It couldn’t be true, I told him. But his receipt from a company called Euronet showed the breakdown: a transaction fee of 3.95 euros, an exchange rate of 0.82 euros to the dollar, and a 13% markup on the prevailing exchange rate. .
I asked him if the ATM had disclosed these expenses during the transaction.
“I saw the charge of 3.95 euros,” he said. “But I didn’t notice the exchange rate and the markup.”
Many customers also fail to notice the unfavorable exchange rates that allow some businesses to cash out.
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“It’s one of the hidden costs of ATMs,” said Arun Tharmarajah, head of European banking and expansion at Wise, a fintech company specializing in online money transfers. “Customers don’t know about them.”
So why do I blame myself for this high ATM spend? Because I knew them and I should have said something.
I regularly hear from readers who report fees and surcharges that almost make the ATM exchange rate in Greece look like a bargain. And in 2020, when I was living in Lisbon, I came across an expensive ATM operated by Euronet.
I had spent the last of my euros on a fresh pão de centeio loaf at a local bakery in cash only. Just across the street, I spotted an ATM. I was relieved when he accepted my card, but that feeling quickly gave way to dismay. The exchange rate looked off. Instead my US dollar was worth 0.90 euro, it only gave me 0.80.
Then I checked the numbers: the machine charged a $4 fee, plus a 12% markup—shown on the screen in small print—for exchanging my dollars.
Euronet Worldwide operates a network of more than 50,000 ATMs in 63 countries, according to the company.
Stephanie Taylor, spokesperson for Euronet Worldwide, said all of its fees are “clear, transparent and in plain view” before each transaction. “The client can withdraw from the transaction at any time free of charge,” she said in an email.
She said Euronet is committed to providing convenient cash to people around the world, but there is a cost involved in providing this service, “which we believe is fair and reasonable”.
Simone Semprini, who lives in Lisbon and is the CEO of TourScanner, a tour and activity comparison site, says high ATM fees are a big concern for her customers.
“Over the past few years we’ve seen the rise of ATMs that charge huge commissions,” he said.
ATMs endear themselves to locals in two ways. First, by generously compensating merchants who host them (merchants told Semprini they receive up to $1,000 a month to maintain an ATM on their site). And also, by allowing customers with a bank account in the distributor’s home country to withdraw with lower fees.
Greg Grobmyer, a dentist from Chattanooga, Tennessee, says he was stunned when he returned from a trip to Poland to find $100 in commissions and fees on his credit card bill. He had found an ATM in Krakow after having to pay a hotel bill. Although the exchange rate didn’t look very good, he didn’t check the numbers before accepting his withdrawal.
“It’s disconcerting to see these not-so-tiny commissions soar into the hundreds of dollars,” he said in an email. “Especially if you can avoid them.”
How to Avoid High ATM Fees
So how do you avoid high ATM fees? Preparation is the key.
Call your bank before you leave the country to find out what type of out-of-network ATM fees they charge for foreign transactions. Some banks waive the fee or will credit you after you return to the United States.
Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan, recommends calling your bank before your trip to order currency from the country you’re traveling to. He says it may be cheaper, but not free. This requires an in-person visit, and your bank may also offer a less favorable exchange rate when buying foreign currency.
There are workarounds once you’re on the ground. Mine was to head to an ATM, which can give you a better exchange rate. Not a perfect solution: halfway through the transaction, the machine asked me if I wanted to make the transaction in dollars or euros. As with credit cards, it’s best to transact in local currency and let your bank do the conversion.
Another solution: use a multi-currency debit card to reduce your exchange fees. Financial services app Revolut, for example, converts your money at the best interbank rate (i.e. the rate banks charge each other to exchange money).
For out-of-network ATM transactions, Revolut does not charge fees for withdrawals up to $1,200 (or local currency equivalent) per month. After that, it charges a fee of 2% of the value of an ATM withdrawal.
Wise, another popular app, also uses the real rate and exchange fees on a sliding scale. It will cost you around $4 to convert $1,000 into euros. For ATMs, there is no fee for the first $250 per month, and you pay a 2% fee for anything over that.
Andy Abramson, who runs a communications consultancy in Las Vegas, has used both services and says he prefers them to traditional banking.
“I load them up with cash and then use them on trips,” Abramson said. “I can add money as needed in seconds and spend locally in the local currency without any fees.”