OPINION: The erosion of spending power caused by foreign exchange charges is enough to make a person hope Facebook’s Libra is successful.
Facebook, which has around two billion users, wants to launch a global digital currency, which people all around the world could use to make payments and send money to each other.
If successful, you could use it to pay for your groceries at Countdown, or your cappuccino in Turin.
It seems to offer a future where Kiwi holidaymakers never have to get foreign currency when heading abroad, or get gouged by your credit card provider when they make a payment overseas.
A global digital currency has the ability to take an awful lot of currency costs out of a traveller’s life, just as email, texting, Facebook and Skype slashed people’s costs for keeping in contact with relatives and friends overseas.
Personally, I have grave concerns about the idea of Libra.
Technology companies have ridden roughshod over our laws, undermined our tax base, subverted our moral values and labour standards, and our politicians have let them.
Just think of it: Amazon, Book Depository and Netflix (not collecting GST), Lime (allowed faulty Lime scooters to be ridden), Facebook (live-streamed terror), Google (has arranged its tax affairs to pay a small amount of tax) and Uber (remember the early failure to abide by driver safety screening laws).
Libra promises more of the same.
The official interest rates we use to manage the economy, anti-money laundering laws, and personal privacy are all highly dependent on the existence of the New Zealand dollar.
And yet, the history of global technology companies is if they save us money, and make life easier, the public will embrace the personal gain over the societal threat.
Having just tripped overseas, I can understand that.
As online financial researcher Moneyhub points out, spending overseas can be done in cash, by credit or eftpos card, prepaid travel card, or (yes, really) travellers cheques.
For one, or two country jaunts, cash is great.
It’s good for budgeting, and avoiding repeated fees, but it carries a level of risk of theft. If you go to the same countries time after time, any unspent cash can be stored for future use avoiding the fees to convert it back into Kiwi dollars.
Using debit and credit cards brings both currency conversion value loss, and fees, sometimes dreadful fees, if you do things like withdraw cash from an overseas ATM using your credit card (currency conversion, ATM transaction fee, interest on the money withdrawn).
Credit and debit cards transaction fees are inexplicably high; 1.85 per cent for Kiwibank credit card to 2.5 per cent for Kiwibank debit cards and ANZ, TSB and Westpac credit cards, according to Moneyhub.
Travel cards also have some pretty high fees, especially if people spend in currencies not loaded onto the card.
The sheer complexity of the multi-layers of charging for transacting overseas makes it hard for ordinary people to compare value, which means banks and credit cards don’t compete on price.
The banks and credit card companies have created the perfect conditions for Facebook to launch an assault on our currency sovereignty.
* Focus on total cost of holiday spending money
* Never buy cash at the airport
* Research the charges/currency conversion fees on your card