in euros would end up costing them €107.60.</p> <p>Despite the high fees, <a href="https://journals.sagepub.com/doi/full/10.1177/07439156231157721">our research shows</a> that more than half of international customers still choose to pay in their familiar home currency. The most obvious explanation for this is an understandable preference for the familiar when dealing with money abroad.</p> <p>But it is also true that the fees are not explicitly shown to customers. That is, tourists may see the applied exchange rate, but they are not shown the hidden fees or how that exchange rate compares with others. </p> <p>And while expensive for tourists, the currency choice “service” can be highly lucrative for those who operate it. The companies which provide dynamic currency conversion options earn significant conversion revenues – a portion of which is often shared with the business where the transaction takes place.</p> <p><a href="https://www.electronicpaymentsinternational.com/opinion/dcc-routing-revenues-away-from-issuer-into-acquirers-pockets/">Sources indicate</a> that extra revenues for retailers come to around 1% of the transaction value. We have also been told of well known department stores training employees to actively encourage foreign customers to pay for purchases in their home currency.</p> <h2>Greater transparency</h2> <p>And despite the high conversion fees involved with dynamic currency conversion, most government regulators around the world have been hesitant to intervene. One possible reason for this is that regulation would be seen as potentially hitting the profits of local businesses. </p> <p>The exception is the European Union (EU), which considers excessive transaction costs <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021R1230">to be a barrier</a> to the development of businesses and aims to protect European consumers. </p> <p>The latest <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021R1230">EU regulations</a> (not yet enforced) aim to enhance transparency by including extra information about the costs of currency choice on card readers and ATMs. </p> <p>This is a step in the right direction. But we would in fact encourage a reduction in the amount of information to make things simpler, so that customers are made aware purely of the percentage fee being added if they choose to pay in their own currency. We also think there should be maximum conversion charges to protect unaware customers from excessive fees.</p> <p>With the continued growth of international travel, it is crucial to find ways to help people make informed financial decisions when dealing with exchange rates and making payments outside of their currency zone.</p> <p>But for now, travellers are likely to spend more of their money abroad than they need to, because of something they intuitively feel will make a transaction simpler and less time consuming. </p> <p>So if you’re on holiday or travelling for work, our advice is to decline the option of paying in your home currency and instead opt for the more reasonable conversion fees charged by your bank. Your travel experience could end up much cheaper if you do.</p> <p><em>Image credits: Getty Images</em></p> <p><em>This article originally appeared on <a href="https://theconversation.com/travelling-abroad-dont-be-tempted-to-pay-your-way-using-your-home-currency-202795" target="_blank" rel="noopener">The Conversation</a>. </em></p>

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The origins of money

<div> <p><span style="font-size: 14px;">From cowrie shells to native resources and animals, currency in some shape or form has long been a part of human history. </span></p> <div class="copy"> <p>A currency of sorts was first thought to emerge as trade and exchange, with trade being tracked through the archaeological record, starting in the <a rel="noreferrer noopener" href="https://www.annualreviews.org/doi/10.1146/annurev.anthro.31.040402.085416" target="_blank">Upper Palaeolithic</a>, when groups of hunters traded the best flint weapons and tools. Throughout the years, various objects were used as units of value until nearly 5,000 years ago, when the <a rel="noreferrer noopener" href="https://theconversation.com/when-and-why-did-people-first-start-using-money-78887#:~:text=The%20Mesopotamian%20shekel%20%E2%80%93%20the%20first,gold%20coins%20to%20pay%20armies." target="_blank">Mesopotamian shekel</a> emerged as the first known form of currency.</p> <p>Now, researchers from Leiden University in the Netherlands are adding an Early Bronze Age piece to the currency puzzle. They’re proposing that Bronze Age people may have used rings and axe blades as an early form of standardised currency. </p> <p>“Archaeology can provide a unique perspective on the development of money and systems of weighing over space and time, but the discipline has difficulties with the identification of objects that functioned either as commodity money or as weights,” the authors write in their paper, <a rel="noreferrer noopener" href="https://dx.doi.org/10.1371/journal.pone.0240462" target="_blank">published</a> in the journal <em>PLOS ONE.</em></p> <p>The authors compared objects from Early Bronze Age Central Europe. Based on the similarity in weight and shape of the objects, they suggest that ancient people used bronze objects that were standardised in shape and weight as currency. </p> <p>“Found in bulk, sometimes in hoards containing multiple hundreds, many of the rings, ribs and axe blades are considered to have no other practical function besides their tentative use as ingots, or rough-outs for further production,” the authors write.<em> </em></p> <p>“Moulds, made of clay, stone or casted directly in sand made serial production possible, which led to some degree of unintentional standardisation. However, there are indications that for some types of objects, a deliberate effort was made to achieve a specific weight interval, meaning that weight mattered.”</p> <p>The researchers studied just over 5,000 objects made of bronze in rings, ribs and axe blades from more than 100 ancient hoards.</p> <p>The objects’ weights were compared using a psychology principle known as the <a rel="noreferrer noopener" href="http://apps.usd.edu/coglab/WebersLaw.html" target="_blank">Weber fraction</a>, which suggests if objects are similar in mass, a human being weighing them by hand can’t tell the difference. </p> <p>Around 70% of the rings were similar enough in weight – they averaged about 195 grams – and would have been indistinguishable by hand, as were subsets of the ribs and axe blades. </p> <p>Standardisation is a key feature of money. However, the researchers say this can be difficult to identify in the archaeological record since ancient people had inexact forms of measurement. </p> <p>“Commodity money displays rough similarities in terms of shape and weight, because of standardisation, without necessarily following a strict metrological system,” the authors write.</p> <p>“Though archaeologists have no insight in the transactions that took place, there can be no doubt that at least the rings and ribs conform to the definition of commodity money.”</p> <p>More precise weighing tools appear in the archaeology record later, in the Middle Bronze Age of Europe, along with an increase in the availability of scrap bronze.</p> <!-- Start of tracking content syndication. Please do not remove this section as it allows us to keep track of republished articles --> <img id="cosmos-post-tracker" style="opacity: 0; height: 1px!important; width: 1px!important; border: 0!important; position: absolute!important; z-index: -1!important;" src="https://syndication.cosmosmagazine.com/?id=135363&amp;title=The+origins+of+money" alt="" width="1" height="1" /> <!-- End of tracking content syndication --></div> <div id="contributors"> <p><em><a rel="noopener" href="https://cosmosmagazine.com/history/the-origins-of-money/" target="_blank">This article</a> was originally published on <a rel="noopener" href="https://cosmosmagazine.com" target="_blank">Cosmos Magazine</a> and was written by <a rel="noopener" href="https://cosmosmagazine.com/contributor/amelia-nichele" target="_blank">Amelia Nichele</a>. Amelia Nichele is a science journalist at The Royal Institution of Australia.</em></p> </div> </div> <p><em>Image: </em><em>M.H.G. Kuijpers</em></p>

Money & Banking

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Top tips for travellers on currency exchange

<p>Many overseas travellers make the assumption that exchanging your Aussie dollars for cash in foreign currencies, like US dollars, Euros or Pounds, will be pretty much the same deal no matter which institution they choose. In reality; nothing could be further from the truth!<br /><br />Even a fraction of a cent difference in exchange rates can add up to big dollars, once you multiply it over the amount of funds you want to exchange. What’s more, the method you use for purchasing foreign currencies can make an even bigger difference and fees and charges can slug you again. <br /><br />So, what are the key rules to go by for making sure you don’t ‘get fleeced before you fly’?</p> <p><strong>Plan ahead for big savings</strong><br />The best option is to plan at least three days ahead and order your currency exchange online. This means you generally get a better exchange rate and can cut out potential commissions and fees that may apply.</p> <p>Here’s an example:<br />Say you want to buy $2000 USD for your trip to America. After comparing some rates, a foreign exchange company provided the best deal at a cost of just AUD$2739. If you wait to exchange at their airport counter or local bank, you would pay AUD$2833.05. That amounts to a hefty saving of $94.05 – enough for some fine dining at a fancy LA restaurant!</p> <p><strong>Use BPay to maximise the savings</strong><br />The above example is based on paying online via BPay, which is the most cost efficient method, as Travelex will not charge fees or commission for online orders using BPAY. You simply make an online transfer from your bank account and the purchase is complete and the savings locked in.<br /><br />The other good news when you purchase this way is that you can still pick up the cash at the airport, so you can avoid having to run around to get the cash beforehand.</p> <p><strong>Don’t assume that the banks are best<br /></strong>It might be reflex action to assume that the “big four” banks will have the best deals, but such an assumption could cost you money.</p> <p>It’s also a good idea to avoid shopping centre exchange kiosks too. They may be convenient, but you will probably pay more for the privilege.</p> <p><strong>Beware of fees and charges</strong><br />Currency exchange operators have two ways of making profit;</p> <ul> <li>putting a margin on the inter-bank exchange rate that they pay, and</li> <li>charging fees and commissions.</li> </ul> <p>The complexity of these fee structures can make them tricky to compare, so rather than trying to sift through this yourself the best approach is to just ask for a quote from each institution. This way you will end up with bottom line figures to compare after differing exchange rates and fees are taken into account.</p> <p><strong>Don’t rely on plastic alone</strong><br />Credit cards can also be more expensive. While you may see banks offering deals that say things such as “no overseas transaction fees on purchases”, they will still charge other fees such as an exchange charge - typically around 3% of the value of the amount exchanged.</p> <p>Of course, no one wants to carry around all their foreign funds in cash and the security of plastic does have merits, so the best solution is usually to use a combination of cash along with a prepaid travel card and/or a credit card to optimise convenience, cost savings and security.</p> <p>What is your experience on saving money on exchange rates? Share your ideas below.</p> <p><em>Written by Tom Raeside. Republished with permission of <a href="https://www.wyza.com.au/articles/travel/top-tips-for-travellers-on-currency-exchange.aspx">Wyza.com.au</a></em></p>

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Travellers warned about currency conversion swindle

<p>A travel trend has descended on Europe. It's worse than selfie sticks. It's worse than drone photography. Like a pickpocket at a train station it pretends to be your helpful travel guide before leaving you a few euros short.</p> <p>It's called Dynamic Currency Conversion (DCC), and despite its off-putting name it can butter up unsuspecting tourists when they come to pay their bills.</p> <p>You've probably been one of them.</p> <p>Picture this: you're finishing up dinner at a Parisian brasserie or pizza parlour in Naples, you hand over your debit or credit card and the friendly waiter asks if you'd like to pay in your home currency used on the card – dollars – or euros (or whatever the local currency is). So helpful, right?</p> <p>Travel budgets are hard enough to manage (especially after a few drinks at dinner) and then along comes this offer to convert your meal bill into simple New Zealand dollars at the point of sale to help you track you spending. Do not do it.</p> <p>This is Dynamic Currency Conversion. The exchange rate applied to convert your dinner bill (or new shoes, or souvenirs) is the worst currency conversion rate going and the merchant is offering you the "convenience" at the point of sale not from the good of their heart, but because they earn a small commission for on-selling this service.</p> <p>Offering a conversion rate of €0.58 to the dollar instead of your bank's €0.63 may not sound like much of a margin, but over a month-long jaunt to Europe that could see you losing out hundreds while the merchants cream it.</p> <p>You wouldn't be  alone in opting for this cheeky convenience - one in five travellers fall victim to this pushy trick, according to currency company FairFX.</p> <p>Although now common throughout Europe and elsewhere, the mark-up charged varies a lot depending on the shop or restaurant, your credit card firm, the DCC operator and the payment gateway being used. Since the merchant is getting a slice of the action, suddenly it makes sense why they are suddenly worried about your convenience and ability to track your holiday spending. Yeah, right.</p> <p>Several shop assistants and restaurant staff have been rather too forward in offering this service, making the assumption that I, the customer, would much rather pay in my home currency and present the bill already converted when handing me the card payment terminal.</p> <p>Like an over-cooked steak, send it back. Do the same if asked when using a foreign ATM to withdraw cash, because to choose   the convenience for knowing exactly how many dollars will come out of your home bank account will only mean that more will be deducted.</p> <p>And in case you're feeling smug because you think your pre-paid, pre-loaded travel debit card protects you – that's not always the case. You will still be offered the service and if you accept (or don't decline the converted rate that appears before you on the terminal) it will still deduct the agreed dollar equivalent from your pre-paid account, even if you have pre-loaded local currencies. Sound complex? It's meant to.</p> <p>To win the war on confusing currencies: just say no.</p> <p><em>Written by Josh Martin. First appeared on <a href="http://www.stuff.co.nz/" target="_blank"><strong><span style="text-decoration: underline;">Stuff.co.nz</span></strong></a>. </em></p>

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New Zealand $5 note named “Banknote of the year”

<p>New Zealand’s five-dollar note has been named “banknote of the year” by the International Bank Note Society, beating 40 other eligible designs from 20 countries.</p> <p>For a design to be eligible, it must be issued for the first time and in general circulation during the year of the award. Banknotes are assessed by a panel on “artistic merit and/or innovative security features” as well as use of colour, contrast and balance.</p> <p><img width="500" height="244" src="https://oversixtydev.blob.core.windows.net/media/19187/nz-in-text-one_500x244.jpg" alt="NZ In Text One" style="display: block; margin-left: auto; margin-right: auto;"/></p> <p>Almost 150 new banknotes were released last year, with the International Bank Note Society deeming over three dozen eligible for nomination.</p> <p>New Zealand’s five-dollar note was described as the “clear winner” with Sweden’s new 20 kronor note, Russian’s 100 ruble note, Kazakhstan’s 20,000 tenge note and Scotland’s five-pound polymer note named as runners-up.</p> <p><img width="495" height="240" src="https://oversixtydev.blob.core.windows.net/media/19188/nz-in-text-two_495x240.jpg" alt="NZ In Text Two" style="display: block; margin-left: auto; margin-right: auto;"/></p> <p>Geoff Bascand, the deputy governor of the Reserve Bank of New Zealand, said “We are proud of all of New Zealand’s new banknotes, but to have our $5 note recognised internationally is very special. The note incorporates some of the world’s most advanced security features, yet still beautifully showcases New Zealand’s history, culture and heritage.”</p> <p>What do you think of the winning design?</p> <p><em>Image credit: International Bank Note Society</em></p> <p><strong>Related links:</strong></p> <p><span style="text-decoration: underline;"><em><strong><a href="/news/news/2016/04/cat-meets-dogs-at-dog-show/" target="_blank">Watch this friendly cat meet 50 dogs at a dog show</a></strong></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="/news/news/2016/04/prince-george-president-barack-obama-photos/" target="_blank">The story behind Prince George’s presidential photos</a></strong></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="/news/news/2016/04/lifeguard-helps-wheelchair-bound-veteran-surf/" target="_blank">Lifeguard helps make wheelchair-bound army vet's dream come true</a></strong></em></span></p>

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