Danish banks lower charge for customers who make purchases abroad 

An order went into effect Wednesday requiring Danske Bank and Nordea to charge customers less when paying in foreign currencies. 

Danish banks lower charge for customers who make purchases abroad 
Users of Dankort debit cards from Nordea and Danske Bank will now pay lower surcharges on payments made abroad, but the banks want to reverse the order. Photo: Kristian Djurhuus/Ritzau Scanpix

Customers at Danske Bank and Nordea will now pay a lower charge when they use their bank-issued debit card – referred to as a Dankort – to make purchases when abroad.

Earlier this year, the Competition Council (Konkurrencerådet) determined both Danske Bank and Nordea added unreasonable surcharges to purchases abroad — 1.5 percent within the EU and 2 percent for the rest of the world. 

As per the Competition Council’s findings, Danske Bank must drop the currency exchange surcharge altogether within the EU and reduce the rate to 1.5 percent outside the bloc, broadcaster DR reports on Wednesday.

Nordea has changed its surcharge from 1.5 percent in the EU and 2 percent in the rest of the world to 1 and 1.5 percent respectively.

Danske Bank opposes the Competition Council ruling. The bank has appealed the decision and will argue its case before a judge at the Copenhagen District Court. No date has yet been set for a hearing.

“Although we don’t agree with the council’s decision and have appealed the case with the courts, this is a case of an order by an authority, which we have to comply with by the set deadline,” Danske Bank head of media communications Stefan Singh Kailay told DR via email.

“That is exactly what we have done with the price changes of August 1st. That does not change our view of the ruling,” he wrote.

“(The council) is focusing on one element of the overall payment transaction and the level of profit on that alone, and not on the overall cost of the Visa-Dankort service. This creates a misleading picture of what we actually earn from the cards,” he wrote.

The currency exchange surcharge is applied as a percentage of the amount you pay with your card in a foreign currency, such as in foreign shops, hotels or restaurants as well as on websites.

Nordea, which has also reduced its surcharges, has also appealed against parts of the ruling according to DR.

“We do not think we have charged too much in this area, but conversely have – in good faith – set our prices in a free, competitive market. We have full transparency with our customers in this area,” the bank’s head of media communications Stine Wind told DR via email.

“Every time you complete a payment in a foreign currency with your card, you can see how much you pay as currency exchange surcharge in our Wallet,” she added.

READ MORE: Danish banks raise interest rates but many remain negative 

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Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

The value of the British pound has fallen steeply against the dollar in recent days but also against the Euro – and the krone. So what should you do if you live in Denmark but have income – such as a pension, rental income or a salary – in pound sterling?

Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

Exchange rates might sound like a spectacularly dull topic, but if you live in Denmark (where, naturally, your day-to-day living expenses are paid in kroner) but have income from the UK in pounds, then the movement of the international currency markets will have a major impact on the money that ends up in your pocket.

This is not an uncommon situation – Denmark-based Brits may work remotely as freelancers from British companies and be paid for invoices in pounds, while retired Brits might be receiving a British pension.

Others might have income from rental properties or investments.

So a big loss in the value of the pound against the euro – and by extension, the krone – can have a major impact on Brits in Denmark.

The most recent fall in the value of the pound was sparked by the UK government’s new mini budget and has already seen a relative recovery. 

The pound-krone exchange rate over the last month. Chart:
But while this one-time fall is spectacular, it’s also part of a longer term trend in the fall of the value of the pound, especially since Brexit, that has seen people such as foreign-based pensioners lose a big chunk of their income.
The pound-krone exchange rate over the last 10 years. Graph:

So if you have income in pounds, what are your options?

Income in kroner – obviously this isn’t an option for everyone, especially pensioners, but the best way to protect against currency exchange shocks is to make sure that you’re paid in the same currency that you spend in.

Alternatively, income in euros: the advantage of the euro in Denmark is that its value is pegged to the krone and not sensitive to exchange rate fluctuations.

For those being paid from abroad, billing in euros means you could work in any EU country – including the anglophone ones like Ireland – and get your salary in euros.

Depending on your employer, it might also be possible for you to ask to bill in euros. 

Work in Denmark – if you’re currently not working or want to switch to local currency income, then an obvious option is to take up some work in Denmark.

Depending on your work and residency status, as well as the field you work, the practicality of this option ranges wildly from one person to the next.

READ ALSO: How can you get a work permit in Denmark if you are not an EU national?

Exchange rate – if your income can only be paid in pounds, it’s crucial to ensure that you get the best exchange rate possible and that you don’t waste money on international transfer fees.

The best options here are online banks or money transfer services, which compete on the rates that they offer, so usually have the most advantageous rate.

Some online banks also have the option to set up accounts in both pounds and kroner, so that you can receive money in pounds and spend it in kroner without having to make bank transfers, which can attract fees.