Shed Some Light on this ATM/Debit Card Notice
 

Hi everyone-

I was wondering if anyone could decipher this notice that I received today with my bank statement:

Important Information on International Use of ATM/Debit Card Product

The exchange rate between the transaction currency and the billing currency used for processing international transactions is a rate selected by Visa from a range of rates available in wholesale currency markets for the applicable central processing date, which rate may vary from the rate Visa itself receives, or the government-mandated rate in effect for the applicable central processing date, in each instance, plus or minus any adjustment determined by the Issuer.

Can someone shed some light on what this run-on statement means?

basically, Visa can choose to give you any exchange rate they like, on purchases or ATM withdrawals made in international transactions (not your home currency).
The rate can be much worse than the exchange rate that Visa is able to get, or much worse than the government's prime exchange rate, and they can adjust it even further any way they like.

Visa is a big currency trader. They set a dollar/"other" currency exchange rate for each day, depending on yesterday's trading. They will charge you this exchange rate, plus a 1% "international processing fee". Your bank (or whoever isues your card), can charge you additional fees.

See www.corporate.visa.com/pd/consumer_ex_rates.jsp
and click on "questions" for more info

Bottom line is that Visa (and MC too) will probably have the best exchange rate you are likely to get - even with the 1% added.

Stu Dudley

Good answers.

I think Elaine said it best: they can, and will charge you any rate they think is most advantageous..to THEM.

To many, this is hardly news, but they at least have had the courtesy (undoubtedly this is legally/liability driven) to put it in writing.

Forgive my negativity, but the bottom line is that I'd translate that message to say "we are now going to charge you based on whatever rate we want and add a fee which may be 1% or higher if we feel like it and there's not much you can do about it if you want to use our credit card".

"I think Elaine said it best: they can, and will charge you any rate they think is most advantageous..to THEM. "

But only if it was available in the wholesale currency markets.

Keith

Hold on folks.

Visa has competition in Master Card, American Express, and Discover. If their competition is offering better rates, people will flock there. And don't think for any minute that there is any collaboration in establishing rates - if the Fed or SEC found out about anything like that, Visa would be "dead meat".

All these companies are required by law to disclose all charges to customers. Both Visa & Master Card were sued a few years ago because they did not disclose an obscure charge. My wife works for Visa, and disclosure is a BIG thing to them. Also, market share loss is a BIG thing. They want you to use their card just like cash, and offering the best exchange rate is a sure way to get you to use their card and not MC, AE, or Discover.

If you go to the site I suggested in a prior post, you will see that today Visa is charging 1.2862* dollars per Euro - and this includes their 1% fee. Without the 1% fee, it's 1.2734. Today in my paper, it said that the Dollar/Euro traded at 1.2858 yesterday - so Visa was able to get a better rate than whatever sourse was used in the financial section of my paper.

Has anyone found a better exchange rate recently than 1.2862 ?????

The banks & other issuers are free to charge you anything they want on top of the rate that Visa charges you/them for the currency conversion. One of my issuers charges 0 & four others charge 2%.

Stu Dudley


* on the currence conversion table displayed on the Visa web site, it says the exchange rate is 1.29. If you go to the detail and calculate the rate used to convert $300, you will see it is actyally 1.2862. Also. .78 Euros/Dollar is 1.2820.

Sorry, I just don't think most people will flock to any one card based on nearly-incomprehensible disclaimers like the one we started with here.
Savvy Fodorites maybe will flock based on cheaper rates, but most customers don't read the small print, don't understand it, and can't really figure out what they're being charged anyway.
Whether it's Visa, the bank, or a combination of the two, there are charges above and beyond what they pay themselves, and it seems that legally they can levy surcharges as the mood hits them, as long as they inform you, and obfuscate, up front.

Thanks for the info, Stu! Ordinarily I'd agree with Elaine about the "flocking to cards" point -- I certainly wouldn't have a clue about these obscure charges if I weren't reading this forum. But since finding out about the additional 2% MBNA was going to charge for my purchases in France, I've actually gotten two new credit cards to use on my trip that charge only the 1% fee. Just a matter of principle for me!

I don't believe there is really obvious consumer comparison on this point, either.

First, I didn't think you could even use Discover abroad. But most folks don't even know anything about this subject. I don't see how that statement can be explaining things if VISA is so interested in being clear. It doesn't come out and say exactly what rate will be used. Now, I do think it's probably not too different from what you observe as the interbank exchange rate, so I'm not really worried about this. I think the larger charges are in the extra percentage addon some card issuers make on top.

But I don't think a lot of people are going to be comparing fractions of points in exchange rates for foreign purchases as it's practically impossible to get the information out of any card issuer as to exactly what it is, in numbers, to compare. And I think Visa can make a lot of money over all of its foreign charges by simply shifting it a quarter point for no reason other than they want to make extra money.

Fortunately, there are no additional charges added by my bank when using my debit card for international purchases. The thing that bothered me about this statement (and prompted me to post about it) is the sheer ambiguity of it.

I think elaine said it best: "...it seems that legally they can levy surcharges as the mood hits them, as long as they inform you, and obfuscate, up front."

StuDudley, you should know better than to try to explain a statement composed by US lawyers who must cover every eventuality so their client isn't sued.

Last year I had to refill a prescription in London. It had the usual insert listing side-effects, etc. The British insert is two sides of a 5 1/4 by 7 3/4 inch sheet printed in what is essentially newspaper size type and one third of each side was a coupon to request two videos and a booklet. The insert in my US prescription is four pages and about half the type size. This is known as an attorney employment service.

The drug also came in a prepackaged one month (or 3 month supply). My pharmacist has to count them out from a bulk shipment. This is known as a pharmacist employment act.

Of course, we have the interior decorator who gets a kickback from the showroom, the doctors who refer you for an MRI or CT but don't disclose their affiliation with the center (see the front page of the WSJ of 5/2), the teacher's union which fights tooth and nail against funding charter schools or other alternative education but continues to support a failing system, or accountants who benefit by finding loopholes in a 60 thousand page tax code that nobody can comprehend.

Sorry if I left you out of this diatribe but I expect it will be pulled anyway.

If I can assist in its pulling:
A local hospital already has a latest-state-of-the-art PET scan machine; another local hospital wants its own. The new one will cost $400,000, which the 2nd hospital will charge $4900/procedure, saving $400/per. There are approx 1500 procedures locally on the 1st machine.
I figure that's about $5,000,000/year total, which would pay off the machine in one year, PLUS pay for two radio-technicians to run it, PLUS a new boat per year for every neurologist referring patients to use it (their fee would be on top of the above).
No wonder health costs are high (But then, how would one even GET a PET scan in the Ukraine?_

No constants, only variables, especially "plus or minus any adjustment determined by the Issuer".