Imagine the scene. You are standing at the London Eurostar terminal in St Pancras. You need some euros. Yes, you could wait until you get to Paris, but you have a connection, or some reason to not mess around at the other end. You want euros, and you want them now.
You wander into the main concourse of the station. Left, or right?
If you turn right, you will pass some smart shops and, just before you get to the domestic train bit, you will come to a cashpoint (ATM). It will dispense euros. Great – job done.
But if you turn left, and walk just outside the station, across the busy Euston Road, you can find several bureaux de change. They do a quick turnaround of currency. Job equally done.
So which should you do?
If you turned right, you may have stayed in the comfort of the station and avoided the scary world outside, but you lost money. Big time.
Let’s say you wanted €100. No more, no less.
The ATM would have ‘sold’ you euros at a rate of 1.0105 (euros to pounds) as of September 9th, 2019. I know. I put my card in to check. (I didn’t complete the transaction, fwiw).
Outside? Shop around, and you could have got a much more agreeable rate of 1.065, or even 1.09. However, avoid the Post Office – they were offering 1.030. (All checked on the same day.)
Savvy travellers using a MoneyCorp payment card could have got 1.0873 that day. My Revolut card was offering an even better 1.1195.
If all these numbers sound a bit abstract, let’s break it down.
|PROVIDER||euro rate (as of 9 Sep 2019)||£ spent for €100|
|Bureau de Change||1.09||£91.74|
To get my €100, at the ATM I would have spent nearly £99. Outside, I could have got it for just under £92.
So I’m calling that £7, for the sake of simplicity.
How much more walking is it? According to Google maps measurement, to get to the outside Bureaux from the Eurostar entrance is 266m. To the ATM it’s 115m. So for the sake of walking an extra 150m, you’ve spent £7.
Is that worthwhile? Most people can walk at around 1.2 metres per second. So 150m is 125s or say 2 minutes. Add in 30 seconds of crossing the road, and walking back – that’s 5 minutes.
Is £7 worth 5 minutes of your time? That’s £84 per hour. The London living wage is £10.55 per hour.
Then again, this is for €100, which doesn’t exactly get you a full weekend in Paris. If you want €500, it’s suddenly a cash difference of £35, all for walking 150m. And that’s suddenly £420 per hour. We are getting close to serious lawyers fees here.
Why is the ATM so much more expensive?
It’s not the costs – they are minimal. Rent is a factor, but it’s essentially a 1.5m cube in the wall. No staff needed, compared to the bureaux outside. It needs to be topped up by a security guard now and then, but all banks and money shops need that anyway.
So why do Rafael’s Bank (the ATM provider) give such a poor rate? The answer is simply that they can. It’s a case of total price insensitivity. If some people aren’t going to shop around, you can over-charge them all you like. But next time you are tempted to use that ATM or a similar one, think about the location, your time, and whether you can afford £84 per hour – or far more – just to not walk that little bit further.