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From the Economist:The great foreign exchange rip-off is coming to an end Thanks to Financial-technology firms

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  • May 14th, 2018 8:38 pm
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From the Economist:The great foreign exchange rip-off is coming to an end Thanks to Financial-technology firms

Canadian banks are criminal when you consider their markup on currencies
Between the buy and sell margins they are making exorbinant profits
SOME years ago, when Gulliver was a wide-eyed reporter on his first business trip, he sidled up to a bureau de change in London’s Heathrow Airport to buy some foreign currency. His nervous excitement quickly turned to dismay when the teller gouged 12% from the transaction, justifying the theft by tapping on a display-screen of ruinous exchange rates. Today, Gulliver knows better than to buy foreign currency at an airport. But many do not: in 2016 Heathrow raked in £50m ($68m) by renting retail space to bureaux de change. New technology and startups could soon change that.

Savvier travellers have, until now, bought their foreign currency in advance from bureaux de change outside the airport. Higher competition and lower costs mean that these firms trade closer to the interbank exchange rate—the price at which two currencies are actually swapped by financial institutions. Yet all middlemen need a mark up, so they still add a margin of 2-5% to their “commission-free” quotes.
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Oct 26, 2003
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indeed, it is impossible to buy it at the spot rate, i hear amazon credit card lets you do that though.
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For too long we have been too complacent on how much we pay for things. Forex fee at an airport kiosk is just one of many things that we unwittingly pay our hard earn cash for. For example: why are we okay with paying $130 for an hour long taxi ride that cost about $20 worth of gas? Why are we okay with a financial advisor selling us a product where he/she will be taking a 5% fee plus a 1% service fee? Why are we paying real estate agents tens of thousands of dollars more just because real estate prices went up 30% in one year - is their service worth a 30% inflation? Why am I paying tax on the taxes that I pay in my annual income?

I hope technology will change all that before one day everyone realize how badly they are being taken advantaged of.
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Been buying at spot rate and sometimes even better for years

Norbert's Gambit using x-listed TSX/NYSE equities.
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Its all about convenience. Lots of people use Forex kiosks because they are unprepared or don't care. Like lining up at Costco for an hour to get cheap gasoline. Or paying for full serve vs self serve. Or DIY oil change vs Lube place.
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Revolut already does that where it uses the real exchange rate with no ATM withdrawal fees. I'm not sure if it's available in Canada, but I have an account in the UK. It does say in their website that it is coming to Canada. If so, I wish they will provide free bank transfers between the UK and Canada using the real exchange rate and no transfer fees.
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Dec 27, 2013
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Statistics101 wrote: For too long we have been too complacent on how much we pay for things. Forex fee at an airport kiosk is just one of many things that we unwittingly pay our hard earn cash for. For example: why are we okay with paying $130 for an hour long taxi ride that cost about $20 worth of gas? Why are we okay with a financial advisor selling us a product where he/she will be taking a 5% fee plus a 1% service fee? Why are we paying real estate agents tens of thousands of dollars more just because real estate prices went up 30% in one year - is their service worth a 30% inflation? Why am I paying tax on the taxes that I pay in my annual income?

I hope technology will change all that before one day everyone realize how badly they are being taken advantaged of.
so basically u want Slave society to work for free for you... but you want to make 100k?
gas costs $20.
insurance on a commercial vehicle cost $5k a year
a driver wants to make $35,000 a year to feed his family.
the car needs $5k a year in maintenace.
the city needs $250,000 for a taxi medallion.

Thats why it costs $130 for a trip that only consumes $20 in gas.
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my visa cc has no foreign transaction fees, and my debit interac card gives me a really good rate. When I travel overseas I just use them both and get pretty much the same rate as XE.com
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heymikey wrote: Revolut already does that where it uses the real exchange rate with no ATM withdrawal fees. I'm not sure if it's available in Canada, but I have an account in the UK. It does say in their website that it is coming to Canada. If so, I wish they will provide free bank transfers between the UK and Canada using the real exchange rate and no transfer fees.
I want to get a revolut acct. But cant from here.
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webdoctors wrote: my visa cc has no foreign transaction fees, and my debit interac card gives me a really good rate. When I travel overseas I just use them both and get pretty much the same rate as XE.com
Yea but if you need to convert a million bucks (or even a lot less) from CAD to USD, say, to buy a US property a VISA CC ain't gonna help ya. I saved a friend a small fortune by showing her how to get the spot rate on that amount using Norbert's Gambit.
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divx wrote: indeed, it is impossible to buy it at the spot rate, i hear amazon credit card lets you do that though.
They did before the card was discontinued in March, 2018.
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eonibm wrote: Yea but if you need to convert a million bucks (or even a lot less) from CAD to USD, say, to buy a US property a VISA CC ain't gonna help ya. I saved a friend a small fortune by showing her how to get the spot rate on that amount using Norbert's Gambit.
Doesnt Norberts Gambit necessitate a manual step of transferring your US traded shares across to Canadian account? So after half an hour on hold with brokerage you may find the the change in share price hurts (or helps) the overall effective exchange rate??
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eonibm wrote: Yea but if you need to convert a million bucks (or even a lot less) from CAD to USD, say, to buy a US property a VISA CC ain't gonna help ya. I saved a friend a small fortune by showing her how to get the spot rate on that amount using Norbert's Gambit.
I'm not familiar with international banking, but i thought for large amounts you just do a wire transfer. Pay the SWIFT fee of $25 but that's small fee overall for $10K+ and you'd get the spot rate? Is that not true?
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webdoctors wrote: I'm not familiar with international banking, but i thought for large amounts you just do a wire transfer. Pay the SWIFT fee of $25 but that's small fee overall for $10K+ and you'd get the spot rate? Is that not true?
No not true. You pay the SWIFT fee plus the bank's implicit exchange fee
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Jul 7, 2005
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Cough wrote: No not true. You pay the SWIFT fee plus the bank's implicit exchange fee
There are also intermediary fees tacked on depending how it routes. And depending on the size of the fx transfer, you may need to book a 'preferred' rate. Prefered or days rate still has the exchange fee embedded.

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