Here is my account of trying to withdraw cash in Argentina and how expensive the process was. I’d like to use this experience to demonstrate how much easier and cheaper it would have been if I was using cryptocurrencies instead.
Everyone uses Cash in South America
I’ve been travelling South America for 10 months making my way south from Mexico to Argentina. So far in all the countries I have visited only cash is used to trade directly between the buyer and seller. To withdraw cash I have an account with “Revlolut”. They provide me with a VISA debit card which I need to top up with funds. When using it to withdraw cash, I can withdraw £400 per month without being charged by Revolut. However the bank I am withdrawing from abroad may charge me. Throughout my travels it’s been hit and miss to find a foreign bank that doesn’t charge me for withdrawals.
High Fees for not much cash!
I arrived into salta at 6 am on an overnight bus from Tarija in Bolivia. I had checked that there were a few cash machines local to the bus station in Salta and upon arrival duly marched over to the nearest one. In goes my card and I tried to withdraw 8000 Pesos (£170) which was declined. I’m a bit tired from lack of sleep so I try another cash machine for the same amount…declined again. The third different bank I try varying amounts…6000 Pesos (declined), 5000 Pesos (declined), until finally I hit jackpot with 4800 Pesos (£100). Turns out in Argentina there is a limit of 4800 Pesos per withdrawal.
Before the money at the cash machine is issued I get a final message “you will be charged 386 Pesos (£8.00) for this transaction”. So for £100 I am going to be charged 8% in transaction fees by the local bank. I need the money and I’m exhausted so succumb to the banks demands!
My home bank charged me too!
I mentioned previously that my bank gives me £400 per month of fee free withdrawals. Just my luck, I had exceed my limit so Revolut charged me £2 for the transaction. So in total for withdrawing £100 it cost me £10 in transaction fees. This £10 fee gets charged every time I withdraw.
Paying with a card costs as well
It seems that all the retailers over here get charged 10% for the privilege of accepting Visa or Mastercard. So whenever I asked if I could pay by card they added this 10% to the bill as well!
Why the transaction fees?
I am not a financial expert but it seems to me that the fees are a combination of charges made by the banks, cash machine companies and VISA (or Mastercard). I doubt it actually costs £10 to withdraw £100 in order to facilitate converting my pounds into Pesos and for the privilege of pressing the buttons at the cash machine! Neither does it actually cost 10% for the mentioned parties to process a VISA or Mastercard payment in a shop.
Do all banks charge the same for cash withdrawals?
Turns out that most UK banks charge between 1% and 3% per cash withdraw abroad on top of what the foreign bank charges.
Where did the money come from to create these Fees?
The interesting thing is that money I paid in fees either when withdrawing cash or when paying with my card did not exist either on VISA, the cash machine company or the bank’s books before I started the transaction. On the contrary, this debt was created out of thin air through a process of fractional reserve banking. 97% of all financial company’s assets are created out of nothing in the form of loans, credit and interest payable on this debt. There is no effort required to increase the money supply apart from typing zeros on a computer screen.
How would using Cryptocurrencies be easier?
Firstly using cryptocurrencies there is no requirement to have middle man like VISA, banks or cash machines. Cryptocurrencies are global and there is no need to convert into a local currency. All retailers and buyers need is a smart phone or computer with a software wallet installed on it. With this wallet someone wanting to buy a coffee for example simply scans their phone against the coffee shop’s wallet and the payment is instant.
If you would like to learn more about how cryptocurrencies work read my guide “Demystifying Cryptocurrencies”.
Are Cryptocurrencies cheaper than cash?
Using Bitcoin as an example, the transaction fee is a fraction of a percent and nowhere near the 10% charged to withdraw money. Below is a screenshot showing that it would only cost £0.09 to send £100 in Bitcoin to a seller. Withdrawing cash is 1111% more expensive than cryptocurrencies!
Read “Comparing Cryptocurrencies to Money” to find out more.
So why are people not moving from Money to Cryptocurrencies?
I keep asking myself this question and the only reason I can think is that people are used to the old way of working. Maybe they are afraid of change, maybe the technology it too straight forward? Maybe people actually like paying 10% transaction fees to withdraw money while travelling abroad?
Also there are not many retailers accepting Cryptocurrencies which is a shame when you consider how easy it is to get started. All a coffee shop needs to do is download and install a software wallet an put a notice in their window saying “We accept Cryptocurrencies”.
How I can help you?
My background is in technology and training and for over 10 years I have provided IT Support to home and small business users through my IT company ithound.co.uk. In recent years I have added cryptocurrencies to my product offering with cryptohound.me.
Whether you are a business wanting to accept cryptocurrencies or an individual interested in investing in them, I will help you get started and provide training and support to give you confidence using them.
I regularly write blogs both on my website and the Steemit platform so be sure to connect with me there. If you would like to support my work please check out my affiliate links below which help finance my work:
- Mine Bitcoin and earn passive income with the Elevate Group
- Earn $10 worth of free Bitcoin on your first trade with Coinbase
- Buy Bitcoin and Cryptocurrencies using the Binance Exchange
- Protect your Cryptocurrencies with a Ledger Hardware wallet
Carl Hughes, The Crypto Hound
Signal Messenger: +447919 562 418
Telegram: @ flowingman