Why are banks charging higher exchange rates for online shopping?

Dear Editor,

We are constantly reminded by the central bank through the media that there is no shortage of foreign currency in the country and that the spread between the buying and selling rates should be no more than $3, yet the public is bombarded daily by contrary scenarios when they approach the cambios and banks.

We are living in the age of the internet where online shopping is the new normal, and people from all walks of life indulge in this. I normally make small purchases on Amazon whenever a relative or friend is planning to visit Guyana and is able to bring my items. As an average Guyanese with a public service job my earnings are at the lower end of the salary scale, therefore I would make my online purchases over a period of several months with my little disposable income.

I noticed a dramatic change in the USD rates offered by the only two banks that I use, Republic Bank and GBTI. During the latter part of last year I purchased items online using my Republic bank One Card at a rate of $212 for US$1. This was $2 above the selling rate then of the USD. Earlier this year the ‘online rate’ rose to $217 and has now skyrocketed to $230, although the selling rate of the USD is $210 on the bank’s website. Why is there such a huge spread between the selling rates of the USD when bought at the bank and when purchased to facilitate online shopping? In addition, for each item of goods or services purchased in USD the bank charges US$1. Can a representative of the bank explain this situation?

At GBTI it is much worse. I have a Visa travel classic card (a debit card) which I sometimes use for online shopping. The most I normally put into this card is US$100. In November 2016 I paid $212.5 for US$1. This was $2.5 above the advertised selling rate of the US dollar. The rate started to soar after this. In January it went to $213 then to $216 in February and the last time I checked earlier this month it had climbed again to $220. This rate for online transaction is not shown on the bank’s foreign exchange board nor on its website. Only on enquiring from a teller would I be told this. To further bleed the customer this bank charges a ‘reload fee’ of US$5 every time money is put into the card; it doesn’t matter whether this is US$50 or US$100, there is also an ‘other’ fee of 0.5% of whatever is being loaded, and lastly for each purchase made the bank charges US$1. So if I want to put a measly US$100 on my card I have to pay 100×220 plus US$5 plus 0.5% and finally US$1for each item.

I am baffled by this situation and never received any satisfactory explanation for why there are two different selling rates for the US dollar at both of these banks. I do not use the other banks so I cannot comment on what occurs there.

Most young people are familiar with online shopping and consider this quite commonplace. Why are the banks restricting online shopping by charging exorbitant fees and inflated rates?

Yours faithfully,

(Name and address provided)

Around the Web