eToro the Israeli-owned trading platform, best known for its social and very high-risk crypto trading is increasing the cost of converting money when clients deposit and withdraw money.
Specifically as of May 5th, the FX conversion fee will rise to 150 pips for all payment and transfer methods, other than bank wires, where the fees remain capped at just 50 pips.
- Related guide: What is a pip in trading?
eToro has not said why it’s necessary for the firm to increase its deposit and withdrawal fees and in the current environment, where there is intense competition between payments companies, it seems unlikely that a service provider has raised its fees to the broker, and if they had eToro would likely have been able to shop around for a competitive deal.
We don’t have to look too far for a possible answer because in its email to clients about the fee increase eToro promotes its eToro Money service and points out that users of the service enjoy a 100% discount on the deposit and withdrawal conversion fees.
- Thinking of using eToro? Read our expert eToro review first.
eToro Money is the firm’s new payments app and it even has its own Visa debit card and links seamlessly to your eToro trading account, and thanks to a sort code and personal account number, the app can send or receive money from any UK bank.
eToro money also contains a crypto wallet allowing you to receive transfers of coins into the app. The wallet can hold any of the following coins BTC, BCH, XLM, XRP, LTC, ETH and TRON. Note though that the functionality of the wallet is provided by a different division within the group, and not eToro money.
The eToro money app and debit card are currently only available to UK eToro club members.
However, the app is not covered by the UK Financial Services Compensation Scheme or FSCS. Instead, customer funds are deposited into a regulated bank account that is held in trust and is therefore ringfenced from a failure or default at eToro.
Raising the FX conversion fees whilst promoting an in house service, in which those fees are not applicable, is akin to a carrot and stick strategy and one that is presumably designed to encourage eToro’s UK clients to adopt the money app.
The UK experience could act as a testbed for the firm, which has more than 20 million registered users across the globe. And of course, an in-house payments app and wallet, with a substantial client base attached wouldn’t do eToro’s valuation any harm either, as when and if plans to list the company are resurrected.
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
During his career, Darren has acted for and advised major hedge funds and investment banks such as GLG, Thames River, Ruby Capital and CQS, Dresdner Kleinwort and HSBC.
In addition to the financial analysis and commentary he provides as an editor at GoodMoneyGuide.com, his work has been featured in publications including Fool.co.uk.
As well as extensive experience of writing financial commentary, he previously worked as a Market Research & Client Relationships Manager at Admiral Markets UK Ltd, before providing expert insights as a market analyst at Pepperstone.
Darren is an expert in areas like currency, CFDs, equities and derivatives and has authored over 260 guides on GoodMoneyGuide.com.
He has an aptitude for explaining trading concepts in a way that newcomers can understand, such as this guide to day trading Forex at Pepperstone.com
Darren has done interviews and analysis for companies like Queso, including an interview on technical trading levels.
A well known authority in the industry, he has provided interviews on Bloomberg (UK), CNBC (UK) Reuters (UK), Tiptv (UK), BNN (Canada) and Asharq Bloomberg Arabia.
You can contact Darren at darrensinden@goodmoneyguide.com
