Story time: This is why we need digital currencies

My recent trip to Lisbon made it crystal clear why Facebook and a number of central banks see a need for digital currencies.

What happened: Before I went on vacation, I made sure to transfer money into my Schwab High Yield Investor Checking account. The account offers no ATM or foreign transaction fees, which is the entire reason I got it. I made the transfer on Thursday, Nov. 12, in anticipation of landing in Lisbon on Sunday, Nov. 14.

  • Initially the message I got from the bank told me I wouldn’t have access to the money until Monday, Nov. 15, which was annoying, but fine.
  • On Sunday, I found a Santander ATM and withdrew funds from my Santander checking account, expecting that I could avoid rapacious ATM fees.

I got two surprises. First, Santander charged me $6 (six!!!!) to use the ATM because Santander Portugal is not connected to Santander U.S.

  • Then, naturally, they also charged me a foreign transaction fee. (Fun fact: In Lisbon, Santander doesn’t own or operate the ATMs that are inside the Santander bank; they are Multibanco ATMs. This was true of every single bank I went to — they were all operated by outside entities.)

Second, Schwab said my money would not be available for five (5!!!) business days, meaning I wouldn’t be able to access it until the following Thursday.

  • Schwab had taken the money from the Santander account, meaning it was no longer there, but would not make it available to me. So, in essence, Schwab just planned to hold my money from Monday, when it was removed from the Santander account, until Thursday.

Between the lines: Many vendors in Lisbon, even fairly large restaurants and bars, don’t accept credit/debit cards.

  • This meant I had to take more money out of my Santander account and pay more of their outrageous $6 per transaction fees until I finally got Schwab to release the money.

Watch out: Some ATMs in Lisbon offered an absurd «fixed» exchange rate that was $0.12 per euro more than the market exchange rate. That’s significantly higher than even the airport foreign exchange places charge. On top of this, the Euronet ATMs charge you nearly 5 euros per transaction.

  • If I had chosen to take the «fixed» exchange rate, which is presented as the only choice (but is not), taking 100 euros out of an ATM would’ve cost me around $18 in fees.

Why it matters: Digital currencies administered by central banks could potentially cut the banking sector out of foreign exchange transactions and make this process significantly easier and less expensive.

  • Similarly, Facebook’s Libra could provide a way to send or withdraw money in any currency without the need for ATMs or banks and their ridiculous fees.
  • Also, no one would have to wait five business days for their money to transfer from one bank account to another.


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