111op

I just came back from China, where I encountered dynamic currency conversion.

An especially egregious example was with a hotel. I checked with them at that time and they assured me the charge would be in Chinese yuan, but there was a USD equivalent that is now exactly the amount that's on my statement.

I'm guessing the implied fee is around 3%. So that's around $25-$30. It's not a huge amount, but I called my cc company and I just called the hotel. The cc company was a little confused at first, but then the rep agreed that the only amount showing on their side was USD, whereas for typical foreign transactions, they would have a foreign currency amount and a USD amount.

They offered me two choices. I could file a dispute with the cc company or call the hotel. I chose to call the hotel first.

This is a matter of principle to me and it's important for me to get my money back -- especially when I have my charge slip where I especially notated I wanted to pay in Chinese yuan (so I could have the cc company convert the amount).

So be aware of this scam in China. I think that there are other smallish charges where this happened, but it would not be worth my time to dispute the charges. Plus it's easier for me to work this out with a reputable hotel that must care about customer satisfaction.

Nywoman

This seems to be very common in Europe as well. It is always much more economical to have the charges in the local currency.

As usual it is tourist beware.

Kathie

This can happen anywhere world-wide. Note that your credit card company usually charges you 3% for use of a credit card in a foreign country. So if the difference was 3%, you probably broke even. While I have usually avoided dynamic currency conversaion, I had a gallery owner offer it to me once where it was to my advantage, so I toook it. But you have to know exactly what exchange rate they are charging you and what foreign currency charges you bank charges you.

111op

I think my problem is that despite my attempts to get them to use Chinese yuan, I was just unable to do so. So it wasn't my being unaware and being taken in.

I'm reviewing my charge slips and there's a case when I was offered CNY or USD and I was asked to mark the desired currency. I chose CNY but I was charged in USD anyway. That amount is around $70 or I guess the overcharge is a few dollars. I'm not going to dispute that one.

The charge slip for the hotel indicates that I was given a choice of currency and that my choice was final, and I can tell you that this was definitely not the case. I expected that this would happen, so I especially circled RMB on the slip.

I'll see how this gets worked out.

What are some preemptive measures that one could take? (Apart from taking large amounts of cash from an ATM, which seems awfully impractical.)

111op

Kathie, I stopped using my Citi cc a long time ago when I discovered the 3% tag on (or maybe it was even more). I believe that my current cc charges no extra fees beyond what's customary.

To compare, the hotel's exchange rate was around 6.6 and the other charges were billed at around 6.8. So that should be around 3%.

I think it's rare to have an advantageous exchange rate. I've never seen it happen.

Kathie

I think it's rare to have an adventagous rate on dynamic conversion as well. It's only once I had it happen, so I thought I'd mention it.

There is only one credit card I know of that that doesn't charge for currency conversion (Capitol One - and only some of those cards); it only charges the 1% rate required by Visa. So do see what your card charges - as "customary" these days is about 3%.

111op

Hi Kathie, I don't have that particular card (yes, there are others with no fee), but I'm pretty sure that customary for my card is not 3%.

As I indicated above, I worked out the implicit exchange rate for my cc and compared it against the one for DCC, which is about 3% worse. And since it's not the first time I've done this particular calculation and it's also not the first time I've used this card overseas, I'm quite sure that the fee for my card is not 3%.

One thing I could never figure out is whether the actual fee is 1% or 0%. I think Visa/Mastercard charges 1% and the cc company can charge something beyond this. I believe that for this particular card, I don't pay anything beyond what Visa/Mastercard charges, but I could be wrong about this.

Kathie

I was suggesting that you check with your card company about their charges as many cards have recently changed their charges in advance of the new federal laws taking effect. I re-check fees on all of my credit cards and ATM cards about a month before each big trip. It seems like there is always some change... and typically for the worse!

111op

Why is there such a need? I've already checked all my charges online. Maybe there's such a need for the next trip, but certainly not for the trip that's already taken place.

rkkwan

I'd dispute with the CC company any of this scam. Even if it's just for a penny.

111op

Well I guess you have more time than I do.

I just got a call from the hotel and they are claiming that it was the rate set by the cc company. Needless to say, I'm skeptical.

After their call, I checked http://www.oanda.com/convert/fxhistory .

The USD-CNY rate hardly changed at all over a rough two-week period starting Sept. 22, 2009. My understanding (I could be wrong about this) is that USD is basically depreciating against Chinese Yuan at a slow and steady pace and that China is ensuring that the exchange rate is moving within a small band every day. The depreciation of USD is obvious only within a very long period (i.e. years, not weeks).

So it's hard for me to see how the rate can actually fluctuate within 3% over 2 weeks, and Onada doesn't show this either.

Here's a small list of transactions for comparison:

Sept. 26: 477 yuan, $70.06 (exchange rate = 6.80845).
Sept. 29: 374 yuan, $54.93 (exchange rate = 6.80866).
Sept. 30: 84 yuan, $12.34 (exchange rate = 6.807131).

I'm still waiting for a final charge on Oct. 5 to show up online.

Then this is what happened with the DCC transactions.

The hotel charge was 6027.84 yuan filed on Sept. 27, which appeared as $910.72 (exchange rate = 6.62253).

There were two other charges were billed at DCC rates.

One was at a Din Tai Fung restaurant (283 yuan = $42.79, with rate of 6.613695). The other was at Lei Garden (which is a reputable Cantonese restaurant that's actually a chain: 472 yuan = $71.74, with rate of 6.579314).

Now that I'm checking this in detail, the Lei Garden charge seems especially egregious too -- this was the one that offered me two boxes to choose from (CNY or USD) and I marked CNY, but I was billed the USD amount that appeared on the charge slip. DTF never offered a choice but had the same disclaimer on the charge slip that I was offered a choice and that my choice was final (just as in the hotel's case). This was what first alerted me to DCC.

One ATM withdrawal on Sept. 22 of 2000 yuan appeared as $292.87 (exchange rate = 6.828968).

Unfortunately I don't have multiple cards and multiple transactions in one day to cross check transactions. But I'll call my cc company again to have them try to dispute the charges.

111op

Ok, I called the cc company and filed the dispute.

One thing I should add: There really are a lot of scams in China!

I'm reviewing my charge slips again, and unfortunately for the Lei Garden charge, there's disclaimer like this: "I have chosen not to use the Mastercard currency conversion process and agree that I have no recourse against Mastercard concerning the currency conversion or its disclosure."

I did tick the CNY box, but I now wonder if this is actually disputable. I didn't notice the disclaimer at that time, thinking that if I chose CNY, I'd be using the Mastercard conversion rate. On the other hand, there probably would have been no other way to settle the charge with a cc.

With the hotel's charge slip, this disclaimer appears: "I declare that I have been offered a choice of payment currencies and my choice is final." As I said, this was definitely not the case.

I'm curious: Is the markup in DCC credit-card machine dependent? My hotel charge slip was a Bank of China charge slip and the Lei Garden one was HSBC/China. Din Tai Fung also used Bank of China.

I guess I should have disputed the DTF charge while I was at it, but I didn't do so.

Kathie

You've done your research. The DCC is certainly not to your advantage.

I wonder if your charge ships showing you had chosen CNY would help. The disclaimers on the charge slips indicate to me that LOTS of people have disputed their charges!

111op

Well we'll see. I mean, this is really a scam because the "choice" is not real.

Which brings me to that question I first asked -- is there a way to preempt DCC? It seems like there's no way if that's the way that the cc machines are set up to bill. Who wants to carry huge loads of cash?

And who benefits? Does the merchant get a cut?

rkkwan

It's not that I have more time than you do, but that's your best chance of getting anything done to yourself and others. Calling the hotel is totally useless, as you've found out.

My experience with disputing with credit card depends. AE's usually on my side on most issues. Other cards not so much.

Kathie

Well, there should be a way to preempt DCC, and your credit card slips shows that they are supposed to ask and abide by your decision. That's in theory. In practice? Well, you are discovering that at the places you used your card, they opt for DCC even if you don't. I assume both the bank and the merchant get a cut.

When I've been asked about DCC, my choice has always been honored. But that w asn't in China.

111op

Well I called the hotel because it's a nice hotel and I always believe in hearing the other side's story -- just in case I'm wrong. If there's a way for them to right the wrong, I'd rather they do it rather than go into a dispute. To their credit, they did call me back at least, so even if it's useless, they are very polite and nice.

But now I have actually disputed and I'll see what comes of this. My cc asked me to estimate the credit and I said $25-$30 and the rep actually said that she could offer me a $25 credit. I told her that I would take the credit later after this has been investigated.

It's not the $25-$30 that irks me obviously. It's the scam I'm annoyed by. As I said, this is just a matter of principle and I don't think that these scams should exist.

rhkkmk

there is a very easy way to avoid all of this and be happy with the results: pay cash and do so by atm withdrawals, especially for things like restaurant bills..

i'm sorry to say but this all seems a little over the top to me....rates change minute to minute and your cc is charged and converted at the time the transaction is received by the card issuing bank....on the same day you can have many different rates.... i use multiple cards and i never see the same rate for transactions done on the same day... they can be all over the map...

on the up charge i find that those of my cards that did not charge a fee, they are now starting to...in fact two have notified me this week of it and recently a couple more increased the fee to 4 and 5%...

there are some banks around that are still not charging anything or else they refund the bump to you, but i bet that won't last long... its annoying, but i have to just shrug my shoulders....after all they are profit making businesses and are entitled to make money and charge fees....they have to pay for the processing of these transactions too, through the clearing houses...

best bet, check out your credit union....

i opened a second account with capital one and they won't give me more than a $1000 credit line on this one, so what good is it....i continue to use the other one...

111op

I know this can seem over the top and it seems like I am whining, but I think that this is the sort of thing that if people don't complain, merchants will just think that they can get away with it.

I also understand that exchange rates can "seem all over the map," but I do believe that Chinese yuan is a special currency, as I mentioned before. Plus a rate shouldn't fluctuate by 3% within a period of days unless there happens to be some kind of central bank action. Exchange rates just don't behave like equity prices.

It's a bit hard to do an ATM withdrawal for a $900 hotel bill. Plus hindsight is always 20-20 -- I mean, I was not expecting to encounter DCC in China. If I were, I might have planned differently. Plus I was checking out at 5:30 am -- I wasn't about to run to a bank to withdraw all that cash.

Banks are of course entitled to charge some fees, but it's in the consumers' interests to try to ensure the fees are as low as possible. Their profits are *our* money. If we don't fight, who will?

rhkkmk

111... do you live in cambridge or some other socialist community? "consumers interest"???