burta

I have seen posts on this subject before, but cannot remember which was suggested as better when charging merchandise and services to a credit card: in U.S. dollars or native currency? Can you enlighten me and tell me which and why?

janisj

Definitely in the local currency.

​​​​​​​If you charge in $ you lose because the merchant or merchant's bank sets the exchange rate, and then your bank can still assess a foreign transaction fee. It is called DCC Dynamic Currency Conversion and you want to avoid it.

greg

Local currency. It is cheaper for you.

It only takes a simple computation. When you choose/forced/cajoled/conned, etc, into being charges in U.S. dollars, you are hit with about 3% additional charge for which you get no/zero benefit while the local DCC processor and the merchant split the profit from the 3% extracted from you. If the credit card company charges fee for foreign transaction, it is called FOREIGN TRANSACTION FEE and NOT Foreign exchange fee. The difference is crucial. If the transaction passes through ANY foreign financial institution, you get hit with the FOREIGN TRANSACTION FEE irrespective of the currency used including USD.

Suppose your credit card charges 3% foreign transaction fee and local DCC processor charges 3%, which is buried in gobbledygook phony "your benefit" figure and you don't see it until it hits your statement weeks after your trip.

If you charge in local currency, you get hit with 3% fee over the official rate. The fee goes to your bank.
If you charge in USD, you get hit with 3%+3%=6%. 3% to your bank and 3% fee goes to the DCC processor+merchant.

The DCC processors assume that you connect the invisible dots. When they say "comfort in being charged in your own currency", they know most people would automatically assume they would avoid the FOREIGN TRANSACTION fee. A simple reading of the credit card T&C fine prints would shows you that is not the case, but how many people actually read the fine prints?

How aggressive they push DCC depends on the country. I got asked about being charged in USD or CHF at every merchant in Switzerland. They gave me an option every time. However, in Italy, several merchants automatically charged me in USD and if I did not catch it on the spot, I would have had to eat the fee. I protested and forced them to cancel the transaction and redo in Euro. I have succeeded in reversing the charge every time.

kappa1

Local currency. eg if you buy something in France, demande to charge in EURO.
If marchant says ther other way ( to charge in your currency - USD if you are American), that's called DCC ( dynamic currency conversion I believe ) and you will lose more. Refuse it.

kappa1

I did not see there were already 2 replies! I would not have posted if I had seen them. I could not see the earlier replies after the OP due to a publicity taking up the space when I'm looking full screen/125% on my computer ( not smartphone)

StCirq

And if by chance a merchant insists on the DCC, either refuse to make the purchase or write on the reciept that you were forced into it, and keep the receipt and present it to your cc company.

AJPeabody

One restaurant in Paris last September presented us with a credit card receipt for signing already converted to dollars. I refused to sign and insisted that the charge be cancelled and that a charge in euros be done instead. When I got home, BOTH charges were on my card. I called my card company and they charged the dollar denominated one back to the restaurant, which I believe costs them a penalty fee. The difference between the two bills was $5. For a $5 scam attempt they gained my enmity, a review ding, and a penalty.

A few places had a choice of currencies on a touch screen before I accepted the charge, so picking euros was easy. All the others were in euros from the start.

Christina

Good for you! I'll admit Paris is one of the places I have never had such a problem, I don't recall any establishment of any kind trying to charge me by DCC in Paris. But we may frequent different type restaurants, I usually don't go to ones with tons of tourists nor in the center. Now I have had that problem in Poland for sure and Spain, places where they did that without my permission nor asking and in one small restaurant in Warsaw, they did it even after I told them I wanted the charge in zloty. The waiter didn't know what to do and said he couldn't change it, I called for management and he said the guy "was new", blah blah blah, and made a mistake, but also claimed he couldn't change it. I did give up at that point as it was only about a 10 euro meal but then I didn't tip the guy (service isn't include in Poland, as I recall), so I ended up about even I guess. I just hope they learned something. I really didn't think the guy was malicious (the waiter) and probably was confused about how to do these different type charges.

I think common sense would tell you that it cannot be cheaper to try to pay for something in a foreign currency in some country compared to paying in the native currency, electronically or not. In fact, some credit cards even charge you a foreign transaction fee even when it is in USD, I forget which one does that, if it is a foreign charge.

crefloors

I had a couple of places ask me if I wanted the charge in dollars, can't remember where , but when I said no, use GBP or Euros, there was no argument and they did as I requested. I have heard cases where the business has not been as accommodating. I'm sure they want the fees and I'm sure they get a lot of them.

AJPeabody

Come to think of it, I was at a crafts fair in the here in the US and bought something with a credit card - a designer craft jacket for my wife. The seller was from Europe and routed the charge though her bank and I was charged both local sales tax and a foreign transaction fee. As I read somewhere, everybody wants a piece of the action.

kerouac

Anybody who says it is not possible to fix a "mistake" on an electronic payment terminal is lying. As long as the transaction has not been validated, it does not exist.

AJPeabody

That's what I thought, but the restaurant that double billed me may have fiddled a bit with honesty and "signed" for me. It took almost three months to get the final cancellation of the false billing. I'm glad I saved my copy receipt of the rejected bill.

thursdaysd

No financial institution actually checks signatures. When confronted by someone who flat out refuses to undo a transaction there is nothing you can do except write on the receipt and then take it up with you CC company.

You can at least avoid foreign transaction fees by getting a CC that does not charge them.

burta

Thank you all, This is much clearer now, and I don't think I will forget which is better ever again!

Leburta