hkkings - 17/07/2009 08:48 GMT
Recently, I noticed that many overseas hotels (not in the USA) and shops began to use banks that treats foreign visitor unfairly for their credit card processing.
For example, I carry a AMEX or MasterCard when I travel. Recently I was in Busan, Korea, I charged my hotel stay to my Mastercard but the bank that this Starwood's Westin hotel use for credit card processing instead of charging me in Korean Wons, it converts the entire charge to US Dollars with a terrible exchange rate. In this case, I ended up paying an additional US$75.00 than if my Mastercard did the conversion.
Another example - I charged something in China and the merchant's credit card processing company gave me an exchange rate of 1USD = 6.6RMB. I found out that other charges on the same date if my MasterCard had done the exchange, my exchange rate would have been 1USD = 6.8 RMB. For something that is 3000RMB, the difference is US$13.36 for one item.
This practice is showing up more and more in different countries and treats foreign visitors unfairly by ripping them off. Pay attention to the credit card slips you sign, if it shows a local currency then a US Dollar amount with a warning that if you sign the receipt, you agree to the exchange rate, then you are being ripped off!!! In China, you can ask the merchant to use the "local credit card processing machines" instead of the "foreign card processing machines" that rips visitors off.
EIther way, I feel that this is illegal. When I charge something in a foreign country, I want my credit card company to do the conversion. Trust me, little bit at a time adds up to a lot!!! Please complaint to the merchant if this happens to you!!
Good luck.
Ah, the joys of 'Dynamic Currency Conversion'. The first point you need to understand is that the banks who provide merchants with this facility share the resulting commission with them, so of course merchants are keen to have their clients use it.
Never, ever allow the merchant that you are dealing with to use DCC. You will always - ALWAYS - end up worse off than if your bank makes the conversion. This is not just a problem in exotic places; just try using a credit card in a supermarket in Calais.
Beyond that, not all banks are the same when it comes to currency conversions. Amex are the worst by a country mile; not only are their commission charges more than anybody else; they also indulge in the nefarious practice of converting all currency transactions twice; first into US Dollars and a second time from US Dollars into Sterling.
Never, ever use an Amex card overseas.
Even Visa and MasterCards vary in their practices, taking between 0% and 4% commission in currency conversions. I suspect that a 4% saving on overseas travel costs would be a material amount for most of us; enough to reward a bit of time sourcing a more favourable card.
Conclusion; caveat emptor.
hkkings - 17/07/2009 09:21 GMT
Hi there,
Thanks for your reply. I appreciate some insight into this problem. How sure are you that the merchant gets a kickback from the credit card processing company? When I complained to the merchant, their reply was that they are paid the same amount in local currency regardless. If they are getting a kickback, then I am being ripped off by them too. How do I find detailed information? Proofs?? Thanks,
hkkings - 17/07/2009 10:07 GMT
Hello,
Thanks for your help. I know understand this process much better. You are great!! I can't really believe that this is legal. I was never given a chance to choose local or US currency. Just ripped off ;-(
VintageKrug - 17/07/2009 10:14 GMT
I was caught out by the myself at the Ciragan Palace Hotel in Istanbul; before I knew what had happened the check-out agent had put this through without asking me.
Thieves.
Trouble is, reversing the transaction is even more expensive.
Well I'm not sure that Amex deserve such bad press in these posts. Firstly, unlike Mastercard and Visa, they won't allow the transaction to be dual converted, so you will only ever be charged in local currency. They do, as is rightly pointed out, convert all transactions through USD, however you will find that if you do the basic calculation yourself from the local currency into the final amount charged to your statement, the exchange rate you get will beat any BDC.
hkkings - 17/07/2009 14:08 GMT
So, here is an interesting question, if they try to run the AMEX through the same machine instead of a Visa or MC, what happens? Does the machine simple knows that oh, when it is a Visa or MC, I can add the disclosure and convert the local currency to US Dollars and if it is an AMEX, leave it in local currency?? I thought by the time Visa, MC, or AMEX receives the charges, it is already in US Dollars??
My understanding is that even that the fact that the charge is made in a non-local currency is shared with the card issuer and Amex will decline a non-local currency transaction.
hkkings - 17/07/2009 14:52 GMT
Wonder if AMEX can decline a non local curency charge, can I call my MC to do the same??
AlexSW1 - 19/07/2009 17:37 GMT
I experienced this for the first time at a diner in Coronado Island (San Diego) earlier this month. I'd never heard of getting a slip to sign that was converted into the currency of my card. I looked at it for awhile and while it said I could refuse to accept the conversion it was never made clear exactly HOW I would do this. My transaction was very small and not worth the hassle but does sound well dodgy from what I've read above.
sam9151 - 19/07/2009 22:56 GMT
This scam has been around for quite a while. Actually, many London hotels have been pulling the same shtick for a year or two. The key is:
Always insist on being charged in the LOCAL CURRENCY - let your bank do the eventual conversion, and save yourself the pain.
sam9151 - 19/07/2009 23:02 GMT
Oh, and Selfridges do it as well....
VivaVida - 22/07/2009 12:40 GMT
This has been around in Asia for some time now. It is pitched as "Be comfortable knowing the exact amount you'll be billed in your own currency!" Of course, the exhage rate is lousy. But what can we expect of CC companies who for the last many years have been charging a "Foreign Transaction Fee" of between 1 and 3 percent when they already make money on the spreads when they do the transactions.
Sheliamd - 23/07/2009 14:20 GMT
This scam is alive and well in Ireland and France. Any tourist spot I recently visited in Ireland, were billing the credit cards - visitors in the currency of their own country. When I explained to one American couple I was talking to that the conversion rate was a scam, and they should ask for the bill in euros and let Visa/Mastercard do the conversion their rates are bad enough at times. I myself had a terrible row in Paris at a show some time ago and refused to accept the bill in sterling. 30 minutes of hard arguing before they eventually found the machine that would give me the bill in euros . I was using a sterling card. Just another way of making a little profit with the credit crunch.... SPB
hkkings - 23/07/2009 14:24 GMT
This type of practice has to be illegal!!! Or should be anyway. Company offering this type of services through Planet Payment are required to offer us a choice in local currency or changed currency. But they just don't give you that option.
Some Uk hotels do it too for foreign (Canadian in my case) credit cards. Last Sunday, the Radisson Edwardian at Heathrow did it to me. They reversed the conversion at my request as I stood at the check out desk once I noticed what they had done but it took at least five minutes of computer entries by the desk clerk to accomplish it. Us foreigners need to remember to tell the check out clerk in advance of their printing your bill that you want the charge posted in local currency because otherwise they do it the expensive way without telling you in advance that the particular hotel will be doing that.
Binman62 - 23/07/2009 16:07 GMT
I experienced this for the first time in Changi airport and again in Sydney airport, but this was about 3 or 4 years ago. At the time I did not understand what is was about but my gut instinct and a quick calculation in my head, told me the exchange rates were not in my favour and I insisted both be reversed. This caused all sorts of problems and long queues but because it was a GBP transaction there was no loss when the transaction was reversed. I have not had this repeated since but that may be because I now use Amex and never Mastercard when travelling. Amex does change to USD and then to GBP but this is made clear in all the terms and conditions. Their charge is generally about 3% and they load this converting at a exchange rate 3% below the interbank rate on the day. In my experience this is certainly better that Travelex or cash and I get my miles, along with a degree of security. (I have had my card replaced in 12 hours before when out of the UK) The best option however was a Nationwide credit card...at least until Visa started charging. Now even they load 3% when outside the EU. I still use my flex account debit card to withdraw cash which to date does not appear to attract any charges……
Travelforus - 23/07/2009 18:53 GMT
For UK-based travellers, Santander Bank offers a Mastercard credit card which, unlike most credit and debit cards, charges no fees for any purchases or cash machine withdrawals worldwide. The card is called 'Zero'.
hkkings - 30/07/2009 10:06 GMT
so using AMEX is the only way to totally bypass any possible ways of the DCC conversion? Does anyone know how is it done?
