Dynamic currency conversion

Still very prevalent in Ireland (where it first started) in most places associated with tourism, but not usually at fuel stations or supermarkets. Also increasingly encountered in Spain, Italy, France and UK, esp for those businesses with regular international clientele, such as souvenior shops, car rentals and higher-grade hotels and restaurants. While it's true that customer awareness is higher, it is still being touted as a service to customers and choice of currency isn't always given, so vigilance is needed.

If you are presented with a receipt to sign that's been translated to your home currency ($ for Yanks, £ for Brits, € for most EU), ask for them to re-do it in the local coin.

If you are refused, sign it and write above your signature

Local currency not offered

...and take it up with your card issuer when you get your bill. You will win, because not offering local is a violation of the merchant's agreement with the card network (Visa, MC).

Lots of luck with that Robespierre! The best thing is to pay in cash and never return to the same place without sufficient cash in your pocket.

Under most conditions, the hotel staff cannot override the system. Department stores are another story. El Cortes Ingles is the biggest offender in Spain. It's also Spain’s major department store.

Just be aware that this will continue because its profitable to everyone involved in this scam, especially the American company that promotes and controls it.

I'd like to be able to use my credit card and not always use cash (yes, I'd like the miles plus the ability to pay the bill after I return home).

If I tell the merchant, hotel, waiter, etc. in advance before they ring up my bill that I want to pay in Euros will this help to avoid the problem? I'd rather avoid it upfront rather than try to refuse it and/or negotiate the credit later.

Sometimes, if they know how (and are willing) to override DCC, but other times it makes no difference, as the bill will still be presented in the coverted currency. In which case you have to argue with them to reverse the transaction, pay cash or do as Robespierre suggests (and hope for the best).

You don't have to hope for the best. The policy is clearly defined here:

http://corporate.visa.com/pd/consumer_services/consumer_ex_faq.jsp#faq5

Some merchants now offer to convert your bill into your home currency. This is called dynamic currency conversion and means the merchant—and not Visa—is converting the currency. As a consumer you may value knowing the exact price in your home currency at the point of sale but you should also know you may be charged extra for this service by the merchant. Visa requires that you are provided a meaningful choice at the point of sale and you have the right to buy your purchase in the local currency so that you do not incur any additional fees the merchant may assess. Visa also requires merchants offering this service to inform you of the exchange rate including any applicable commission being charged. If you choose DCC for a transaction, you receive the merchant rate, not Visa's rate.

I recently pre-paid for a hotel room. I was offered the amount in dollars or GBP. I specified GPB and no Dynamic Conversion took place. I suspect that if I had specified dollars, DCC would have been used.

An off-topic note: within 4 hours of the transaction I received a call from my credit union to check that this was a legitimate transaction. The person on the line also reminded me to give the credit union my travel dates.

Yes, I know the Visa/Mastercard rule, but it also depends on your card issuer and how helpful they are in dealing with your complaint. Some will quickly do a chargeback, others may be reluctant to take action unless a clear fraud has been committed.

My husband and I had this happen to us last August in Luzern, Switzerland at the Hotel Wilden Mann. We caught onto it so fortunlatey for us, they didn't get away with it.

If your card issuer doesn't adjust the charge and credit your account immediately, you need to take your business somewhere else.

(For the record, I've never heard of a cardholder being refused if the DCC was documented correctly - see example above.)

By the way, the merchant wins if you pay cash - he doesn't have to pay the merchant discount points to his bank.

"Sometimes, if they know how (and are willing) to override DCC, but other times it makes no difference, as the bill will still be presented in the coverted currency. In which case you have to argue with them to reverse the transaction, pay cash or do as Robespierre suggests (and hope for the best)."

I thought the DCC was the override function. Normally if they were charging something to a local resident they would use the "normal" currency function. It seems like they would have to specify "U.S. Dollars" in their computer (cash register) to charge Americans this way.

I think when they zip the card through the reader, the POS computer decides what default currency to convert to based on the country of the card issuer (which is encoded in the first 4 digits).

Most POS terminals I've come across has DCC as default option when a foreign card is swiped or inserted. But there is always a key the operator has to press in order for the transaction to go through. Some are simply told to press the button as a matter of routine and don't realise that it's an 'opt in' button for DCC.

I had DCC happen to me this past September at a car rental (National) counter at Heathrow.

I was charging the payment for additional insurance and simply signed the receipt without carefully looking at it.

Later I discovered that included in the description was the notation that I had agreed to be charged in my own currency after being offered a local currency option. This was, of course, not true as no offer had been made.
Naturally, I should have read what I was signing more carefully so I had to eat this one.

In another instance, at a hotel in London I notice I was being charge, at check-out, in Dollars and I asked that the charge be put through in Pounds.

The clerk said she didn't know how to override this so I asked to speak to the manager. The manager immediately showed the clerk HOW to do the override so I think it is always good to persist at the point of sale.

Does you CC company still hit you with a % fee on a foreign transaction if you DCC to you home currency?

yep.

". . .others may be reluctant to take action unless a clear fraud has been committed."

If you have a copy of your charge slip with "local currency not offered" on it, then fraud HAS clearly been committed. I can't believe a credit card company wouldn't back you up on that -- it's their own rule!

Meanwhile the suggestion that if they refuse to override in local currency you should pay cash really grates me the wrong way. That's exactly what they want you to do -- so they avoid paying anything for the credit card -- and by aggreeing to pay cash rather than insist they do it right, you are merely encouraging to keep up their illegal practice.

I would write "local currency denied" or "refused" as "local currency not offered" maybe only the clerk's mistake

That's a good point, Faina. I think denied was the word I've seen suggested before.

I notice more and more in Ireland (the home of DCC) you are asked if you prefer the charge in euros or dollars. Perhaps something is getting through to vendors. I always tell the person taking my card what I want before I hand it over. I often overhear other tourists tell them to charge in dollars. I guess they don't know about DCC or this forum!

I think you're picking nits.

Visa requires that you are provided a meaningful choice at the point of sale.

The requirement is that local currency be offered. "Denied" and "refused" means that it wasn't.

Credit card companies are notorious for picking nits. I'd rather pick a few myself to avoid the possibility of their picking them later!
Sure, it's a minor point, but how much harder is to write "denied" than "offered" which could suggest that they simply never mentioned the possibility of doing it otherwise, nor did you?

Okay - from the language of the Visa site: how about "Meaningful choice not provided?"

Cheez.

As pointed out above - it's to the card issuer's benefit to undo the dollar charge and do the conversion themselves. They make more money doing that.

Congratulations. You have just won the "nit-picking" contest.

Perhaps there is another way to look at this DCC "problem." It seems that DCC itself is not an issue but, rather, it is the lack of choice by some merchants which is offensive. However, where a merchant does offer a choice of paying for a transaction in a foreign currency or the customer's own currency, aren't we all better off? Ever since this DCC service came about, I've noticed some Visa & MasterCard providers being more aggressive in promoting their currency conversion practices - in some cases, like Capital One, not charging any fees at all.

Contrast this with those cards, such as American Express, which offer no choice as to the method of converting foreign transactions. I noticed a recent posting on Fodor's by Katie Hamlin, applauding American Express, "which charges a flat 2% fee, [and] deserves special mention for its refusal to allow merchants to tack on additional fees at the point of sale, namely the Dynamic Currency Conversion fee (DCC)." I thought this an interesting statement -- as anyone who has recently checked their fineprint from Amex knows, effective April 10, 2007, American Express has increased the amount it adds to foreign currency transactions from 2% to 2.5%. One wonders why they stopped there? So much for customer choice!

Visa (and MasterCard) deserves the credit for promoting competition between the merchant and my bank for my dollars (Euros, Yen, whatever).... Sure, some merchants still haven't gotten the message but, as the contributors to this forum eloquently point out, Visa permits the ability to challenge the transaction if the merchant does not offer a choice of currencies. I, for one, prefer the ability to make the choice, but do appreciate everyone's suggestions.

...and knowing full well that 100% of the time you do far worse allowing a merchant to pull this dcc scam on you, why should any choice be permitted?

Now if the merchants used the interbank rate then I would have no problem with it.

The choice should be permitted because some people (believe it or not) don't know how much the transaction is costing them in dollars unless the merchant's terminal does the conversion. This is, in fact, a major selling point presented by the DCC scam artists.

I would venture that 99% of the time this is done out of ignorance of the additional DCC fees.

I said this once before and no one believed me, but here it goes again. And please realize, I'm NOT advocating DCC, just telling about a single isolated event.

Several years ago in London we ate at Rock and Sole Plaice, a fish and chips restaurant. When I went to pay with my Citibank, the waiter said he'd do it in US dollars. I protested and said I knew all about DCC -etc. But he insisted that because they are an American owned company and the credit card charge would go directly to their US bank, that didn't apply to me. I argued some more. Finally I just gave up as it was only for about 20 pounds anyway -- how much could it cost?

Well guess what. When that charge came through on my statement, it was indeed at the exact amount of dollars charged -- and yes the conversion they did at the restaurant that day was the normal exhange rate. And here's the best part. Since it was indeed deposited into their US bank, it did not count as a foreign charge and Citibank did not add the usual 3% to it.

So here is one example --a very unusual one, I'm sure -- where what appeared to be DCC actually saved me money. Although I suppose you really can't call it Dynamic currency conversion, because it really wasn't converting anything except the initial charge was done there at current rates. I have been unable to confirm that the place is US owned, but I do know that it sure worked somehow as the charge showed up on my statement the same as if it were done in the US.

...of course the big problem are the lies the clerks are taught to tell to the customers:

1. You do better with dcc as there are no fees the credit card companies charge.

2. The amount listed is just an approximation.

3. I have no control over the terminal; it's done automatically.

4. It's a law here that all credit card transactions be done in the currency of the credit card.

5. No speak English.

NeoPatrick,

I had the oppostie experience. A car rental agency, presumably an American subsidiary, charged me 7.5% using DCC in Portugal. I think that it is safer to decline DCC.

Wow. What timing. I just went online and looked at my Citibank statement. I see that the company in Amsterdam that was to charge me 475 euro for a deposit, came through as $644.77. The charge posted on 3/09 when the XE rate shows 1.31169, which would be $ 623.05. I called Citibank to see how many euros were charged and they don't seem to have that record, only the dollar amount. So I'm suspecting that the agency decided to charge me in dollars at a rate of 1.36. I have emailed them to ask how I was charged. Meanwhile the guy at Citibank was no help at all -- he didn't have a clue what Dynamic Currency Conversion is or why that would make a difference, nor how I could protest it.
And of course, I realize that Citibank will still be adding a total of 3% more onto this since it was a foreign transaction -- even if it was done in dollars.

We first encountered this scam in London in July '04.
I refused the DCC and told them if they didn't charge in GBPs, I was leaving and they should call the police.
I made such a fuss, they rapidly obliged.
M

Yes, but now I'm wondering how I can make such a fuss about something done when they are there and I was here! Especially since there was no signature involved which would indicate approval and yet no opportunity to protest the charge in dollars, if that is what they have done.

I would dispute the entire charge. If the merchant doesn't have a signature or the cyber equivalent, the card issuer will charge back the invoice.

Then you can negotiate a settlement on your terms.

Good luck!

Get ready for this. I have heard back from the rental agency in Amsterdam (Simply Amsterdam). They assured me that they did not charge in dollars. In fact the woman told me they don't even keep track of what the exchange rate is, nor would they know how many dollars to charge. They charged my card 475 euros and put in through their terminal.

I call Citibank and they inform me that the charge came through VISA services (by the way my Citibank is a Master Card) already in the amount of $644.77. The Citibank supervisor tells me normally they can look and see how many euros were charged, what the rate was, and how many dollars it converted to, and they will also see the 1% levied by Visa. But in this case they insist there is no record of any of that -- it simply came through from Visa services in dollars and doesn't even show up as a foreign purchase.

So when I said, "I'll still get 3% added since it's a foreign charge", she insists no I won't. That it didn't really come through as a foreign charge at all -- it just comes through as a charge from Visa just as it would if I had charged something in the US and it was handled through Visa. And what's really interesting is that the dollar amount is almost exactly 3% above what it would have been at the XE rate. So what's happening? Is Visa services now adding 3% before they send it on to Citibank?
I won't know for sure until I get my statement if there is an additional charge, but the rep insisted there won't be -- and she says there is none now on my account, as normally there would be for each foreign purchase.

Stranger and stranger. The bottom line is, that apparently however this happened, it's costing me no more than if it had gone through at the good rate and then Citibank added its usual 1% visa and 2% additional. But if I had a credit card that normally didn't add 2 or 3% for foreign purchases, it sounds like I still would have been billed the same amount.

Sounds like you've been DCC'd, and the person you talked to at Simply Amsterdam doesn't know about it. That's why Citibank saw the charge come through in USD.

Maybe.

Possibly.

Although I was under the impression that with normal DCC, the charge still comes through as a charge in a foreign country and the credit card company then adds a percent if that is their policy. How do you explain that in this case apparently that isn't happening. It really seems like the entire currency conversion thing was done not by the "merchant" but by Visa services in the handling of it.

And by the way, all my correspondance with Simply Amsterdam has been with the same person (is Jan a man's name?) -- whom I take to be the owner/agent/worker/secretary -- in other words, a one person operation. So it hardly seems likely that they are doing a DCC without being aware of it. I have no reason not to believe her/him when they say they never converted it to dollars.

Patrick - I think I am understanding this but why do you think that the dollar amount is not just simply the currency conversion rate of 3% already added? When I get my Visa (admittedly Canadian) I only see two amounts - the amount in foreign currency and the amount plus the bank and Visa charge - totalled in Canadian dollars.

Because that's normally what I see too, but in this case there is NO foreign amount -- not even in view to Citibank. There is only dollars, and it is already 3% higher than the amount it should be by the daily exchange rate.
What I'm really saying is, it looks like Visa services added the 3% before it even got to Citibank -- and when they did it, they changed it as if it were a regular charge, not a foreign one.

Could this be a "new" charge from Visa services, not unlike the added 1% they started adding about a year ago for all ATM withdrawals they handle for banks?

Robespierre - Can you provide a link to Mastercard about DCC? I've searched for that information in the past, but never could find it.

NeoPatrick..

Hi...I will give you my take on it and you're welcome to take it or whatever.

About a year ago, I finally gave in on the foreign exchange fees. I had been happy using Capital One but all my flying was on American Airlines and I have amassed quite a few miles and of course citibank controls the AA advantage program credit cards...I decided that while if I charged $2,000 on a foreign trip it would cost me $60 to use citibank AA advantage rather than Capital One and decided, rightly or wrongly, that the 2,000 miles was worth the $60 so I have a pretty good idea of the way Citibank operates.

It definitely sounds like a dcc transaction; perhaps unknowingly by your contact in Amsterday who may not have a clue what is going on with a pos terminal geared to dcc. As you have indicated, when a charge is done the correct way, the charge in USD and in euro will appear and you will see the euro amount....but the way Citibank operates is funny...when a charge done in foreign currency first hits the account and can be seen on the internet, it is done with no additional charge above the interbank rate...at the end of the billing cycle Citibank adds up all the foreign charges (including dcc charges as the fee is not for foreign exchange but for foreign charges) and tags the account with an additional 3% foreign exchange finance charge (the 2% these crooks impose and the 1% pass along of mastercard)...according to their literature a dcc charge is a foreign charge and subject to the 3% fee as you know.

Now I wouldn't trust anything told to you by Citibank customer service reps...most likely you were speaking to somebody in India to where they have outsourced their customer service reps who is just a robot...he usually doesn't have a clue what you're talking about and just receites from the computer screen after he inputs the question. Perhaps you got a supervisor but she really wouldn't be in a position to know just what is going on and whether or not the 3% charge will be imposed. You won't know it until the end of the billing cycle.

At the end of the billing cycle, you will be able to see if the 3% charge was applied to this charge...if not there's probably no need to take it any further as a charge in euro would be subject to the 3% charge anyway which would bring it up to the amount on the internet screen.

OTOH if they now impose an additional 3% fee for this charge, I would dispute the 3% fee...there's probably no need to dispute the whole charge...you might want the merchandise or whatever (was it a car rental? I don't remember) and don't want the reservation messed up.

In this case 3% of $600 ;whatever is about $18 so I would dispute that amount, send them a letter giving the particulars. The chances are, given the small amount of the dispute, rather than charge it back, since you are evidently a good customer, they will simply credit the amount as a courtesy as it would probably not be worth their while to engage in billing error procedures over $18. That should, most likely, be the end of it.

But it is a lesson of what to watch out for...dcc is a scam, even though the perpetrators may not know they are scamming you and with the spread of international commerce, it is more and more rearing its ugly head into every day transaction wherever we do them.

All of what you say makes a lot of sense except for one thing. I asked at Citibank (the second time I called) for a "supervisor who understands Dynamic Currency Conversion" and I got just that. The woman I spoke to was totally knowledgeable. I agree that normally I don't see any of those fees or charges online -- they only appear at the end of the month on the statement, but she assured me that they CAN see them, and that normally when she checks she will see the amount in euro and the amount in dollars as well as the 1% added by Visa -- she totally understood all of this. She assumed that this Simply Amsterdam company must be in the US, because she said there is NOTHING at all that even indicates it was a foreign charge -- which normally would be very clear.

But you are right -- until I get my statement (almost a month from now), I'll have no real way of knowing for sure if they're adding anything more or not. And yes I will easily contest an attempt to charge me a conversion fee for something that even Citibank assures me was not converted by them.

And it is an apartment rental deposit, so yes, you're right, I don't want that messed up. But again, since my email was from the person who actually charged it, I have no reason not to believe that he didn't have a clue how many dollars to charge, and certainly didn't convert it and charge me dollars.

Possible scenario: the Dutch proprietor is what we used to call a "sharp operator." The company is actually a US firm, and s/he adds a few points to the company's profit margin by jacking up the invoice, which then gets settled in USD and no one notices.

Well, it's possible.

But EXTEMELY improbable.

What is this scam? This is the 1st I have heard of it...

DCC is a scam that has been around for a while...it started out in Ireland but with a buck (or quidor looney or whatever nickname there is for euro) to be made, credit card payment processors and merchants are looking for ways to screw their customers and try to have them believe they are performing a service for them.

In this scam, when you present your credit card to a merchant, the terminal from its numbers recognizes it is from a foreign country and just what foreign country it's from. The terminal then converts the charge in the foreign currency to your currency. So let's see you are in an Irish shop and purchase something for €100, you present your credit card and from the numbers it recognizes the card is from the USA and so it converts the €100 to $137 or thereabouts but now here is where it gets tricky and into the scam business.

In theory, the merchant is supposed to ask you if you wish to be billed in your currency...few do...they present you with the sales slip and ask you to sign it trying to hurry it along so you don't read what you're signing which is basically acknowledging you were given the opportunity to pay in local currency (euro) and agree to the conversion. If you notice and ask why you're being asked to sign such a statement you are given a variety of lies by the merchant.

1. We are doing you a favor and keeping you from paying fees to your bank (not telling you of course the exchange rate they are using is exhorbitantly high, even if the bank adds on a fee, and many banks add on a fee anyway).

2. Oh the US dollar amount is just an estimate...your bank will actually do the exchange (a downright lie, you are signing a statement and will be billed at that rate).

3. We have no control over this (a lie, the terminal asks the merchant to press a button if the customer desires the conversion and can always press the other button to have the transaction go forward in the local currency).

4. Our contract with visa (or mastercard) requires us to bill you in your currency (no such provision exists, as a matter of fact visa and mastercard require you be given a choice).

5. No speak English...don't understand English what you're talking about (very prevalent when this scam is pulled off outside Britain and Ireland).

6. We are doing you a favor...this way you know exactly what you are spending and the rate is very competitive (well some people actualy think this is doing them a favor like $5 calculators have not been invented yet).

Most of us seasoned travellers recognize this scam for what it is a rip off. When this happens to you, do not sign the slip...insist the transaction be done in the local currency...don't take any of the above lies...if the clerk refuses (often he or she is just following orders see Nuremburg 1945), insist on speaking to the manager. If this fails, instead of signing your name, cross out that you accept the currency conversion and write dcc declined. When you get home and receive the bill, institute billing error dispute procedures against the charge pointing out you were refused the right to choose to pay in local currency required by visa and mastercard.

Amex, to its credit (no pun intended) does not allow this scam...merchants must bill you in local currency (among the reasons some merchants refuse to take Amex)...

The scam, as noted, started in Ireland where it became very very big...almost universal in tourist shops but to some degree the bad press it has received on travel boards such as this have slowed it down a bit and many merchants now do give you a choice (although they try to push you and tell you how wonderful it is to know exactly what something costs in your own currency..no matter they've jacked up the price 5% (a profit they share with the cc processing company for this "service")

While it was most prevelent in Ireland, this cancer has spread to many tourist places in countries such as Spain and Italy. It occurs in France and Germany but not too often or as often as it does in the countries mentioned. It seems to be spreading through Switzerland too.

Bottom line...inspect the charge slips carefully before you sign and if you see an amount in your own currency listed as well as the local currency, as a famous US first lady once said, just say no.

After a couple more emails with Simply Amsterdam, I have gotten to the bottom of this, I think.

I had asked who their bank was. They do not deposit credit card charges with their bank. Instead they use the services of a company called "Easy Services" which is located in Amsterdam and is established for retailers to "save money on all their credit card transactions". In other words they charge the company a smaller percent for handling the credit card receipts than the banks do. I went to their website which is all in Dutch, ran it through a translator, and there in plain English it even called it "the new Dynamic Currency Conversion". They paint it to be a bonus to the European merchant. I guess another way of looking at this is, that this company is a competitor of Visa Services who handles the vast majority of foreign transactions and sends them on to the home banks. This firm has figured out a way to attract retailers on their end by reducing their costs, but at the same time making it back by charging more for their services than VISA services is doing. Pretty clever, huh?

This is why Citibank does not see that it was even a foreign charge. They get a "bill" for the amount from Easy Services which apparently has a US connection and bills it to them only in US dollars.

So the bottom line is that this is apparently a new thing. A company who handles ALL their credit card transactions, does the converting and sends it on to Mater Card or Visa. So now it is not the merchant doing the DCC it is their contracted financial handler which is doing it. Not really a new thing, just a new firm doing for 3% what Visa Services has been doing for 1%.

So what can one do? When renting an apartment from them and wanting to use a credit card, I must tell them that they can't deposit my funds through their terminal? Because they enter it only as euro, not dollars. I must tell them they must go to a bank and open a credit card deposit account for my measly deposit, because I don't want it done their regular way? Guess what. That isn't going to happen. It's like telling them I don't want them to deposit my funds in Bank of the Netherlands but I'd prefer them to deposit it in Amsterdam Banque. I have no right to tell them who to use or not to use to deposit their funds.

So I suppose, now I just content myself with the idea that this whole transaction hasn't cost me any more than if it were done the usual way. The only difference is that a company in Amsterdam called Easy Pay made the 3% instead of Citibank making it. When I think about it, that sort of means that Citibank got screwed. And that sort of makes me smile.

One further point I got from my emails with Simply Amsterdam. They do not make a profit on this form of DCC, other than they do get a lower rate of fees for depositing credit card reciepts than if they did it with their bank. After their teminal sends the 475 euro receipt to Easy Pay, Easy Pay transfers exactly 475 euro into Simply Amsterdam's chosen bank account with a regular bank. The owner of Simply Amsterdam mentioned that they use Easy Pay because most of their credit card payments are very high, and using Easy Pay saves them a lot of money over depositing directly with the bank. I really don't think they ever understood that it was also costing the customer more.

And by the way, it is now no longer necessarily a lie if the clerk tells you they can't control whether it is charged through the terminal in dollars or euros. With this system, there is no difference. All credit cards going through the merchant's terminal are in in euros. The currency conversion is done at a later date. In fact if I were standing there and signing a receipt it would show as euros so I'd have no indication of what was going on. Later a bill would be sent to Master Card in dollars, but not at that time. Really, this is no different than any charge that happens currently. It's charged in euros, then Visa services adds a percent when they forward it on to your credit card holder. This firm is doing the same thing, only adding a higher percent. It would be hard to say that's illegal unless they also say that what Visa services does is illegal -- as they are doing exactly the same thing!

Neopatrick...

This is in a way nothing new....for a while, some credit card processors have not been banks...go on a google search on dynamic currency conversion and see such companies as planet payments which advertise about the system.

It is still most illegal what they did...now if I get a charge in person in euro and it only says euro, the conversion better be doneat the interbank rate (with the later addition of the 3% charge if it is a citibank charge) or I will scream bloody murder.....what the cc processors have done is they have figured out a way for these dcc charges to be paid into the merchant's account in euro and then to enter the international credit card system say, as in your case, in the USA at the inflated rate...this is not really a new thing.

Now I have a small credit card processing account with a firm called propay.com...I hardly run any charges through it but it's around just in case...unlike a bank processing company, I don't pay monthly fees...a small annual fee yes (very small compared to banks and other processors)...frankly I don't have any foreign customers and odn't have a clue what they would do if they charged a US amount say on a Canadian card....of course I have no reason to doubt what you're saying is true...but it just seems to be plain illegal and a violation of mastercard/visa rules.

I'm not sure how it could be illegal. If so then what Visa services does is also illegal. On the vast majority of credit card transactions in Europe, the merchant's terminal connects to Visa services (often directly connected with the merchant's bank) and deposits the exact amount of euros in that merchant's checking account. Then Visa adds 1 % to that amount and forwards the charge on to the appropriate US credit card company/bank. What this other place does is EXACTLY the same thing, except rather than add 1% on for their services, they are adding 3% on. How can they make it illegal to offer the same service but charge more to do it? If so are you saying it would be "illegal" if Visa decided to raise their 1% to 2% or even 3%? Of course not. These two companies, Easy Pay and Visa are offering the exact same kind of service -- how can one be legal and the other not?

Scan this article for independent service organization:

http://answers.google.com/answers/threadview?id=784579.

No...you miss the point...

It is "illegal" as far as visa is concerned in that the customer must be given a choice to pay and be billed in the local currency...what is happening of course is that as more and more transactions are not conducted in person, some of the distinctions begin to become blurred....this processing company is doing nothing different than, for example, planet payments. You can read up on them by doing a google search...more and more credit card accounts are not with banks but payment processors such as planet payments and the one in Amsterdam.

Look back at the history of dcc....originally what Irish merchant did is they kept two different credit card processing accounts...one with an Irish bank and another with a US bank...they deposited the transaction slips in USD with the US bank...they made money, of course, by upping the exchange rates.

What the cc processors have figured out a way to do is to deposit the transactions (all captured electronically in this day and age without depositing anything in the bank) in local currency in the merchant's designated account and then electronically transfer the amount to be deposited in a bank in your country in your currency...the transaction does not go through the international credit card processing system so to speak....what visa and mastercard have now done is figure out a way to identify these transactions and to impose a foreign fee on them anyway...they don't like the fact they are losing the conversion fees to the cc processors.

Again...if you are doing a charge in person, according to visa rules, the credit card slip must show both amounts (one of the web sites has an example of such a credit card slip)...but once things go through the internet, I really don't know how it works.

But as I said earlier...if they don't put any additional charge on it by citibank, then basically you will have paid the same amount anyway...if citibank tags it as a foreign charge and imposes the 3%, well you know what to do.

Ok - I have a good one for you -- which could happen if you make the retailer/hotel, etc. "redo" the transaction. I stayed in a high priced Marriott for 2+ weeks in Amsterdam for work..... I used a US Bank Visa card to pay my bill.... after the clerk had charged my card, I noticed a charge on my statement that clearly was not mine. I immediately asked the clerk to correct it and print out another statement. She CREDITED the charge card for the total amount originally charged and the RECHARGED the correct amount. I assume - fixed. When I got my credit card statement, I had been charged the 3% fee on the original charge, 3% of that entire amount again when it was credited (NOT A CREDIT FEE mind you) and then 3% AGAIN when she charged the card for the correct amount..... I called the US Bank and discussed with them and they said they said that the hotel should not have done this -- I kindly requested that the fee be waived and after some discussion, they agreed to charge me the 3% fee only on the corrected charge amount.....

If you read the fee notices, this indeed is what happens on a credit as opposed to a void....on a credit the 3% is subtracted from the amount to be credited to your account as opposed to a void where the transaction is simply cancelled.

Just another way credit card processors and banks have figured out to impose these near criminal fees on unsuspecting suckers like us.

Yep. It is a dirty trick in my view.
I got nailed once at a hotel located just north of Stalden in Switzerland.
I have been fuming about it ever since.

After that, I ask. Am I billed in US dollars or x, where x is the local currency.

The problem is that if you don't have enough cash to cover the bill, which could run to several hundred dollars if you are at a hotel, you are stuck.

I ask in advance if I remember to do it.
If the scam is pulled, I pay every other day in currency from a local ATM, but that, too, can get expensive unless dealing with a correspondent bank.

I have been told that Bank of America has agreements with Deutsche Bank (Germany), Barclays (UK), Scotiabank (Canada), and BNP Paribas (France).
So if you use your ATM card at those banks, the transaction is treated as "local" or on-net. I hope all of this is true.

I used Barclays in the UK several times and saw no added charges for ATM usage.

queener...i was just going to ask about that on this thread. i have received refunds for things purchased in a different currency (nothing to do with DCC). the amount of the refund IS always less than the original charge due to the buy/sell spread, the 3% charge or whatever (not just the difference in the ex rate between the time of the purchase and the refund).

i would assume the same loss would occur if you refuse a DCC and have the charge reversed and re-charged in local currency. bad bad bad.

"The problem is that if you don't have enough cash to cover the bill, which could run to several hundred dollars if you are at a hotel, you are stuck."

NO, YOU'RE NOT!

See 02/08/2007, 12:43 pm

This thread has been most valuable. If I get presented with a bill in US$ when in Europe later this year, I now know to make a fuss about it.

Robespierre's advice on this subject may well save a lot of us some money if we follow it.

Personally, I find it invaluable; something I will stick in my memory bank. When I lose that, I will not know the difference anyhow!!

I am not yet 100% convinced that writing something on the credit card piece of paper will prevent dynamic currency conversion because I have no personal empirical evidence.

However, ever since I got stuck the first time with DC, I have asked how I would be billed. In a hotel I ask that even before signing the guest register. That tactic might have precluded any attempts at DC, but I don't know that for a fact.

When in Europe I use a Capital One Master Card. I am assuming MC offers the same provisions as Visa for at least de jure protection against dynamic currency conversion. Whether or not the protection is de facto remains to be seen.

I also would expect Capital One to back me up in case I was refused local currency billing and made the proper notation.

From my observation the practice of DC will continue because many people will not argue; they will just sign and go on. The merchants using this technique don't have to trap everybody to make an extra profit, just clip most of them!!

I do have one question.
Would any benefit result from writing?

Local currency refused.
Will dispute the charge.

I think some may still be missing the point of what happened to me in this Amsterdam situation. I WAS NOT billed in US dollars. The merchant DID NOT convert to dollars. The merchant ONLY received the correct amount of euros that should have been charged. The conversion was done by a processor -- to say that is illegal is to say that EVERY single charge done in Euros on a US card is illegal, because this processor did exactly the same thing every bank or Visa services does with every other credit card charge. The merchant billed me in euros, the processor gave the merchant the correct amount of euros, then added a conversion fee and billed my credit card bank. This company did exactly the same thing VISA does with all the others. If you say what this processor does is illegal, then you MUST say that every single charge you have ever done in Europe that was processed by a bank or Visa and ended up having a percent added is also illegal. It is that simple, as far as I can see.

"I am not yet 100% convinced that writing something on the credit card piece of paper will prevent dynamic currency conversion..."

It doesn't prevent anything. If the merchant insists, the charge will go through in USD with the rip-off-mark-up added.

The magic happens when you dispute your statement. If the merchant can't produce the signature document, the charge is reversed. If the merchant DOES produce the signature document, your notation clearly states your intention to be billed in local, and the transaction will be reversed and re-computed with the correct exchange markup.

And the merchant will probably get a ration from the card issuer or network.
---------------------------------
I have said this before, but I think the card issuers are missing out on big revenue when people who want to pay in local revert to cash.

If they would simply inform every cardholder what their rights are (and maybe include a printed card with every monthly statement), more people would decline DCC and the networks would get to charge the merchants their discount points. It could be millions.

By (in effect) forcing their customers to go to cash, the merchants are getting to keep the discount - so the mere threat of DCC benefits them.

I just received another email from the owner of Simply Amsterdam, after sending several lengthy discussions of how this whole scenario is playing out. Obviously I've opened a "can of worms" that he (she) is exploring. As I suspected the reason for them using this newer processor is because they charge them (the merchant) a much lower percentage on the credit cards than the bank (or Visa services represented by their bank) does.
Here is the email:
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

"Thank you for your comments - I had no idea about this whole thing
going on with 'Dynamic Currency Conversion'.

As I understand it now (but I must say, it is rather complicated), the
concept is controversial, because it may be disadvantageous for
travellers. Or it may not, it appears to depend on the difference (if
any) between the percentage charged by the merchant's company and the
customer's bank.
I can see how banks may not like this development, as they do not get
to charge the exchange fee.

Also relevant is the fact that Easy Payments Service charges our
company a much lower fee than the previous companies we worked with.
Because of this, we abolished the 5% surcharge on balance payments,
charged if the balance was paid by credit card and not in cash or by
bank wire. We used to do this, as we had to pay up to 5% on every
credit card payment. We were glad to get rid of this surcharge,
because it is customer-unfriendly and also because it induces people
to run around with (sometimes) large amounts of cash.

If I see it correctly, it seems the DCC development moves part of the
profitability of exchanging foreign currencies toward the merchant
that the traveller deals with, thus making it possible for the
merchant to become more competitive (to the detriment of the banks).
In a competitive market this should, in general, then be advantageous
to travellers.
I also see how DCC could be abused, so if it is a blessing, it is a mixed one.

Anyway, thank you for bringing this to my attention.

Kind regards."

neo...i'm not sure what is legal or illegal (surely it depends on the countries involved). anyway, it is not the same thing to say that all transactions in different currencies are illegal. the reason is that you have an agreement with a merchant to purchase something for 100 peanuts...not 60 walnuts or whatever someone says is equivalent (would i expect a merchant take my £100 coat as payment for £100 bill without discussion?). you then have an agreement with your CC company that all foreign charges will be converted to the currency of your CC account according to the rules of the card.

so the agreement with the merchant is honoured if he charges you €50 when the agreed price was €50. your agreement with the CC company is honoured when they convert your charge according to the rules that you agreed to when you signed up for the card. but the merchant (OR his agent - in this case) charging walnuts when the agreement was in peanuts is NOT honouring the deal.

Exactly. That's what I'm saying, as no one was charging in anything but the local currency in my case.
What I am saying is the the merchant's agent was only doing exactly what every merchant's agent does. Pay him in his local currency and then convert the charge to dollars to the bank -- the same that Visa does for every other charge. I still say that to suggest that this merchant's agent did anything different from what VISA services does to every other charge is simply wrong. They both do EXACTLY the same thing.

>>>>>
the same that Visa does for every other charge
>>>>>

unless i'm missing something, you have an agreement with visa to convert foreign currency purchases according to agreed rules. you have no agreement with the merchant's third party agent. the fact that his terms might be better worse or the same than the terms you agreed with visa is not the issue nor is it any of his business.

the issue is that you did NOT agree to have your charge be presented to your CC company in anything but €. you agreed a price in € and that's what the charge should go through to visa as. this third party agent could have given you any exchange rate he wanted to (because there are no pre-set rules that you agreed to).

Well, there is another way of looking at this. Actually I don't have any agreement with Visa. I have an agreement with Citibank regarding my MASTER CARD.

So when a European merchant charges me in euro, and sends it to their bank and the bank contracts with VISA services to transfer the debt to the US, and Visa service then translates the euros to dollars and sends that dollars amount to Citibank along with a one percent charge, then I'd say that is no more an agreement that I have with Citibank than if another firm called ABC does exactly the same thing. I have no control over whom the merchant uses to send the charge to Citibank -- whether it is a Dutch Bank, or Visa Services, or ABC services. And my credit card certainly doesn't specify that I will only be responsible for transfers done by Visa Services nor that I won't be responsible if they were done by a bank or another financial service that operates in the same way.

As I said, I will believe it when and if I see a contested charge result in a refund of some type.

Until then I shall remain skeptical. In the meantime, I have no intentions of accepting a DCC. Hopefully I shall remain forever skeptical because I will ask in advance and refuse DCCs unless in a real pinch. Like my flight home is leaving and I don't have time to argue or I am unable to argue because of the language barrier.

It has been quite a few years since I have been "dynamoed". The reason: I am now an informed traveler. Stand your ground and insist on having it your way.

I'm assuming that the last two posts purposely had nothing to do with my situation. I repeat. I was not a victim of avoidable DCC. I made a charge in Amsterdam. The charge was in Euro. Although I did not sign the slip because I wasn't there, that is minor. If I had been there the amount still would have been in euros, not dollars. There is no way, I can possibly think of to avoid this type of DCC -- done by a processor just like Visa after the fact.

Bob - As I stated above, I can't find anything on Mastercard about their DCC policy. Do they have one? I had this happen in Spain a few years ago at a hotel. I was in a hurry, but did ask them to change it to Euro, but all of a sudden they only spoke Catalan. Nothing I could do if I wanted to make my train.

When I got back to the states I contacted Mastercard International office. I filed a complaint, but nothing ever came of it. They said it didn't matter how or even if the slip was signed. Once it's presented for signature, it's already processed.

Perhaps each bank that issues cards for Visa and Mastercard have different policies for DCC. I've noticed my DD's CU Visa doesn't protect her on purchases made over 100 miles from home, but mine does. I had assumed all cards had protection for purchases.

kybourbon...

You lost your leverage when you sign the sales slip...in a billing error dispute if the merchant cannot produce a signed sales slip, you win the dispute.

Neopatrick...again I am not sure no matter what the people in Amsterdam say that if you are present in person, they can pull the dcc scam on you. As noted regs require that when your transaction is made in person, the sales draft must include both the local currency and the home currency of the card holder clearly indicating the exchange rate being used. The problem, as I pointed out, is the growing use of the internet where you don't physically sign a sales slip but give your consent to the purchase...I and am sure some others have had, in recent memories, cases where my credit card info was stolen, probably by a waiter in a restaurant usingone of those terminals and several charges suddenly being made on the internet...it is quite true that internet merchants have no idea what happens to the charge after it is processed...as noted for my very modest service (I may have a total of 40 clients and it is a very seasonal service which ends on April 15) I may have 3 or 4 clients who wish to pay via credit card...I found on the internet a provider known as propay.com...they don't charge very high rates to me and their annual fee is very modest..more than worth it to me for even those few clients who insist on using plastic. I have no idea if they provided me with a foreign credit card what happens to the charge, whether it would be converted to their currency. I am not required to provide a sales slip to them (although I do print one).....and we don't even know if this is dcc and won't know until the end of your billing cycle so there is no use in getting upset right now...at the end of the billing cycle if indeed dcc was performed on you then institute billing error dispute for the foreign finance charge alone and cite the provision of not being given a charge. As I said before, since the amount involved is relatively small, less than $20, it would be my bet Citibank will simply eat it then to antagonize a good customer.

Modern technology has many good things to offer us but then there are downers such as this nonsense.

BTW I would never use cash to avoid dcc. I just don't understand why anybody would ever suggest that. At the same time the euro exchange rate was around $1.31 to the euro, with the 3% charge that would bring it to ablut $1.35...the 5% charge with dcc would bring it to about $1.3 or thereabouts....I would bet the cash rate for euro USD exchange would be in the vicinity of $1.42 or $1.43 so even if you are scammed by these vermin, you still come out ahead using a credit card as opposed to paying cash all the time.

xyz, I'm not sure how I can make this any clearer. When you sign a credit card slip in Europe in euros and it goes to Visa services to be processed and sent to your credit card holding bank, VISA is the one that changes it from euro to dollars. In my case that is EXACTLY what happened. It has nothing to do with the merchant changing from euro to dollars. The ONLY difference is that the merchant doesn't turn it over to VISA to process, they turn it over to another independent processor who does the same thing that VISA does. Period.
Saying that this company used DCC is the same as saying every transaction in Europe handled by Visa services is also DCC as they DO convert in the process from euro to dollars.

On my arrival in Amsterdam, I can use a credit card to pay the balance. If I do, it will show as 475 euro. I will get a slip and sign it for 475 euro. The agency will deposit it with their processor who will put 475 in their bank account. But when it appears on my Citibank statement it will show in dollars, apparently with the 3% added, not the usual 1% added by Visa, because Visa didn't do it, this other company did it.

You are wrong if you suggest I tell them to take my credit card and charge in EUROS, because that is EXACTLY what they are already doing. There is nothing the agency can do differently, except to break their contract with their current credit card processor and switch to a new bank. They are NOT going to do that for me. As their email shows above, they are saving money by not using the old bank processing company which charged them up to 5% for every credit card they take, which is also why they dropped the 5% fee to customers putting apartment rentals on a credit card.

This is a far cry from what you and others are describing as DCC. If I complain about this as DCC then everytime you charge in Europe and your credit card company shows a 1% added by VISA then you should be complaining about THAT form of DCC also, because it is exactly the same thing.

Neopatrick...

In all due respect to you, and I really don't want to get into an argument about it at this point, at this stage you really don't know what happened despite assurances from various people who may or may not be knowledgeable and won't really know until the billing cycle ends.

The curve ball in this, I believe, still remains it is an internet on line transaction and not done in person. I will reiterate if this happened ot me, and believe me I know it is easy to try to put oneself into somebody else's shoes, I might scream bloody murder. It will be interesting to see what happens if you do it with the same apartment in Amsterday...what the sales slip will say.

And again, most credit card merchant accounts are no longer with banks..they are with credit card processors such as planet payments...the advantage being you can take MC, Visa, Discover (USA only), Amex and don't need separate accounts...planet payments does the processing and after adjusting for whatever merchant discount you have negotiated places the funds in your bank account...in the past the system required merchants to deposit sales vouchers into their accounts in their bank...now once the transaction is run through the terminal it is on the way to being processed (unless it is voided by the merchant) nobody looks at sales voucher anymore.

The DCC scam involved basically what you were saying...the merchant ran the transaction in their pos terminal which gave them a local currency amount and a converted amount and then asks the merchant whether the customer wishes to accept the conversion (some of the clerks are taught as we know simply to press the button saying customer accepts...I once asked a manager why their clerks are told to do this and he said it would take too long to ask every customer what they wished to do as there would be questions...he kept insisting this is a service to the customer and the rate used is competitive)....in any event in the familiar dcc scam, the cc processor deposits the amount in the merchant's account and then electronically transfers the charge to a banking institution it has contracted with in the country of the cardholder's currency in this case a US bank....this is where the whole controversy comes in...visa and the banks now insist they have the right to charge the extra fee as it is a foreign transaction.

I understand what you have said...it was all done in the backroom so to speak but I am still not sure we know really what's legal and not legal...I go back to what the visa web site says which Robespierre has pointed out...you must be offered a meaningful choice to pay in your currency before a merchant can perform a dcc transaction...now we can nit pick and say the merchant did not perform the decc transaction here but it would be interesting.

I suspect most online credit card processors do perform dcc in the backroom similar to these guys in Amsterdam...I would love to see what the sales slip would say when the transaction is processed in person!

And heaven help all of us if these vermin have figured out a way around the regs and can now perform currency conversions without the consent of the cardholder...when visa does it I have agreed with the bank to allow them to do it (it's buried in the agreement)...the merchant also makes certain agreements with credit card processors. I know, for example, in the USA, visa and mastercard do not allow merchants to set minimums for charges and to surcharge credit card payments. Unfortunately these valuable customer protections do not apply in many other countries.

But believe me, I understand exactly what you have said and that you had no control over it.

Oh, and xyz, I think the idea some are giving of being better off paying by cash is considering getting their cash from an ATM if their bank has NO fees or is limited to a simple 1% or less exchange rate. I've been well aware for a long time, that overall I AM better off getting ATM cash and paying in cash than using my Citibank which adds a total of 3%.

Meanwhile, I'm still curious about this comment that the charge slip you sign in Europe must show both a dollar amount (at current exchange rates) as well as the amount being charged in Euro. I really don't recall ever seeing that in the many, many slips I've signed in Europe. Is this new? Meanwhile I suppose that dollar amount shown wouldn't include the 1% from Visa, would it? If not, then again how is that any different from not showing the 3% that ABC agency or whatever adds -- the same as the 1% Visa adds? Technically, those have nothing to do with the "rates" they are currency exhange fees added by Visa or Easy Pay, or whomever.