Hidden credit card fees for foreign transactions

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  • Anonymous
    Guest

    hkkings
    Participant

    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
    Participant

    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,

    A moment on Google produces;

    http://en.wikipedia.org/wiki/Dynamic_currency_conversion
    http://www.nationwide.co.uk/mediacentre/PDF/Dynamic_Currency_Conversion_Factsheet1105.pdf
    http://www.realexpayments.com/payment-services/dynamic-currency-conversion ‘Dynamic currency conversion offers cardholders the choice to pay in their own currency, whilst creating an additional revenue stream for you. ‘

    etc.


    hkkings
    Participant

    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
    Participant

    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.


    ANDREWYOUNG1
    Participant

    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
    Participant

    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??


    ANDREWYOUNG1
    Participant

    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
    Participant

    Wonder if AMEX can decline a non local curency charge, can I call my MC to do the same??


    AlexSW1
    Participant

    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
    Participant

    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
    Participant

    Oh, and Selfridges do it as well….


    VivaVida
    Participant

    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.

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