Kiwis are forking out $1 billion a year to ultra-profitable banks just to convert their money into other currencies, it has been claimed.
UK-based company TransferWise, which launched services in New Zealand three years ago, says its research found $5 billion has been paid over the last five years in fees and other hidden charges - $2 billion from online shopping, overseas purchases and remittances, and $3 billion by Kiwi businesses.
"Banks and remittance providers should stop the practice of hidden fees," TransferWise's New Zealand manager Nicholas Lembo told Stuff.
"If service providers don't do this, the regulator can and should step in. In some countries, the authorities have already done so in order to protect consumers."
Bagrie Economics managing director Cameron Bagrie told The AM Show on Monday while banks should be allowed to make money for the services they provide, questions should be asked around whether the present charges are appropriate.
"New Zealand's got about $80 billion worth of exports, about $80 billion worth of imports. There's $160 billion. There's going to be currency conversion fees on that. They're not going to be small numbers. But $5 billion over five years? That's a whopping big sum."
Bagrie said New Zealand's banks, most of which are owned in Australia, are some of the most profitable in the world, recording a 15 percent return on equity after tax.
"They're a lot more profitable than they are in Australia... I can't remember the last time the banking sector made a loss."
The Commerce Commission told Stuff it wasn't currently considering following its Australian equivalent and conducting an inquiry, because it's "busy" with its investigation into fuel pricing and competition.
"I'd like to see the Commerce Commission battling up and having a look at certain things that are going on in the sector - credit card charges, bank interchange fees, merchant costs, what we're seeing in regard to currency conversion fees.
"You've got the Commerce Commission... asleep at the wheel. They're making a bit of a song-and-dance about the fuel companies - well let's muscle these guys up and look at other sectors across the economy."
Another area they should probe is credit card charges, he said.
"The [official cash rate] has come down an awful lot over the past decade - have we seen credit card costs come down? No, they're still up around 20 percent."
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