New Zealanders are forking up significant sums of money to overseas banks through hidden ATM fees when withdrawing cash abroad.
It comes as prior research showed Kiwis collectively lost hundreds of millions to foreign exchange (FX) payment fees on their own cards while travelling in 2023 – a figure that continues to balloon.
According to fintech company Wise, which analysed data from 9.7 million ATM transactions made by customers between February and July, many banks in popular travel destinations impose large third-party transaction fees on foreign cards, quietly driving up the cost of travel.
Vietnam was the most expensive place in the world to withdraw cash, with an average third-party fee of 27.1% on cash withdrawals at banks and ATM providers, meaning more than a quarter of a $100 transaction could vanish through charges.
Argentina, with its rocketing inflation and exchange rate volatility, had average hidden fees amounting to more than one-fifth (20.51%), while withdrawing cash in Colombia mounted average transaction fees of 16.66%.
Tristan Dakin, Wise’s Australia and New Zealand country manager, told the Herald that fees varied widely with local market forces in play.
“In some regions, particularly where cash is still king, banks and independent ATM operators are able to set their own fixed fees [a flat charge per withdrawal] and variable fees [a percentage of the amount withdrawn] for foreign cardholders.”
Costs can escalate even more in markets where restrictions may require several withdrawals to be executed to access the cash needed.
While expensive, more regulated markets like Australia and Europe typically had better transparency and competition over fees, reducing hidden costs to a marginal number.
“In cash-heavy economies, however, looser regulation and limited competition often means operators can charge higher surcharges without much oversight,” Dakin said.
“It’s also common to see extra costs creep in through dynamic currency conversion, when an ATM or merchant offers to charge you in New Zealand dollars instead of the local currency.”
But these typically have a poor exchange rate attached, making the transaction unnecessarily expensive.
Separately, currency mark-ups on bank cards’ international payments see millions disappear from wallets.
Research conducted by Edgar, Dunn & Company found Kiwis lost US$400m ($696m) in FX fees in 2023.
The figure is projected to increase to US$500m ($870m) by 2029.
As international travel rebounds, understanding local banking fees can make the difference between a dream holiday and a costly surprise.
“It pays to be smart with your money, especially when travelling,” Dakin said.
“While ATM fees can’t always be avoided entirely, travellers can limit unnecessary costs by withdrawing larger amounts less frequently, using bank-owned machines where possible, and always choosing to pay or withdraw in the local currency.”
Most expensive travel destinations for ATM withdrawals (average):
Tom Rose is an Auckland-based journalist who covers breaking news, specialising in lifestyle, entertainment and travel. He joined the Herald in 2023.
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