Article: Why is Dynamic Currency Conversion Even Legal?

[Beano]

It's a bit of a "lazy tax" - that AUD91 value purchase becomes $100 - then they get a shack when the stament shows $103.

As I said, the shock is straight away if you select your own currency and not delayed.

 

[SYD]

It's a bit of a "lazy tax" - that AUD91 value purchase becomes $100 - then they get a shack when the stament shows $103.

Do we know if cards that otherwise charge 3% add that also? ie closer to 10% “convenience” fee? I guess they must based on mine and other comments above about online purchases charging in AUD going through with the 3% charge.

It’s certainly a PITA if you have a fee free CC and get slugged 6%+

SYD+1 scored it a few weeks ago at BUD. Already overpriced airport sandwiches had a 6% markup. Never got a chance to see the POS terminal after tapping… But alt least 28° MC had no further fee.

 

[Beano]

Do we know if cards that otherwise charge 3% add that also? ie closer to 10% “convenience” fee? I guess they must based on mine and other comments above about online purchases charging in AUD going through with the 3% charge.

It’s certainly a PITA if you have a fee free CC and get slugged 6%+

SYD+1 scored it a few weeks ago at BUD. Already overpriced airport sandwiches had a 6% markup. Never got a chance to see the POS terminal after tapping… But alt least 28° MC had no further fee.

Part of the increased cost is the exchange rate, with different banks in different countries offering different rates with buy/sell prices being again different.

 

[Rich]

It is all part of the capitalist finance system . You do, mostly, have a choice of where you buy your foreign currency or how you spend your home dollars and it is what the market can bear. Are you going to say that each currency exchange should charge the same amount--- is it not legal for each shop to set it's own prices?

Yes shops set there own prices. But they set them in the home currency and the price tag only shows that currency. If I go up to the register with a 100 Euro item, that is what I should be charged, not an AUD amount with a bogus, unadvertised exchange rate.

 

[Beano]

Yes shops set there own prices. But they set them in the home currency and the price tag only shows that currency. If I go up to the register with a 100 Euro item, that is what I should be charged, not an AUD amount with a bogus, unadvertised exchange rate.

But what exchange rate are you using as a comparison? If you want to pay 100 euros for a 100 euro item, pay by cash, otherwise you are at the mercy of an international financial system, over which you have no control, but can choose your poison.

 

[Rich]

But what exchange rate are you using as a comparison? If you want to pay 100 euros for a 100 euro item, pay by cash, otherwise you are at the mercy of an international financial system, over which you have no control, but can choose your poison.

If there was a chance I might be better off (no one can give a real life example) I would look up the current Visa or Mastercard exchange rate. Or the nearest money changer.
I know the principle you arguing here, but there is only one poison.

 

[Beano]

If there was a chance I might be better off (no one can give a real life example) I would look up the current Visa or Mastercard exchange rate. Or the nearest money changer.
I know the principle you arguing here, but there is only one poison.

It is a good idea to look up the exchange rate and fees for the card issuers and look for the best deal; i.e shop around. I have used CashPassport in the past but their rates are horrible. I will look again at some other card.

 

[Rich]

CommBank Ultimate Awards Mastercard has no fee for international trx and you still get points. I kind of forgot about that recently and used my NAB (formerly Citi) debit card on a trip, also no commission.

 

[SYD]

Part of the increased cost is the exchange rate, with different banks in different countries offering different rates with buy/sell prices being again different.

You missed my point.

If I buy something on 28° MC, say in Euros. I get the MC rate which includes a small fee (< 0.5%). If I’d used my AMEX or NAB Visa CC, I’d pay their respective rates (pretty similar to MC), but those cards add 3% international tx fee.

Now, back that purchase. If the merchant selected AUD, I’d be charged > 6% additional.

What I don’t know (but assume you do) still pay 3% and 6% DCC on the AMEX and other CC/DCs that aren’t international fee free.

But in the end, no one other than the merchant and POS provider is financially better off paying DCC.

 

[Beano]

You missed my point.

If I buy something on 28° MC, say in Euros. I get the MC rate which includes a small fee (< 0.5%). If I’d used my AMEX or NAB Visa CC, I’d pay their respective rates (pretty similar to MC), but those cards add 3% international tx fee.

Now, back that purchase. If the merchant selected AUD, I’d be charged > 6% additional.

What I don’t know (but assume you do) still pay 3% and 6% DCC on the AMEX and other CC/DCs that aren’t international fee free.

But in the end, no one other than the merchant and POS provider is financially better off paying DCC.

But it is still your choice. That's the way the cooking crumbles, and yes it does seem unfair to the unwary.

 

[Rich]

What I don’t know (but assume you do) still pay 3% and 6% DCC on the AMEX and other CC/DCs that aren’t international fee free.

I did a quick check. Amex says it charges 3% of the AUD amount when charged in a foreign currency. So in that case at least, you would surely not be hit twice.

 

[Rich]

But it is still your choice. That's the way the cooking crumbles, and yes it does seem unfair to the unwary.

You still didn't answer the question, but back to the premise, should it be illegal? It is tantamount to theft. You are purchasing a product at a particular price and they try to charge you a different price by deception. It is presented to you in AUD in some cases, but it is still not reasonable.

 

[serfty]

I did a quick check. Amex says it charges 3% of the AUD amount when charged in a foreign currency. So in that case at least, you would surely not be hit twice.

Amex will also charge the 3% if the merchant is not "Australian", even if the charge was in AUD. See my anecdote and subsequent posts for more detail.

Post in thread 'What cheeses me off'

Sep 10, 2024

Direct Currency Conversion - you have to be alert.

Today I was paying for a hotel booking MYR998 using my 28º and the pinpad was handed to me to enter my PIN - I saw on the screen AUD399.

Handed back and said I wanted to pay in MYR, they indicated what to do and the transaction completed. I have checked my account and the authorisation is AUD347.

$52! That's spot on 15% - really taking the p!55

Mastercard Currency Converter | Currency Exchange Rate Calculator

Mastercard currency converter tool calculates foreign exchange rates for all the major currencies worldwide to enable cross-border purchases and ATM transactions.

www.mastercard.us

• serfty

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[Beano]

It's not just what your bank charges but what their bank charges if you use local currency, which is why you are hit twice with charges. It's part of the middle-man payment system. If you use a middle- man/agent you expect to pay more. And off course it is legal and should be. Do you expect your travel agent to book flights for nothing? You could do it yourself on-line and save.

 

[SYD]

It's not just what your bank charges but what their bank charges if you use local currency, which is why you are hit twice with charges. It's part of the middle-man payment system. If you use a middle- man/agent you expect to pay more. And off course it is legal and should be.

That’s not really related to DCC but normal payment processing. Anyone here can get an international fee free debit card and pay in local currency that gets converted to the spot rate with a very small (< 0.5%) VISA or MC fee built in.

In some countries - here, NZ, some merchants pass on the CC/DC fee.

 

[Beano]

That’s not really related to DCC but normal payment processing. Anyone here can get an international fee free debit card and pay in local currency that gets converted to the spot rate with a very small (< 0.5%) VISA or MC fee built in.

In some countries - here, NZ, some merchants pass on the CC/DC fee.

Isn't that what we are talking about here? All those little charges that are piled onto the credit card. Each step demands a fee so with accepting the charge in your own currency means you get charged by the traders bank for converting local currency into your currency, then your bank charging, or not, for an international transaction.

 

[Beano]

Perfectly legitimate business practice.

 

[SYD]

Isn't that what we are talking about here?

Nope.

All those little charges that are piled onto the credit card. Each step demands a fee so with accepting the charge in your own currency means you get charged by the traders bank for converting local currency into your currency, then your bank charging, or not, for an international transaction.

DCC is basically a rort. Hence the premise of this thread.

 

[Pvcmenace]

Well I got ripped with a Malaysia airlines booking the face value of what I purchased in Aud was not what was charged to the American Express. Amex got their 3% and MR got their roughly 7%

After receiving the e-ticket there is a note at the bottom. so $4934 face value was charged at $5436


Multi-Currency Pricing (MCP)

By agreeing to the Multi-Currency Option, you have agreed that the currency exchange rate is based on the prevailing issuer’s rate together with any applicable fee, at the point of payment.

 

[kangarooflyer88]

I think one thing missing from this discussion is a question of who is paying for all of this? If it is you the customer who pays for dynamic currency conversion, then yes chances are you getting taken for a ride. But there are instances I can think of where you aren't paying for these items. For instance, if you are on a business trip and your company is paying for your out of pocket expenses it may very well be beneficial to accept DCC so you can reconcile your expense report sooner as it can be several days before you see the final "price" on your statement, and of course the mismatch between the receipt and what you see on your credit card adds to the paperwork. Another example would be a case where the airline messed up and has to reimburse you for out of pocket expenses (i.e. hotel room, items from your lost luggage that you had to purchase while you awaited being reunited with your luggage). Again you need to fill out an itemized expense report and having all the info available can be handy particularly with airlines like Qantas where it can be weeks before you receive your monies.

-RooFlyer88