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 <i>possible</i>.

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 &euro;100, you present your credit card and from the numbers it recognizes the card is from the USA and so it converts the &euro;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 &quot;service&quot;)

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 &quot;Easy Services&quot; which is located in Amsterdam and is established for retailers to &quot;save money on all their credit card transactions&quot;. 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 &quot;the new Dynamic Currency Conversion&quot;. 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 &quot;bill&quot; 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 &quot;illegal&quot; 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 <b>independent service organization</b>:

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

No...you miss the point...

It is &quot;illegal&quot; 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. &quot;redo&quot; 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 &quot;local&quot; 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.

&quot;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.&quot;

<b>NO, YOU'RE NOT!</b>

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.