It’s hard to imagine buying almost anything online without at least paying Amazon a quick visit. They’re perhaps one of the greatest examples of a business that’s succeeded by looking after their customers. And for that we admire them greatly.
But what about their currency converter? In recent times they’ve been banging the drum of international cross-border purchases, so what better than a built-in service for paying in foreign currencies? Sounds great, right? Well, let’s not be too hasty.
We took a look at the pros and cons, and whether or not it will actually save you money.
How it works
If you live in France, say, and want to buy something from Amazon's UK site using your debit or credit card, there are two options open to you. You can either pay the stated price in pounds sterling, or – if you're with Visa or Mastercard – you can opt to activate the currency converter which will show you the price in euros, allowing you to pay that amount instead.
As well as pounds and euros, there are a number of other currencies eligible for the service, including US and Australian dollars, Japanese yen and Swiss francs among others. That's good news for millions of Amazon-addicts worldwide.
Yes, it’s convenient…
One of the advantages of the currency converter is the immediacy of information. If you don't use it and you decide to pay inthe foreign currency (so if you're in France and decide to use your euro-currency card to buy something in pounds from Amazon UK, for example), you'll have to wait till you get your next bank or card statement to find out how much you've actually ended up paying in euros. That amount will be based on whatever the exchange rate happens to be at the time your order ships. And when we say "exchange rate", we mean the marked-up rate your bank or card provider is charging you, which may differ depending on who you're with. This may also include a transaction fee.
On the other hand, if you use the currency converter then you'll immediately know how much you'll be paying in your own local currency. You can even see exactly what exchange rate Amazon is using by clicking the helpfully-titled View Exchange Rate button. And if you need to refund the item, that exact exchange rate will be used – so there's no danger of getting back a bit less than you paid for it if the rate has since changed. A nice touch, we think.
…but you pay for the privilege.
Putting the instant info and sheer convenience of the service to one side, will it actually leave you better off than paying in pounds? The short answer is, it depends, but most likely not. Amazon say you "may" pay less using their currency converter because they strive to provide a "competitive exchange rate". This may or may not be a better exchange rate than the one your bank or card provider would use if you chose not to use the Amazon currency converter. Clear as mud.
Quite a few users have taken to message boards expressing dismay at how Amazon's rates don't match the more favourable exchange rates quoted elsewhere on the web. The fact is, the vast majority of organisations, from Amazon to your high street bank, don’t provide customers with the mid-market or "real" exchange rate used behind the scenes.
Ultimately, though, it's probably best not to expect too much in terms of exchange rate savings when it comes to the currency converter. Its real benefit lies in the way it tells you what you'll be paying in your local currency at the moment of purchase, which is handy if you're keeping a close eye on your exact daily outgoings. For that alone, it's a pretty useful option to have. But for maximising the foreign currency you get for your local money, it’s no better than the old guard of banks & currency brokers we love to loath.
By Taavet Hinrikus,