HappyCheesehead

I did experience it, 2 times in Ireland. In the first instance my husband had settled our lodging bill (Shelburne Lodge in Kenmare) without me in attendance and I did not know what happened until later, so obviously it was a done deal. Second time was at an Avoca shop. I got the receipt, refused to sign, asked it be re run in Euro. The shop clerk was very pleasant about my request and changed it no problem.

Lovejoy

HappyCheesehead,did you ever do a comparison in cost between being charged in USD vs EUROS?

HappyCheesehead

Hi Lovejoy: Sorry, I did not. It would have been a good idea though, would it not? I should have looked to see what the CC bill ended up costing in $ compared to my first receipt. My CC does give me a great conversion rate however, and at that time I think only charged the 1% fee for MC, I could be wrong about that tho, but it was def the lowest of all my CC, so that is why I used it

KT

I've had this happen twice, both times in small shops in Venice this January. Both times the merchant told me that "the machine automatically does the conversion" and both times I argued to no avail. Because both purchases were small, I let it go -- the extra charges amounted to very little, but I do feel like a sucker. I'm sure that this is a nice money-maker in a place like Venice where such a large percentage of purchases are made by foreigners.

nibblette

This also happened to me in the UK at a Holiday Inn. they initially tried to charge me in $ at a rate 5% above the interbank rate. I insisted that the charge be done in their currency. The clerks told me they couldn't do it. They told me that only the manager could do it. I asked for my charge back and asked that be redone. They complied.

I have a hotel stay coming up where in the booking terms, states that they will convert the charge into $ for credit card users. On a hotel review, it says they use a rate that is 7% higher than interbank rate. But with almost a week stay, there is no real choice given the total amount involved.

Alec

I've been following the development of this consumer-unfriendly practice - dynamic currency conversion or DCC - over the years and have often argued it on this forum. Here is my take on how all this has come about and, as the practice spreads, is having a major effect on debit/credit card market.
It was an Irish company in early 90's called Fexco (www.fexcodcc.com) based in Killorglin, Co Kerry, that first developed DCC. With increase in international travel, many more card transactions involved foreign cards. Visa International and Mastercard had both set up operations whereby they act as a clearing house to convert such transactions into the card's billing currency, adding 1% over interbank rate. Card issuers then decided to add a few percentage points of their own to get their cut, for doing nothing! Now Fexco devised a system to bypass the conversion mechanism of Visa and Mastercard, by performing the conversion instantly ('dynamically') at a rate several percentage points above interbank as soon as a foreign card is swiped. So the mark-ups, formerly pocketed by Visa/Master and card issuers, have been syphoned off by Fexco, who then share their spoils with the merchant in the form of regular commissions (reputedly around 1-1.5%). Since then, the practice has spread to many other card handlers, and British High St banks are actively promoting it to their business customers with significant overseas clientele. Now, having this lucrative income stream denied by DCC, some card issuers have begun to impose commission on any foreign transaction, whether made out in local or billing currency. Others, who are yet to introduce this new charge, offset their loss by promoting DCC on the principle that if you can't beat them, join them!
So who are the biggest losers? We, the consumers! Financial institutions exploit the general public's ignorance and confusion over currencies other than their own and make a tidy profit by stealthily adding percentage here and there.
So it's time to hit back, folks! Our strategy should be:
1. Use those few remaining cards with no overseas charges.
2. Always say before handing over your card abroad that you want to be billed in local currency, and check this has been done before signing the slip or tapping in your pin (for chip and pin).
3. Don't be afraid to get the transaction reversed or voided if they disobey your instruction. This is your right.
4. If they refuse to comply, tell them you will ask for a chargeback from your card issuer as an unauthorised transaction. Merchants hate chargebacks as they cost them money and suffer delay in settlement.
5. Tell your friends and family not to be scammed!

xyz123

Alec...

Nice post and the point is also that some American banks are now saying to their customers (Bank One/Chase for example) that even if the charge is written up in USD, they will still add the 3% charge; highway robbery if you ask me.

Cassandra

And as for the recommendation to pay in cash -- you can't exactly pay a hotel bill for 800 Euros (4 nights at 200E) with ATM cash -- most ATMs have a daily limit well below what a hotel bill would be.

I can't think of a way around this other than paying your hotel tab daily, if you can, with cash.

Question about American Express cards -- are they accepted as easily as MC and Visa, and do they carry these foreign conversion fees, too?

LoveItaly

Hi Cassandra, at least in Italy I have never found Amex to be as useful as Visa of MC.

xyz123

Amex is widely accepted throughout Europe however.....

you will find lots of places that take MC/Visa that do not take Amex but in recent years I have not come across any place that takes Amex but not MC/Visa..

Amex charges a 2% foreign currency surcharge.

nibblette

Cassandra,
In my AmEx agreement it says:
"you authorize us to choose a conversion rate that is acceptable to us for that date. Currently the conversion rate we use is no greater than (1) the HIGHEST official coversion rate published by a government agency, or (2) the HIGHEST interbank conversion rate identified by us from customery banking sources, on the conversion date or the prior business day, in each instance increased by 2%". (Exact quote except for my caps for emphasis.)

So AMEX will use whatever the HIGHEST conversion rate is of the 2 days around the time the charge goes through! My MBNA CC does not do this.

From personal experience, even taking into account the 2% vs 1% for MBNA, using AmEx gave a much worst exchange for the above reason. Another reason to stay away from AmEx overseas!

Cassandra

Thanks for comments, all. Suspected as much but trying not to use our Citicorp or Chase/Bank1 cards.

clevelandbrown

In support of DCC, I would offer that there is no transaction involving two currencies where there is no fee. Some of us have gone to the trouble of finding companies with minimal fees, but I am certain that there are many people who don't bother, and pay higher fees. DCC is marketed as charging less than some of the exchange fees, but as there are many companies offering this service, I am sure some are charging higher fees. It is also marketed as increasing the merchant's profit; they don't describe how, but I would guess there is a rebate of some degree.

What you the carduser get with DCC is certainty, which in my opinion has some value. You know when you authorize the transaction exactly what is cost you, in your own currency.

Without DCC, you know, at most, what fees will be imposed by the network and by your card issuer. You do not know what the exchange rate will be. I am sure very few of us check daily while travelling what the interbank exchange rate is. Further, you have no way of knowing what date the transaction will be made. When home, I check my credit card balances daily, and very rarely are charges posted the day of the sale, or even the next day. I once stayed in a remote Swiss hamlet and they took three weeks to post a sizeable transaction (I know there was no bank in the hamlet, but 3 weeks! I wondered if they were waiting for a favorable dollar/franc exchange rate.)

So when you refuse DCC you have uncertainty, as you won't know until you get your credit card statement whether the 150 euro you just spent on dinner was exchanged at $1.32 or $1.50, or even $2.50. If you are on a budget, I think you might want that information sooner than later.

I haven't yet seen DCC as it apparently hasn't caught on where I have been, but as long as they reveal the charges before I authorize the transaction, I might opt for it. Does the machine reveal what percentage they have added for the conversion?

xyz123

The sales slip is supposed to show the rate....

I might agree with you if they use the interbank rate + 1 or 2% but it seems they use the tourist rate i.e. the rate the bank is charging which is 10% above the interbank rate as their starting point...

Obviously this is not set up to favour the consumer but rather the merchant as the merchant shares a piece of the action i.e. the rate above the interbank or standard credit card rate.

Even if you use one of the near criminal banks that rip you off for foreign currency transaction when they perform no service to earn them, you still come out ahead by having the charge written up in local currency 100% of the time.....

For the most part, in 99% of cases in this day and age, credit card transaction clear the next day thanks to the electronic terminals used in this day and age. In days of yore, when they imprinted credit card slips and deposited them in banks, remember those days, perhaps there might be a delay in posting charges. Today the charges post almost instantaneously.

xyz123

Incidentally Cleveland...

Chase/BankOne has just sent out notices to their cardholders that even if foreign charges are written up in USD, they will still be charging a 3% surcharge for foreign transactions so you lose every which way.

LoveItaly

This is why USAA's credit card is a good deal, especially for overseas travel.

fairoaksjim

This happened to me at the Hotel Parlemento in Rome in 2003. Very annoying. Very expensive.

Sue_xx_yy

Cleveland Brown

If you want to have a reasonably close guess of what you'll be charged, you can always go to an internet cafe to get the official interbank rate for the day in question. (Or check the previous or next day's papers, which are close enough.) It floats throughout the day, but never by as much as around 70 per cent, which is what it would have to do to make an exchange rate vary from $1.50 to $2.50. You will of course have to add on whatever sleazy surcharge rate your CC company charges, but at least you know the terms of this surcharge up front with your CC. You do not know the terms up front with the vendor - you've no idea what percentage markup, relative to the interbank rate, the vendor will charge - until you are actually at the POS. And even then, you would still have to have a rough estimate of the interbank rate to be able to calculate what kind of markup you are about to be charged.

What you will be certain of if you permit DCC is that you will end up being smacked TWICE for 'conversion charges' by parties that, as xyz123 points out, performed absolutely no currency conversion service whatsoever. I catalogue this kind of certainty along with death and taxes.

xyz123

DCC is marketed to merchants as a means of increasing their profits by getting in on the currency exchange fee craze no more no less. It has nothing to do with doing anything favourable for the consumer.

richardab

this al pisses me off