Google’s currency converter said $870, the bank statement says $913. This online shopping trap could cost you hundreds of dollars
Friday, 16 January 2026
The experience will be familiar to anyone who shopped from an international online store.
You check the exchange rate on Google, work out the likely cost, and then click buy now. Then, when the charge finally comes through on your account, it doesn’t quite line up with the figures the Google rate initially suggested.
Most of us would write this off as the byproduct of the rate changing between the time you checked and the moment you made the purchase, but there’s actually more going on here.
Any time we make a purchase via an online store, there are a number of factors that impact the final price you pay for a product.
If you are purchasing something in the currency of a shop based abroad (US dollars, British Pounds or Australian dollars), then the bank will usually charge you a percentage of the purchase you’ve made.
With a standard credit card from a major bank, this fee ranges anywhere from 1.3% to 2.25% for the transaction.
This might not sound like much, but take the example of US$500 purchase, which Google suggests should cost you $870.
Based entirely on who you bank with, that same purchase could cost you anywhere from $887 to $895 (a bank charge of $11 to $19). The bigger the initial cost of the purchase, the more expensive the charge becomes.
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Put another way, you could instantly save up to $20 on this single purchase by simply swapping to a card with a lower fee.
Extrapolate that over the course of a year, and a single New Zealander could be spending hundreds of dollars in charges due to our growing online shopping habits – money that could be put toward emergency funds or other local needs.
And the same principle also applies to New Zealand business owners who need to source services or products in the international market.
So what rate do we actually get?
This fee is well flagged by banks, and consumers do have the choice of switching if they aren’t happy with the rate they’re getting.
Spokespeople from both ANZ and Kiwibank confirmed to Stuff that their banks do not make a margin on the currency exchange rate that is being charged.
Most New Zealand banks will simply apply the rate that is designated by the technology provider, which is Mastercard and Visa in most instances, and then add their service charge on top.
Stuff checked Mastercard’s online currency conversion tool and found that the company offers a rate in line with the mid-market figures shown on Google. There might be a slight variation, but this generally comes down to currency fluctuations that might occur between the purchase and your bank actually authorising the transaction. Currency conversion rates are specific to the date and time of authorisation.*
On the surface, this seems like good news because it means we generally aren’t being given a rubbish rate.
However, things become a bit more complicated when you start to incorporate the marvel called dynamic currency conversion.
The trap to avoid
Some online retailers these days will offer you the option of paying in either your local currency or the currency where the business is based.
This is often used by some of the largest international online retailers and service providers that we shop from.
These companies will detect your location and then give you the option to pay in either New Zealand dollars or the currency where the store is located.
While it might feel more comfortable to pay in New Zealand dollars, that decision sees you shift from your bank’s policy on currency exchange to that of the store (and their bank) you’re shopping from.
The devil is often in the details.
A small print will often (not always) show that the exchange rate is marked up 3-5% from the mid-market rate, which essentially means you’re paying a premium for the privilege of using your own currency.
“Using dynamic currency exchange does offer the advantage of certainty of the cost in your own currency at the time, rather than the uncertainty of the exchange rate at the time of the actual conversion,” says Claire Matthews, a leading academic at the Massey Business School.
However, the moment you make that decision, you’re subject to the margin the merchant’s bank might slap on top of the rate.
“There is really nothing we can do from New Zealand to address the issue,” says Matthews.
The US$500 purchase that costs you as little as $887 with a standard bank card could cost you in excess of $913 if you use dynamic currency conversion.
The problem that we have is that there’s no disclosure of what these charges amount to. And while there have been suggestions of disclosure statements revealing the margin markup, there’s no guarantee anything like this could be put into practice.
“That may be harder than it sounds, because of the different parties involved in the transaction who may each be charging fees,” says Matthews.
“Forcing one party in the transaction to make a standard disclosure may not actually provide the clarity that is sought.”
Opaque pricing
There is so little transparency in this space that online payment competitors often engage in mystery shopping experiments to gain an understanding of how much margin is being applied to transactions.
Kristo Käärmann, the founder and chief executive of technology firm Wise, tells me that he regularly has staff conduct an online transaction of up to $1000 to see what rates are being applied. The price charged is then compared to the wholesale rate visible at the Reserve Bank to gain insight into the margins that are being applied.
“This is literally the only way that you can do this,” he says.
Käärmann tells me he has no qualms about anyone in the industry making money from the international movement of money, but he wants to see greater transparency so that Kiwis can make more informed decisions.
He says the more clarity we have in the market, the better this will be for everyone relying on the movement of money across borders.
The money transfer issue
In the globalised marketplace we have today, the charges don’t stop with online shopping. Companies like Wise first emerged because of the enormous cost of sending money abroad.
This has particularly hurt New Zealand-based family members who might have relatives abroad, but it also hits businesses that transact internationally by paying suppliers or buying products abroad.
Most banks these days do not charge a service fee for online transfers, but they often make a margin on the exchange rate they offer.
Research conducted by Edgar, Dunn and Co suggests the money lost to international transfers and payments amounted to US$102 million ($177 million) for consumers, US$294 million ($511 million) for small to medium-sized enterprises and US$5 million ($8.7 million) for large enterprises in 2023.
As New Zealand’s GDP grows in the coming years, this expense is only anticipated to increase, meaning this issue will only drain more money from the pockets of Kiwis and our businesses.
Member of Parliament Arena Williams currently has a member’s bill before parliament, which attempts to address the lack of transparency in international money transfers.
The bill is designed to provide clearer details on the fees paid by individuals and businesses when transferring money abroad or purchasing goods online.
The Financial Markets (International Money Transfers) Amendment Bill was first introduced in May 2025 and still requires due process before being enacted into law.
Is better competition the answer?
In light of the lack of transparency, the only option Kiwis have is to become more aware of the options available to them.
David Tripe, a professor of banking at Massey University, tells me new players like Wise expanded quickly because consumers are starting to cotton on to the advantages of not relying solely on their bank.
“The wise product has been given a wonderful opportunity to make hay in the market because the banks are less receptive to changing their pricing,' Tripe says.
“If enough consumers do shift across to wires to make these transactions, maybe the banks will respond accordingly.”
According to Wise’s Käärmann, around 13% of New Zealanders currently have a Wise account, with many drawn to the lower fees.
Wise charges 0.35-0.5% for most currency exchanges and offers the mid-market rate we see on Google.
Referring back to that US$500 purchase, you would only pay $876.53 with a Wise card. Remember, a standard bank card would set you back $887 to $895, while relying on dynamic currency conversion could cost as much as $913.
The Wise card also allows you purchase US dollars or British pounds at the mid-market rate when the conversion is favourable, so that you can later make purchases directly in those currencies. All these small features combine to enable smart consumers to save a decent sum.
Tripe believes the introduction of this type of competition will eventually drive reaction from the banks, as seen in more mature markets.
“Competition actually forces changes in costs,” says Tripe.
“I have a UK bank account, and if I use that card outside the UK, I don't pay 2%, I pay about 0.5%. The amount we pay here and in Australia is actually large. Sooner or later, the banks are either going to lose the business, or they'll bring their prices down.'
These small differences in percentages may not seem like a big deal, but they add up over time. A 2% fee charged to every international online purchase will add up to an enormous sum over the course of five or ten years. Just think about how much of a difference a 2% increase in your mortgage rate can make to your financial position.
So much of being smart with money and building wealth over the long-term comes down to making small decisions that add up over time, and this often comes down to being aware of what you’re being charged and what alternatives are available.
We could certainly wait for legislation to come in and effect change, but right now we still have the power to shop around if we aren’t satisfied with the fees, charges and rates we’re being offered by the incumbents.
*Clarification: This story has been updated to better explain the time at which the currency conversation is locked in.