I saw some old threads on this, but I don't know how I can find them now, and actually, some charges were put on my card directly in dollars when I was in Spain last week.

When I questioned one merchant, the response was that there was nothing they could do. Somehow the machine did the conversion.

I assume that the exchange rate was unfavorable.

Could people please refresh my memory regarding this topic?

Thanks.

Not sure how that happened. I was just in Italy 3 weeks ago, bought everything in euros on my Visa and MC cards. When I received my statements, the price in euros was listed as well as the actual cost converted into USD. The exchange rate given is the current one going now and I think it is fair (1.23 USD=1 euro) and I was not over-charged in any way.

I've never had the problem prior, but I remember reading about this problem here. If I recall correctly, it happens in the UK (Scotland?) as well.

Some of my Spain charge slips stated the amount in Euros and went on to quote the amount in dollars. There was also a note indicating that when I signed, I accepted the implicit conversion rate. (Smart move on their part, of course.)

Since I was on a trip, I didn't want to burden myself with these trifles, but I do want to find out about this practice before my next trip. I'm especially interested in knowing if the merchant has any control over it.

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Dynamic Currency Conversion

Thanks -- I looked at a couple of threads.

So fair to assume that

1. I *do* have a choice?
2. I should always insist on being charged in the local currency?

I did notice a post from Patrick that there were direct charges in his case in dollars that were at a favorable exchange rate though.

Thanks.

There were a couple threads about it -- seemed to be mainly in Ireland. As I recall, it was never mandatory, just some merchants did it unless you really kept an eye on them, or offered it to the unknowing.

I was in Spain last March/April, not that long ago, and none of my credit card charges (in Andalusia and Madrid and Segovia) were ever in USD. How did you question the merchant -- I gather you knew they were going to do this ahead of time? (it sounds like you didn't know until you got the statement, but you say you asked the merchant, so I wondered). Did you ask them what the exchange rate was when they did that?

I saw the slip they gave me, and I saw the dollar amount with an implicit rate. Then I asked about it (but not forcefully) and the response was that the machine did it. So I didn't make a fuss. At the back of my mind I was concerned that they could be crediting my card with an amount that wasn't equivalent to the dollar amount they charged if they voided the whole thing. Call it paranoia, but since I didn't understand the problem completely, I just told myself I'll investigate when I came back.

It happened at least twice. Once, I remember for sure, was in our hotel in Seville.

So, would it be fair to assume that if this happens again, I should insist that I want my card charged in Euros?

It happened to me in Ireland, but not during my recent trip to Italy.

The machine won't do the conversion unless the merchant programs it to do the conversion.

I think this is a new scam that needs to be reported. It probably cost you an additional 3% -- ergo, you probably paid for the merchant's cost for using VISA & M/C for that transaction.

Happen to anybody else traveling recently in Spain?

Hi 111,

It would be better for you to have all of your bills charged in euro.

Not all merchants will give you the bank rate.

Originally, it was a scam that started mostly in Ireland in tourist type shoppes. The merchant would open up an account with the local bank and through a subsidiary with a US based bank. The customer would be told, "for your convenience we will write the charge up in your currency (usually USD). If you objected, they would try to con you with, "we are saving you the 3% charged by credit card companies. Look at the exchange rate, and show you it was lower than the cash rate posted at banks. So you thought you were having a favour done for you....not realizing the cash rate at banks is 8 to 9% above the interbank rate and even with the near criminal (see my intellectual discussion with the bank guy Ryan) fee of the extra 2% by some (but by no means all cc banks) you still did much better by having the charge written up in local currency, in this case euro.

Now banks want in on the lucrative fee setting of foreign conversions on cc's and see the foreign cc's don't get the fees. So what they do now is this new thing called dynamic currency conversion. In it, when the merchant swipes the card, the card is immediately recognized to be a card from a US bank in USD. So the credit card machine does a quick calculation at some rate 4 or 5% above interbank and you are given the option of paying in USD or in local currency. Emphasize you do have the choice. The charge then clears through the system on the merchant's side in local currency and through the mc/visa system as a USD charge. The bank on your end has no opportunity to add the near criminal (sorry Ryan) extra 2% charge above the 1% interbank charge mc/visa charges. The local bank and the merchant splits the difference.

It is spreading worldwide, no longer confined to Ireland. As the op indicated, it was done in Spain. Many hotel, car rental terminals now do dynamic currency conversion. Even in the US, there are card terminals that do this i.e. the card is recognized say as a card from the UK and the customer is given the exact exchange rate in sterling while on the merchant side it is a charge in USD.

The advice, of course, is you never do as well with dynamic currency conversion as you do by using a credit card not issued by the near criminal banks in the US and to have the charge written up in local currency despite what the merchant tries to tell you.

Thanks xyz. That's my impression of what happened as well -- that the machine knows that my card is a US card.

Now, the thing is that I wasn't offered the option of paying in Euros or in dollars. I assume that there's a manual setting that the merchant can use to insist that the charge be in Euros?

It is NOT always a scam any more. I ran into the "scam" in Ireland a couple times, and yes, it costs you money!

But then in London a restaurant charged me in US dollars insisting it was a favorable rate. I didn't argue because it wasn't a big amount, but I was sure they were wrong. When I checked it was indeed a good rate-- in fact so favorable that I saved the usual 3% conversion rate (from my Citibank Aadvantage) since it was already in dollars. And yes it was equal to a bank rate -- 3 percent lower than all my other charges within a day or two that had to be converted. I'm not sure how they do this, but it did indeed work.

Just for information, one place this happened was at Rock and Sole Place.

I feel like I need some hand holding here. Someone please write a quick step-by-step primer regarding what we should all do.

The problem is unless you have a calculator that does foreign currency, (another function my mobile phone does for me) you never really know while if the charge is written up in local currency you know you will pay interbank + 1% (or 3% if you use the near criminal banks)....

I agree in principle, xyz. But I guess it does help to do a quick mental calculation to see if the implied rate is reasonable -- and I think that the rate may even be stated on some of the charge slips. So, for example, if the rate is 1.27, say, you know for sure that's not reasonable, as the Euro exchange rate hasn't been this high (well, I could be wrong).

So I'm still interested in knowing how much control I've over this. If the machine does the dynamic conversion and the rate offered to me is 1.27 and I don't like this rate, can I tell the merchant that I want the charge be in Euros? What if the merchant responds with a line like "the machine does this"?

You always have the right to insist the charge be written up in local currency as far as I am concerned; I am not a lawyer but technically use of foreign currency is not really legal tender in many countries but nobody really objects.

Now I don't know if this is the same thing but many years ago in the Caribean I went into a restaurant after having looked at a menu in local currency. When the time came to pay, I was shown a much higher rate in USD. I told the waiter to bring it back and write up the charge in local currency. He said it was impossible, it can't be done. By law, he said, Americans must pay in country X in USD. I said he was crazy and insisted on seeing the manager. After a semi friendly argument, he told me as a courtesy he would have the charge written up in local currency and thus I saved 30% or something like that.

As I understand it, you can always insist the charge be written in local currency and in general this is the best way to do it (although Patrick has come up with an exception).

Very interesting. Ok, I'm ready for the next trip, sort of.

111op... you manage to get around nicely! I am envious!

Thanks, Suzie. When I e-mailed my friends about the recent trip, one of them wrote back and said, "It sounds quite fun, with your usual chaos tossed in!"

That cracked me up -- with me, there's always some sort of chaos.

Anyway, I'm sure that you've your own travel adventures. It's just that the grass is always greener, etc.