allisonm

I bought a pair of tickets on line from Aer Lingus in February. The cost of the tickets was about $1344. Also on the bill was a $40 fee for "foreign transaction." Master Card tells me that it is a 3% fee charged for a foreign transaction. Duh. We bought the tickets in US dollars, we thought. The flight originates in the US. It this just because Aer Lingus is an Irish company? We have purchased tickets from them multiple times with out a fee.

Is this my credit card or Aer Lingus? I know I will be paying 3% on all transactions while there on all purchases and cash advances, but it was a surprise to have a fee before we even got there.

greg

I think it has to do with who you actually paid to for this transaction. The credit companies have crafted the definition of "foreign transaction" to catch as many fees as possible. Most credit card companies interpret "foreign" to include any transaction with foreign companies irrespective of the currency used.

xyz123

It is the credit card company as well as mastercard (or visa)....banks, who have nolthing to do with foreign currency tyransaction BTW as the conversion is done by either mc or visa, have long attached a 2% fee on top of the mc/visa 1% fee for foreign currency transactions for a total of 3%. This has been discussed ad nauseum. MC/visa probably deserve the 1% fee as they do have some, little but some, risk from sudden fluctuations in currency exchange rates, but the near criminal banks such as Citibank, Chase, Bank of America who add on 2% are doing it not because they have any rish but because it is a way to get more moneyh from their customers.

In any event, about two years ago, mc/visa started calling the fee a foreign transaction fee on all charges originating outside the country of origin, especially online merchants. And the banks, on these transactons, add on 2%. So in effecty when you deal on line with Aer Lingus, you are dealing with an internet location in Ireland. Even though the charge is in USD (in a way, it is a dcc transaction although most airline fares are denoted in USD for international flights) mc/visa consider it a foreign transaction and your bank follows through.

Solution....use one of the credit cards such as Capital One or Charles Schwab visa that does not charge this immoral fee.

Postal

We just had the same thing happen to us when we bought two tickets on Aer LIngus through their website.

CAPH52

I posted about this a couple of months ago. My guess is that, until recently, Aer Lingus charged through their American office. The transactions are now going through Dublin, hence the foreign transaction fee.

I can't help but think that this will turn around and bite them in the butt as it makes flying American cheaper in many cases.

alanRow

It's the fault of the CC company, not Aer Lingus (unless you were buying the tickets in Euro). The fact that the transaction was processed in Ireland rather than the US shouldn't affect what you are charged.

I'd moan to Mastercard PDQ and possibly complain to your local trading standards organisation

CAPH52

Well after American cc companies were charging foreign transaction fees every way they could, there was no fee on Aer Lingus tickets. Something has changed in the way the transactions are processed.

allisonm

our reply from Aerlingus:

Please be assured Aer Lingus does not impose a foreign exchange fee on purchases made in North America. The fee you refer to is a foreign transaction fee that is imposed by some credit card companies under the terms and conditions of the contract between the credit card holder and the bank. This matter should be taken up with your credit card company, as Aer Lingus does not impose or collect these fees.

And so we shall.

xyz123

If Aer Lingus' credit card agreement is with a bank in Ireland, as is most likely the case, then the foreign transaction fee applies. As they note it is a fee imposed by the international credit card companies for all transaction that occur outside the country of issuance of the credit card; perhaps what has changed his Aer Lingus' back office location.

sassy27

I had this happen maybe 2 years ago. I had booked a hotel overseas and it clearly stated I paid in US dollars. When I called my credit card company, they said I was charged the foreign transaction fee because the company's vendor code was international. They didn't care that I had proof of the transaction in US dollars. I was told to call the vendor and let them know. When I complained further, because they charged for something they didn't do, the service rep at the credit card company reset my password for online viewing. Funny, when I had just been in there looking at my bill.

xyz123

Let's look at this historically to try to understand what's going on.....much of this started with dynamic currency conversion...this scam is described throughout the blog but basically it began as an attempt by merchants to get a piece of the action regarding currency conversions....for years mc/visa charged a 1% fee for currency conversion and many of the near criminal banks in the USA tacked on an additional 2% fee making a total of 3% but it was limited to foreign currency transactions and the excuse given by the cc companies was the 1% was necessary to protect them against wide currency swings in a short period...something that might be justified. The 2% fee by the near criminal banks is not justified whatsoever, the charge reaches them already convgerted so they havge nothing to do with the conversion. Their excuse? Well they claim they have more disputes on foreign charges to try to justify the 2% but that is garbage of course. As we already know too several banks do not add on the additional fee and just pass along the 1% mc/visa fee while some enlightened banks such as Capital One eat the 1%.

Okay...along came dynamic currency conversion which occurs whenever you make a foreign charge and it is converted at the source to your currency, let's say US dollars. Conversion rates vary widely. In the usual dcc scam, the rate used is atrocious and builds in a margin both for the cc company and the merchant. We have gone through the lies told by many merchants to try to get you to fall for the scam. But in any event, not to be "cheated" of their fees for currency conversion, both mc and visa instituted new fees changing the foreign currency exchange fee for a foreign transaction fee, again claiming that even if the charge was in your currency, they had more disputes on foreign transactions and this covered their expenses on this matter. And of course the near criminal banks added on their additional 2%; this is relatively new and dates to April 2008 I believe.

So....many of the major international airlines used to have their back office operations in a variety of places but it didn't make sense to a degree and so many consolidated. If you book with British Airways, for example, their back office operation might be in the USA for transactions made in the USA or it might be in the UK (I don't know where). If the back office operaton is in the USA, no foreign transaction fee. If the back office is in the UK, then if you pay in US$ (most airfares are quoted in US$, especially involving flights from the USA), if your bank has a foreign transaction fee, you pay. Another example, I use ebay for a lot of my electronic purchases. Manby of the merchants who give the best prices are located say in Hong Kong. Even if the price is quoted and paid for in US$, if the merchant is in Hong Kong and I use my Citibank AA card, I get nailed for the 3% (1% MC and 2% Citibank)...if I use my Charles Schwab Bank visa, not only do I not get nicked for the 1% (they eat it), they have no additional foreign transaction fee and even give me 2% back. By my simple math, I save 5%, even though I don't get the miles, not a hard decision to make.

The difficulty obviously comes in when you don't know you are making a foreign transaction as in the case of Aer Lingus. If you ask your hotel, in a foreign land to bill you in US$, you fall under the policies of your bank.

Moral of the story...use a credit card that doesn't have a foreign currency fee (Capital One, Charles Schwab) or at most passes along the 1% mc/visa fee (USAA and many credit unions) and restrict your use of credit cards from the near criminal banks such as Citibank, Chase, Bank of America to domestic charges, even if you get mileage.

Bronxbomber

And how about which ATMs are best? I thought airport rates were the best. Now I hear that local banks are better. Which is it?

xyz123

All ATM's as far as currency exchange should be the same as the currency exchange is done by the shared teller network, not the bank that owns the machine so if you see a Barclay's Bank ATM at Hethrow, it will be exactly the same as using a Barclay's Bank ATM in Trafalgar Square. But there are some things to be aware of.

1. The currency conversion is done, as noted by the shared teller network. Guess what...cirrus is owned by MC and plus by visa so the currency exchange rate is determined by them as exactly the same as with a credit card purchase that is usually 1% above the interbank rate at the instant the transaction hits the system.

2. Cirrus and plus rules prohibit banks from charging a fee for foreign ATM usage on the machines they own. Thus is you have a US debit or ATM card and use it at a Barclay's Bank ATM, Barclay's Bank is prohibited from charging you a fee for using their machine. However, some machines that belong to private organization, say in a store front, somehow are exempted from this rule. Don't understand how they get away with it but they are.

3. Your bank may or may not have its own policy regarding foreign ATM withdrawals and additinal fees including additonal currency exchange fees. That is all set by your bank, not the owner of the ATM but these fees must be clearly spelled out. As always, the big criminal banks have the largest fees, many of the credit unions and some of the brokerage accounts do not have any fees. But you have to check with the issuer of the debit or ATM card, the owner of the machines has nothing to do with it.

sashh

They are part oewned by Ryan Air, In the UK if yo pay by credit card or debit card that's not 'electron' they charge you. It costs the same for the transaction to be processed but there is some loophole that says they can charge more as long as there is a way for people to pay without the charge.

'electron' cards are issued to people with poor credit histories and are being phased out.

alanRow

<<< In the UK if yo pay by credit card or debit card that's not 'electron' they charge you. >>>

Wrong, the only "free" method of payment these days with Ryanair is by pre-paid Master Cards - NOTE these are NOT Credit Cards but cards you load money onto. But given that many such cards charge for putting money on it, taking money off it, using it...

... it's pretty hard not to end up paying something for the booking.

BUR fortunately where a market is created, someone will fill it - current flavour of the money is virtual pre-paid cards for net only transactions

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