Ryanair Mastercard Prepaid option Neteller: Are their currency exchange rates fair?

ermepb

Hello!

Following the discussion of this thread http://forums.moneysavingexpert.com/showthread.html?t=2074201 about Ryanair charging now when using a Visa Electron, many have suggested cheap Mastercard Prepaid cards. It seems that the majority thinks that the best offer is Neteller. I also thought this way and opened a Neteller account. I have to say everything went fine perfectly and making a deposit is free if you do it by bank transfer. Ryanair always accepted my Neteller Prepaid Mastercard (which is a proper plastic Mastercard a not a virtual card). Thumbs up on Neteller until here :-)

My point (and this is why I open a new thread) is the way Neteller calculates the exchange rate when you pay in a currency different from your Neteller account. Because of my personal situation I opened my Neteller account in Euro. So every time I pay in Sterling I know I have to pay a 2.5% transaction fee (you have to pay this fee with all credit and debit card providers, so this is fine). This fee is well explained by Neteller:

Question: What fees does NETELLER charge for currency exchange/foreign exchange?
NETELLER's exchange rate is based on an average daily inter-bank market rate published by a third party foreign currency data provider, plus 2.5%.
NETELLER retains this amount as a foreign exchange processing fee to protect against exchange rate fluctuations. NETELLER rates are competitive and can be much better than rates found with many credit card companies.

So far, so good. Two days ago on Feb 16th I booked a Ryanair flight from the UK charged in Sterling. The price was 31.99 GBP. Neteller charged me a whopping 39.24 EUR :eek:. This is an exchange rate of 1.22663. Subtracting the 2.5% transaction fee, this means Neteller used a GBP-EUR exchange rate of 1.19671. I was quite shocked. I went on to check the Financial Times' website and the going market rate on Feb 16th was 1.15. If I have done my maths correctly, this means that Neteller used an exchange rate that was 4% more expensive than the going rate (I assume here that FT is accurate and trustworthy). So 4% of the ticket price of 31.99 GBP makes for a Neteller profit of £1.28 that has to be added to the 2.5% "official" Neteller transaction fee which was £0.80. So I have paid £2.08 when paying for a £31.99 ticket.

I contacted Neteller and they said that exchange rates fluctuate and that they cannot give me "the information regarding this "foreign currency data provider" which they use to calculate the rate. To make me even more happy, the Neteller lady even told me that today Feb 18th the going GBP-EUR rate is 1.1078, which is also nonsense. The rate has been around 1.15 for many days.

I know Neteller is a business and not a charity, but I am still a bit annoyed. I would prefer if they are open about their fees so you can decide to go for Neteller or some other card. Also, the situation is specially unfair, because you don't know about this unfair exchange rate until after you have paid it.

I wonder about your experiences when using the Neteller Prepaid Mastercard in a foreign currency. Have I just been unlucky, or is there design and intention in the way Neteller calculates those fees.

Please post your experiences! Cheers!

blueplatinum

I am in an identical situation although so far I have only used the card to pay in Euro. I suspected this might be a problem when paying in another currency.

I have actually decided to get a FairFX card which (without going into details) I think is going to give me a better deal regardles of currency.

Toe-Jam

I use the neteller card for ryanair sterling buys, and I use the Fairfx one for Euros.

The Fairfx euro one is a bit of a pain it takes hours to upload the funds, but at least you know what your paying.

Lehman

Guys, when you buy a ticket on Ryanair it usually asks you to choose the currency in which you want to pay. For example, I wanted to buy with my EUR Neteller a ticket from UK to FR, quoted in pounds and at checkout, Ryanair said, this would be XX EUR and I could then paid in EUR, avoiding FX charges on Neteller. I have to say that Ryanair FX rate is also not the best. But this is the same everywhere, PayPal also applies exchange rate above market.

ermepb

Lehmann, thank you for your message. I didn't see any option to choose the currency, but this may be my fault. I book so often Ryanair flights that I do it very quickly. My impression was that Ryanair always prices and charges in the currency of the country where the flight starts. So flying from the UK is charged in Sterling and flying from Euroland to the UK is charged in Euro. I used to pay with a Visa Electron and for the Euro-based flights my UK bank would use a fair exchange rate and charge me a very small 1.5% exchange fee.

Anyway, will pay more attention next time I buy a Ryanair flight priced in a different currency. Cheers!

budgetflyer

I always use this tool to calculate exch rates for CC transactions
http://corporate.visa.com/pd/consumer_services/consumer_ex_rates.jsp

Mastercard rates will be similar I imagine.

PolishBigSpender

ermepb wrote: »

Please post your experiences! Cheers!

Just because the market rate is 1.15 doesn't actually mean anything, because Netteller are unlikely to get anything near such a great rate for currency conversion. This is exactly the same mistake that people make when checking xe.com/ucc or similar - they see the interbank rate and immediately assume that they should get the same rate, when in reality, it simply doesn't work like that.

I'm looking now and the Euro is being sold in the UK at about 1.09 - which means that Netteller are simply charging about the same as you would be charged to physically buy the currency. Nothing wrong with that!

Again, the "MSE culture" has created a situation where everyone thinks they should get the best possible deal without understanding the situation properly.

berd

ermepb wrote: »

Subtracting the 2.5% transaction fee, this means Neteller used a GBP-EUR exchange rate of 1.19671. I was quite shocked. I went on to check the Financial Times' website and the going market rate on Feb 16th was 1.15. If I have done my maths correctly, this means that Neteller used an exchange rate that was 4% more expensive than the going rate (I assume here that FT is accurate and trustworthy). So 4% of the ticket price of 31.99 GBP makes for a Neteller profit of £1.28 that has to be added to the 2.5% "official" Neteller transaction fee which was £0.80. So I have paid £2.08 when paying for a £31.99 ticket.

I alway use mywirecard. There are no "hidden" currency conversion fees, it is just a one time fee for the loading of the card.It i a vrtul card but you can go for the plastic as well.

ermepb

PolishBigSpender wrote: »

Just because the market rate is 1.15 doesn't actually mean anything, because Netteller are unlikely to get anything near such a great rate for currency conversion. This is exactly the same mistake that people make when checking xe.com/ucc or similar - they see the interbank rate and immediately assume that they should get the same rate, when in reality, it simply doesn't work like that.

I beg to disagree. You have to differentiate between the exchange rates when buying and selling physical coins and notes and when spending money in a foreign currency. Since cash carries a higher handling cost, there is a greater spread for buying foreign notes. If today the exchange rate is 1.15, if you sell Euro in the UK you may get 1.10 and if you buy Euro you may have to pay 1.20. This is normal and it is not at all what I meant.

When you pay in a foreign currency with your card the system works differently. The rate you pay is pretty close to the average rate (say, 1.15) and you pay a fee (usually 2% or 3%).

What happened to me was that the exchange rate was extremely disadvantageous and that I was charged a fee. I agree with the fee but not with the exchange rate. As I said before, maybe it was not Neteller, but Ryanair, I will pay more attention next time.

PolishBigSpender wrote: »

Again, the "MSE culture" has created a situation where everyone thinks they should get the best possible deal without understanding the situation properly.

Sorry, this it not a matter of "MSE culture", you are comparing two different situations: It is not the same to buy physical foreign currency and paying for something in a foreign currency!

budgetflyer

There is a fair chance it is Ryanair and not Neteller who applied the "dynamic currency conversion". They are notorious for it.
I haven't flown with them for over 9 months. Is it still 1 GBP= 1 Euro onboard ?

Lehman

Unfortunately FairFX is only available to UK residents and other fees it charges are not the most competitive in the market.