Singaporean Shoppers Unaware of Hidden Transaction Fees Even as Online Purchases Rise: new study finds

• Singapore shoppers who spend $200 a month on international purchases can lose an average of $82 annually, or the equivalent of 20 plates of chicken rice

• The risk of racking up significant hidden transaction fees continues to rise, as two in five online shoppers (40%) say they have increased their shopping frequency from last year

Singapore, September 2021: Singapore is known to be a nation of savvy online shoppers and discerning bargain hunters – but does the old adage ring true? A new survey published by Wise (formerly TransferWise) has found that while Singaporeans are shopping more from overseas merchants, only 3 out of 10 consumers are aware that there are additional fees attached to card payments for online purchases made in a foreign currency. 

The independent study, carried out by research firm YouGov in Singapore in early August, also revealed that maximising cost savings and having fee transparency were the two most important considerations for Singaporeans when shopping online. Among those surveyed, 86% of online shoppers agreed that transparency is important to them, expressing a desire to know what fees they are paying for on foreign transactions, and 83% value cost savings from online purchases. 

However, 64% reported that they are either unsure of, or say there are no additional fees associated with traditional payment methods such as bank-issued credit or debit cards. These fees, which can become significant over time, can include a foreign transaction fee charged by banks, a dynamic currency conversion (DCC) fee that allows foreign currencies to be converted to SGD, and an often undisclosed mark-up on the exchange rate. Generally, these fees only show up on card statements after the purchase is completed, while the exchange rate used would rarely be revealed transparently.  

Singaporeans still largely favour traditional payment methods and want to save from online shopping, yet continue to lose out in hidden transaction fees 

When checking out online, more than 90% of online shoppers admit they prefer to pay with bank-issued cards or through services like PayPal, putting them at greater risk of incurring transaction fees. Indeed, foreign transaction fees on cards alone can amount up to 3.25% of a shopper’s purchasing volume. Additionally, those who check out with a bank-issued card through PayPal can incur a currency conversion fee of around 3%, which is charged in addition to relevant bank foreign transaction fees.

For Singapore shoppers who spend S$200 a month on international sites, this can total to an average of S$82 a year lost to payment-related fees – the equivalent of 20 plates of chicken rice for each individual! 

Making a big ticket purchase soon? Watch out, as the hidden fees can rack up exponentially at over $400 per year for shoppers who indicated expenses of at least S$1,000 a month. 

Singaporeans are shopping online more frequently from international sites compared to last year 

The pandemic has continued to accelerate e-commerce adoption. Two in five (42%) of Singapore shoppers now shop from international websites at least once a month, and 40% say they have increased their shopping frequency from last year. Additionally, nearly 20% have stated that their shopping has increased more than twice as much a month. 

The study also found that on an average month, two in five (44%) of Singapore shoppers can spend up to S$200 from international sites or marketplaces. Online shoppers cite fashion apparel, electronics and cosmetic products as their top three expenditures each month.  

Surendra Chaplot, Wise’s Global Head of Product, said: “The survey findings tell us that even the most savvy of shoppers may overlook or are unsure of the costs from using traditional payment methods, which are non-transparent, expensive and come with hidden fees, when transacting in another currency. This is a universal problem that affects anyone who has ever needed to manage multiple currencies, whether it's buying something online, going on a holiday, sending money home to loved ones, or running an international business.”

“A Singaporean shopper spending $200 a month on international sites stands to lose an average of $82 annually — this is hard-earned money we're parting with on fees. At Wise, we’re committed to making people’s lives easier and saving them money with each cross-border transaction. Our multi-currency debit card uses the fair, mid-market exchange rate and shows the exact charges upfront, making it a smart solution for Singaporeans to spend without foreign exchange fees and markups.” 

For a breakdown of the findings from the study, please refer to Annex A appended. 

Tips to Wise Up when shopping online from overseas retailers

• Avoid sneaky exchange rate markups: When paying in foreign currencies using traditional payment methods such as a bank-issued card, you’re often hit with an undisclosed exchange rate markup. This is a hidden fee which is not transparently disclosed in your statements. For instance, card statements would display transactions in the foreign currency and the equivalent in your home currency, without revealing the exchange rate used. The best way to get around these charges is to use a multi-currency card like Wise that uses the fair, mid-market exchange rate which you can see anytime on Google.
• Always pay in the local currency: Always choose to pay in the currency of the country you’re buying from. If you choose to pay in your home currency and let the merchant convert it, you could be paying an additional Dynamic Currency Conversion (DCC) fee. On top of that, you will be charged additional foreign transaction fees by your bank since the transaction is conducted with an overseas merchant.
• Look out for foreign transaction fees: As long as you’re making a purchase from a merchant based outside of your country, regardless whether you’re paying in your home currency or the merchant’s local currency, most banks charge what’s known as a foreign transaction fee, which goes up to 3.25% of the total transaction amount. If you shop online often, it’s prudent to use a multi-currency card like Wise to maximise your savings which has zero foreign transaction charges, only a low, transparent conversion fee.

Annex A: Wise Study Findings (August 2021) 

The survey was carried out with 1052 respondents in Singapore, of which 862 stated they shop online. 

Singaporeans have increased their online shopping frequency and expenditure from international websites 

• 2 in 5 (42%) of Singaporeans shop online from overseas websites at least once a month 

• 2 in 5 (40%) of Singaporeans who shop online have increased their shopping from last year, with 18% stating their shopping has increased more than twice a month

• On an average month, well over a third of Singapore shoppers (35%) spend more than SGD100 a month on online shopping from overseas websites, and close to a quarter (23%) spend over SGD200 

• The top categories that Singaporeans spend on from international sites are (1) apparel and accessories (55%), (2) electronics and gadgets (45%) and (3) cosmetics and body care products (31%) 

Singaporeans overwhelmingly value savings and transparency in their shopping

• A majority of online shoppers (83%) agree that maximising savings is important to them when making online purchases 

• 86% of online shoppers agree that they value transparency when shopping online; they want to know what fees they are paying when it comes to transactions involving currency conversions and overseas payments 

Traditional payment methods, which are usually associated with the highest hidden costs, are still favoured by most Singaporeans

• 83% of Singaporeans still use bank-issued credit or debit cards when checking out their carts online 

• Nine in 10 online shoppers in Singapore (92%) use credit and debit cards or digital payment services (i.e. Paypal) when checking out their purchases online

• 64% of online shoppers in Singapore who use bank-issued credit/debit cards and/or digital payment services are either unsure of, or believe there are no additional fees attached to credit/debit card payments for online purchases