The Post Office says that it delivers some of the best foreign currency rates around. However the rates you get from the Post Office varies widely depending on how you order. If you are not careful they could post a large loss on your transaction…
Last Friday if you wanted to buy US dollars from the Post Office then they were quoting 1.23 dollars to the pound. This rate was if you ordered online and collected in store. However if you just walked into the Post Office without ordering online before then the rate dropped to 1.18 dollars to the pound. That is more than 4% worse for exactly the same currency at exactly the same place. To put it in real terms if you were to order 600 dollars then you would get around 25 dollars less.
So what is the justification for this difference in rates? It can’t be simply down to efficiency savings by ordering online as the Post Office still has to deliver the currency to its store and use staff to give it to the customer. So why? The reason is likely to be down to the same toxic reasons that exists foreign exchange bureaus….. lack of competition and necessity. It’s the reason why foreign exchange rates at the airport are worse the same companies offer away from the airport.
The Post Office knows that someone walking into one of its branches without having bought online probably hasn’t seen what a competitive rate is. The person also perhaps doesn’t have the time/inclination to walk to another store if they are offered an uncompetitive rate. So the customer is likely to accept the worse rate.
As with most foreign currency transactions it therefore pays to be organised and to order your currency in advance. In a worse case scenario, if you are forced to buy from the Post Office in store at the last minute you could go in armed with your phone and ask them to match the online rate. However whether they will depends on the postman sticking to the letter of their terms and conditions.