The difficulties of exchanging currency in Italy

I have travelled to many countries and Italy is one of the countries which are difficult to exchange currencies. In countries like China, you just have to walk into a bank, fill a short form, and depending on the bank, you may be required to show a passport and they will do the exchange for you. Or take Poland for example, often changing the currency involves going to a currency exchange office and handing over the cash and getting back the local currency. In Italy, it is not nearly as easy.

Generally, the most likely answer you will get walking into a bank asking to exchange currency is "Sorry, we only do it for clients who have an account with us." So what about non-bank exchanges? The currency exchange office found at the airport or train station is a major rip-off, often charging as high as 15% commission!

If you need to exchange a large sum of money, or frequently need to get euros, consider a low-commission on-line forex service like HiFX.

The central post office in a city could generally handle currency exchange, for up to 1000 euros a time. However, often the employee you meet may or may not be informed about how to do this or that they could even do this. Although this is the best option in term of accessibility, it also often requires a long wait in line, and filing a form and wait even more for the exchange process. Still, it may be the best among the above three options.

The ATM (bancomat) is generally the easier and quickest option, and you will get the best rate from your bank. However, depending on the agreement between your bank and the ATM provider, there might be a percentage commission and you are limited to several hundred euros a day at most ATMs.

Here are my two examples illustrating the difficulty of exchanging currency.

In the first example, in the city of Turin in northern Italy, I tried to exchange $1000 U. S. dollars at Banca Intesa San Paolo, which is a big bank. I chose it because it was near my home and their ATM give me the highest daily withdraw limit from my ATM cards from U. S. banks. However, banking with them is a different story. Since I don't have a checking account, which cost 50 euros a year, plus various fees each time you sneeze, I opened a basic account upon the recommendation of the bank manager. Yet my basic account does not permit me to exchange money.

However, that's not what the manager told me when they directed me to open the basic account. They also gave a reason for which they don't exchange $100 banknotes: because it's the most counterfeited currency in the world. However, if I bring smaller notes, they will do it for me. I thought it was absurd reasoning, because not even in China you hear this type of non-sense. If they are so worried about counterfeits, perhaps it would be prudent to invest in a machine that detects false currencies? Then, upon my refusal to accept this ridiculous justification, the manager relented and told me that even if I have $100 banknotes, I could still exchange them. However, I have to wait one week to get it in my account because they have to verify the money. So what's the point of having this basic account? They are a bank that advertises to exchange currency, yet in practical term cannot for a visitor.

I mean, in the US, not all banks perform currency exchange either, for example, the now defunct Washington Mutual didn't do it. But the ones that advertise to exchange currency generally do so without much hassle for a visitor. At this point, I wish that I left the cash at home in my U. S. bank since It's much easier to get money from the ATM. Sure I get charged a 1% transaction fee, plus $5 ATM fee. Still, it's far easier than waiting in line, filling a form, which can take up to 45 minutes each time.

In addition, even if I have a bank account that permits me to exchange currency, I don't get the market rate of the day. The bank still wants to make some money on the exchange rate, and charge me around 6 euros commission. Each bank is different. Take Banca Intesa San Paolo for example, I did a bit of math:  

They sell me the currency at $1.45 to 1 euro when the day's rate is $1.438 to 1 euro. That means they make $1.45 - $1.438 = 0.012, which is about 1 percent commission (or $10 on $1000). Plus 6.20 euros, which is $8.92. In total, I would have paid about $19 to exchange $1000 or an effective rate of 1.9%. This means, comparing to what my American bank charges me by using an ATM to this, using the ATM is a better deal because 1% of $1000 is $10, and even adding $5 fee, the total is $15 which is effective 1.5%. But since I still had the cash that I needed to exchange, the post office seems to be the best option at this point. That is what I did for more than a year, spending more than two hours on a roundtrip to the post office to exchange money every month.

So, if you keep a bank account in Italy, the best option for transferring large sum seems to be using a currency transfer service with low commission and good exchange rate.

U. S. dollars cash currency
Good luck trying to change this into euros

In another example, I had relatives visiting. This time I am living near Naples. We went to the first bank Banca di Roma, it was closed at 15:45. So we passed by the next bank, it was closed around 16:30. Then finally we went to Banca di Napoli, which opens until 20:00. That is rare operating hour for an Italian business.

We walked in, took our number in the queue but there were no one else. So we walked up to the tellers and asked them if we could exchange some U. S. Dollars to Euros. We had two answers from two employees sitting side by side: "No, we can only do it for bank clients." "Yes, we can do it for you." What? Who should we listen to? This is typical of Italian organization where you get different answers from as many people you talk to.

Naturally, we went to the teller who could do it. My relative wanted to exchange $2000, but the teller said that she could only exchange up to 500 euros a day. I asked her if we could divide the money and exchange it 500 euros per person since there are three of us. She said that we would have to come back the next day if we wanted more than 500 euros.

I asked why one of the biggest banks in Italy is incapable of exchanging more than 500 euros a day when the post office could do 1000? She seemed to be surprised that it was even possible at the post office. Then she responded "It's because we don't have a machine that detects counterfeit money." I said to her: "Why would a multi-billion dollar bank not be able to put some inexpensive counterfeit detection machines in each branch?" She agreed with me, and said: "If I received counterfeit money, then I have to pay it out of my own pocket." I told her, "It's absurd the bank makes it so difficult to exchange currency. You hear in the news every day, people complain about the recession and there are not enough economic growth and tourists. Now when you have tourists who want to spend money to stimulate the economy, the stupid system doesn't allow it."

After getting the 500 euros that afternoon, my relatives went the next day and each exchanged 500 euros more separately. In Italy, they don't want to make it easy for you to spend money, and then they will complain endlessly about the state of economy.

If most of your income is in another currency other than euro and you need euros often, consider using a low-commission online foreign currency exchange service like XE company. There are more options as viewed in this comparison of money transfer services to Italy.


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