London money changes

Dec 22nd, 2004, 02:53 PM
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London money changes

Just got back from London and noticed a few changes regarding credit cards and ATMs.

There were several news reports about new ATMs charges. ATMs that are not located by a bank will be allowed to charge up to 1.75 pounds. This will affect small towns and villages that have only one or two banks. The ATMs will be converted during 2005. Be sure to check the ATM very carefully. A lot of the charging ATMs will be in tourist areas and be right across from a non-charging ATM.

Watch out for credit card charges that are done in US$. My hotel did this. I didn't notice at first. I thought the bottom number was what they estimated the $ equivalent was. But on closer examination, it was actually charged in US$ at a very unfavorable rate (about 5% over bank rate!). They told me it is automatic since I have a US card. I told them to charge in pounds, their currency, but was told they didn't know how to do that! The hotel told me that this was a new thing beginning in 2005. Don't know if it is unique to that hotel chain (Holiday Inn) or going to be something new in general.
nibblette is offline  
Dec 22nd, 2004, 04:27 PM
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Small correction: the new ATM charges will only be at the non-bank owned ATMs. These are increasing in number as many banks are selling their ATMs. The number of charging ATMs is anticipated to be in the majority in 2005.
nibblette is offline  
Dec 22nd, 2004, 11:56 PM
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If Niblette's right about the credit cardr scam, it sounds like a practice our interfering nanny state really ought to stamp out. I'd appreciate input from other posters to start a small campaign.

But she's wrong - and scaremongering - on the other.

Let's get this scam banned...
If Niblette's right, we need to start lobbying for legislation to stop it. Do other users know who actually benefits from this (it may well not be the merchant) and which processing companies are running it? Has anyone encountered it outside the British Isles, and has anyone been hit with it by using a credit card from one EU country in another?

I ask the last question because if the scam means UK merchants are effectively surcharging other EU customers, it's a lot easier to lobby the European Commission to stamp it out throughtout the EU.

With ammunition from other posters, I'd like to get a small dossier to our Consumers' Association and the relevant Ministry early in the new year.

...but this is scaremongering
It's simply untrue to claim that "many banks are selling their ATMs". One or two banks have sold the most remote and expensive to service portions of their networks. And there's been no recent "allowing" of anyone to charge.

Retail banks don't charge: other machines do. There has, however, been a recent explosion in fee-charging machines, so the proportion of machines that charge a fee has grown. So headline-seeking politicians can misuse statistics to claim there's a problem when there isn't. A small town big enough for one or two banks will ALWAYS have at least one or two free ATMs: it'll probably have several others and at least half a dozen fee-chargers - normally in out of the way areas where only the most immobile or feckless will use them. The problem of no free machines is limited to places too small to support any banks.

It remains a legal requirement for customers to be informed they are being charged. There's no need to check for this: you're automatically informed ( and your assent requested as part of the process. There's been no claim, even in the most sensation-inventing, "only newspapers should be allowed to make money" tabloids, of anyone being charged unknowingly.

Incidentally, machines in all Co-op convenience stores are free, and most grocery stores offer free cashback to customers.
flanneruk is offline  
Dec 23rd, 2004, 01:44 AM
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I've been charged in sterling while shopping in Italy when I paid with my UK bank issued credit card. (was that confusing enough?). It's yet another way for banks to make money.

I was asked at Harrods if I wanted to pay in dollars when making a credit card charge. I am American but live in the UK. I was using a UK bank issued credit card! Found it rather underhanded that Harrods would be doing this "service."
highledge is offline  
Dec 23rd, 2004, 04:00 AM
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The bank I work for has recently sold all of its non-branch based ATMs to a company which charges fees. And all of the broadsheet newspapers I read have speculated that most ATMs could be fee-charging within a year or two.

There was a move a few years ago amongst some of the major retail banks to start charging fees to non-customers, but they gave up when not all the banks joined in. It could happen again.

It is a legal requirement for charging ATMs to display the fact but not all of them display it very prominently. There are moves to force them to display charges more prominently.
caroline_edinburgh is offline  
Dec 23rd, 2004, 04:35 AM
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Perhaps this will be another reason, in addition to security, to use your ATM DEBIT card at a teller's window inside the bank.
jsmith is offline  
Dec 23rd, 2004, 04:48 AM
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The current practice of converting charges from the local currency has been discussed previously.

It is happening in the Eurozone as well.

There is a term for it (other than scam), but I can't think of it at the moment.

ira is offline  
Dec 23rd, 2004, 05:09 AM
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Dynamic currency conversion.
Nikki is offline  
Dec 23rd, 2004, 05:39 AM
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Thanks, nikki.

ira is offline  
Dec 23rd, 2004, 07:43 AM
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A lot of the ATM's that charge only tell you of this fact when you have almost completed your transaction so you can't be bothered to start again somewhere else.

I can't see the main banks charging for their own cards at their own banks so use Visa at Barclays and Mastercard at Nat West to keep costs down.
adamhornets is offline  
Jan 1st, 2005, 04:57 AM
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I had requested that my hotel bill be charged in pounds not $, as they had originally tried to do. A manager had to do it but my request was granted. The dollar amount was refunded and the bill redone in pounds (which came out to be less $ on the credit card than what they had wanted to charge).
nibblette is offline  
Jan 1st, 2005, 07:28 AM
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You have to be really careful using what is referred to as 'white boxes'. These are ATMS that are not owned by banks. They are often dressed up to look similar to bank ATM machines. They make their money by charging comparatively LARGE service fees (in addional to any standard bank charges) They are popping up everywhere-hotels, etc. Cannot recall seeing them in Europe but I am certain that they have them. They are very lucrative for the companies that own them.
allanc is offline  
Jan 1st, 2005, 09:02 AM
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This is where I get lost....

This I know, Cirrus and Plus regulations prohibit banks from surcharging out of country ATM transactions. In the US, you may or may not have noticed things like, as are on the Citibank machines, Citibank will charge non Citibank US cardholders a fee of $1.50....that is because, I think, they operate through Cirrus and Cirrus prohibits the transaction fees on out of country fees.

That was why, I did think, that one did not pay fees when using a US card on machines in say the UK. Others have told me, and I have no reason to doubt them, that if you use the out of bank machines, you might be nailed with a fee of £1 or more....don't know how this ties in or whether UK government regs supersede Cirrus and Plus regs or the fee is a separate transaction that some ATM operators have figured a way around. But I still believe that one is not charged for using a US based ATM card at a UK bank ATM.

Now as far as the dynamic currency coversion, we have discussed this ad nauseum it seems on this forum in other threads.....

However, I recently received a change in terms from Chase for my Chase gasoline MC (which gives me a 3% rebate on every gasoline charge and 1% on all other charges applied to my gasoline purchases) which says something to the effect that they will charge an additional 2% on top of the 1% MC/visa charge on foreign transactions and, this part is new, 1% where MC/Visa does not impose a surcharge. I was trying to figure this out and it suddenly dawned on me; they are losing the ability to charge 2% on those transactions where this dynamic currency conversion scam is applied so now they seem to want a piece of that action too.

Still have never met a banker who isn't trying to figure out a way to screw people out of their money whenever possible.
xyz123 is offline  
Jan 1st, 2005, 09:23 AM
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I don't know if you're being faceteous or sarcastic or serious but no matter...

This "scam" is not unique to the British isles. It is part of the credit card war between merchants, credit card companies and consumers.

Historically credit cards were the best way to avoid hassles on foreign currency transactions. The charge was written up in local currency and the international credit card system converted it to home currency surcharging 1% to protect themselves against fluctuations in currency rates between the time of acquiring the transaction from the merchant's bank and processing it to the consumer's bank. There was nothing in it for the merchant; he or she got his or her money in local currency and the consumer got a very good deal on the currency exchange as exchanging cash is usually 7 to 10% above the interbank rate....

The banks, led by Providian in the US, began to want their share and many began charging 2% on foreign transactions. This was an out and out surcharge and they had nothing to do with the foreign currency transaction, they received the charge already converted in local currency. But they claimed this surcharge was to protect them in foreign currency transactions and besides which they have to deal with more problems with foreign transactions so the consumers have to pay. To this day, many of the large credit card banks in the US, such as Citibank, Chase, Bank of America continue this practice of adding 2% to all foreign charges for a total of 3%. Several US banks do not participate in this garbage such as MBNA, Capital One and USAA. Although some people mistakenly tink there is no surcharge, these banks simply pass along the Visa/MC 1% fee for a total charge of 1% above interbank...

Now the merchants want in on this. So we have the growing phenomenom of "dynamic currency conversion". You can read up on it on any internet search's been discussed as we said ad nauseum on this forum.

Let me just say this, it is an attempt for the merchant and the processing bank to get in on the currency conversion fee. They set the conversion rate at 2 or 3% above internet, charge the customer in his currency and pay the merchant in local currency. The charge reached the international credit card system in the customer's currency so no 1% by visa/mc and no 2% by the customer's bank. The processing company and the merchant split the 3% or whatever it is on this kind of transactions.

Now there is no rhyme reason or regulation regarding what rate the dynamic currency conversion uses...they could charge 5 or 6% above interbank rate. The practice actually started in Ireland where merchants at tourist shops opened up accounts with credit card banks both in local currency and USD. Consumers were told the merchant was doing them a favour and comparing the USD rate with what the cash exchange rate would be.

But there is something very important that you and others have to realize. When a merchant says he or she has to write up the charge in the consumer's currency, they are liars. The terminals very clearly ask the merchant if he got permission from the consumer to write the charge up in say dollars in the UK. If the customers refuses, as he or she always should, the merchant must write the charge up in local currency. But, as PT Barnum once said, a sucker is born every day and some people claim it is more important to them to know for certainty what they are paying (rather than to take out a small calculator, most mobile phones have them now) and check out what they're paying.

As I said in my post above, now Chase in the US, wants in on the dynamic currency conversion by putting in its latest update of terms and conditions that if Visa or MC does not charge a fee for currency conversion, they will surcharge 1%. Guess why they're pulling that.

So no it's not confined to the UK, it is probably not illeagal as the customer has to give his or her consent for the charge to be written up in their currency.

But.....I suppose regulations do exist that require the merchant to write the charge up in local currency of the customers demands it or if such regulations do not exist, then they should.
xyz123 is offline  
Jan 1st, 2005, 09:39 AM
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And by the way...that surcharge that some companies charge on conversions as a hedge against currency fluctuations between transaction time and settlement time is a hoax. Too.

American Express, for example, calls it "Foreign Exchange Conversion Factor" (FXCF), and they charge it on all transactions. That means if the currency is worth more at settlement time, they break even. And if the currency is worth less (which it is, statistically, about 50% of the time), they pocket the difference PLUS the FXCF. Can you say "rip-off"? I knew you could.

I use my Schwab debit card to get £ and € - I pay bank rate plus $1 per transaction.
Robespierre is offline  
Jan 1st, 2005, 09:53 AM
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Thanks for the disappointing CC charge update.
The problem I encountered was the hotel did not seek my permission to charge in US$. I would have refused. Instead, they said they could only charge me in US$, not pounds. It was only upon my insistence that I be charged in GBR that it was finally done. It was also the first time I heard of the DCC happening with an international hotel. My experience was just a warning to say that it is spreading.

Re: ATMs. The fees charged are only at the non-bank owned ATMs. These are increasing in prevalence. As long as you see a bank name on the ATM, there should be no machine fee (except maybe from your bank). The charging ATMs often do not tell you there will be a charge until you are almost done with your transaction. There is now an effort to make any charges are clearly stated BEFORE the end.
nibblette is offline  
Jan 1st, 2005, 10:47 AM
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This is nothing new...all ATMS which aren't associated with Banks have always charged a huge fee, at least in the U.S., and many ATMs that are assoicated with Banks, if not your banks, also charge a fee and at that point, some times your bank will also. This isn't a scam, it's called business. It is the consumer's choice to agree with the charge or not. No bank forces you to use their ATM.

As far as being charged in $ vs pound, this also happened to me at Harrods, and when I got home and compared it to the exchange I had gotten at an ATM, it was exactly the same.
lyb is offline  
Jan 1st, 2005, 11:02 AM
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When I returned from the UK, PT and Spain in July, I mentioned the immediate CC currency conversion (to USDs) at very unfavorable rates and many F'ites were nonbelievers.
Of the/my 18 CC transactions, 4 (3 in the UK) attempted this, but I sent all back and they restated in local currency - mostly with negative comments.
mikemo is offline  

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