Article: Why is Dynamic Currency Conversion Even Legal?

[AFF Editor]

Why is Dynamic Currency Conversion Even Legal? is an article written by the AFF editorial team:

Why is Dynamic Currency Conversion Even Legal?

Most countries ban junk surcharges like "resort fees" because they can trick people into paying more and are bad for consumers. So, why is dynamic currency conversion (DCC) is still legal?

www.australianfrequentflyer.com.au

You can leave a comment or discuss this topic below.

 

[marki]

Quote: "Some banks argue that dynamic currency conversion is more convenient for customers because they'll know exactly how much they are paying in their home currency at the time of the transaction. Perhaps you could argue that some business travellers prefer this because they'll immediately know what amount to expense without checking their bank statement later. But this "convenience" comes at a cost."

That is the biggest laugh of my life. Thank you, bank ATM. I will now know I am overpaying, but at least I know the exact overpayment amount. What a relief!!!!

It makes my day - Coffee time - wait, where is my 6.50 Euro gone?

 

[kpc]

Hilton KL automatically tried to charge me in AUD when I settled the bill....I refused to sign, asked them to cancel the transaction, and recharge me in Ringgit...I gave them a polite lecture why I had done so...the staff member had no idea about the increaaed cost of DCC, and clearly must have been instructed to do so.

 

[AIRwin]

Did you end up initiating a chargeback to TAP?

 

[MEL_Traveller]

Quote: "Some banks argue that dynamic currency conversion is more convenient for customers because they'll know exactly how much they are paying in their home currency at the time of the transaction. Perhaps you could argue that some business travellers prefer this because they'll immediately know what amount to expense without checking their bank statement later. But this "convenience" comes at a cost."

That is the biggest laugh of my life. Thank you, bank ATM. I will now know I am overpaying, but at least I know the exact overpayment amount. What a relief!!!!

It makes my day - Coffee time - wait, where is my 6.50 Euro gone?

Must be the same PR firm for the banks as the airlines… who claim an EU-type compensation scheme in Australiamwould be ‘too confusing’ for customers!

Back to the article… 6.5% margin in the example. Many cards already charge a 3.5% foreign transaction fee, so maybe some people think it’s not that much more? And people with travel cards may not want to convert their money twice if they don’t have enough funds in the local currency.

There are lots of traps… foreign currency booths at the airport, the Thai ATM foreigners fee…

 

[SYD]

It would be interesting to know if it IS banned in some countries? I notice that my 28° MC regularly triggers DCC in some countries but not others.

It’s very common in Spain for example but you don’t always see it so presumably it’s a function of the type of POS terminal in use? A friend of mine is taxi driver in Barcelona, he was just telling me that he gets a share of DCC even though he advises his passengers that they’re better off paying in Euros…

Regarding online purchases - there are other examples that aren’t DCC but equally annoying. You’re quoted AUD at what seems like a good exchange rate and pay with a regular CC / DC, only to be slugged a 3% int tx fee because there’s a conversion happening in the background and the underlying currency transaction is still USD or Euro etc but you only ever see AUD amount on your statement plus 3%.

 

[Peter D]

Quote: "Some banks argue that dynamic currency conversion is more convenient for customers because they'll know exactly how much they are paying in their home currency at the time of the transaction. Perhaps you could argue that some business travellers prefer this because they'll immediately know what amount to expense without checking their bank statement later. But this "convenience" comes at a cost."

That is the biggest laugh of my life. Thank you, bank ATM. I will now know I am overpaying, but at least I know the exact overpayment amount. What a relief!!!!

It makes my day - Coffee time - wait, where is my 6.50 Euro gone?

The irrelevance of some examples given by corporate bodies, as to how convenient their services will be, always brings out the cynic in me. i.e. “I will know how much it costs in AUD”.

I am always tempted to respond with dumb literality, but that would be rude to innocent staff.

My Bankwest phone app beeps and tells me almost instantly how much has been charged to the credit card account. If recall correctly overseas charges take longer but are pretty quick to appear as well.

It can also be quite spooky, my phone will beep and tell me how much wife just spent on a coffee before she takes the first sip.

Do they know how their own services work?

 

[Gold Member]

Good article raising awareness and highlighting the pitfalls of DCC.

IMHO, DCC is just another deceitful money grab disguised as a consumer friendly goodwill gesture.

 

[moa999]

I always say.. charge in xx_ when handing my card over.

It's not like 99% of people don't have an easy currency conversion device in their hand

 

[SYD]

I always say.. charge in xx_ when handing my card over.

It's not like 99% of people don't have an easy currency conversion device in their hand

The problem is a lot of people (not here I hope) have standard CC/DCs that charge 3% on everything OS. So they foolishly think they're avoiding that fee but are actually a further 3% (or probably more) out of pocket....

 

[Gold Member]

It's not like 99% of people don't have an easy currency conversion device in their hand

The latest version of iOS now enables currency (any many other units/measurements) conversions in the native calculator. Very handy.

 

[SYD]

The latest version of iOS now enables currency (any many other units/measurements) conversions in the native calculator. Very handy.

I just read the article on that feature the other day! But I'll probably still just use XE (it's free).

 

[RealtimeY]

The problem is a lot of people (not here I hope) have standard CC/DCs that charge 3% on everything OS. So they foolishly think they're avoiding that fee but are actually a further 3% (or probably more) out of pocket....

I would hazard a guess that the people who agree to DCC are likely also the ones who use a 3% international fee card, not knowing how/unwilling to open an account without those fees and are getting done twice every transaction.

iOS has allowed for easy currency conversion for many years and you don't need to open any app. Just slide downwards straight from the lock screen or home screen, and type in what you want, e.g.

• 100 usd
• 100 aud
• 100 aud eur
• 200 mi (to get km)
• 200 km (to get miles)
• 60f (to get celsius and vice versa)
• QF1

 

[moa999]

And for Android users same in the Google search bar, or even Google Chrome browser

 

[NM]

Also note that even if the payment is charged in AUD, if the transaction is transacted outside Australia, you will likely still be charged an additional foreign transaction fee by your Australian bank/credit provider. So you may be charged twice for the "foreign transaction".

I have had this happen even when purchasing something on-line from a company with an office in Australia, the order quoted in AUD and the item shipped from their warehouse in Australia, but the transaction processed in the company's home country. In my example, the company HQ is in the UK and the credit card (Amex) transaction shows as being processed in the UK in AUD and Amex charged me a foreign currency transaction fee.