Article: Why is Dynamic Currency Conversion Even Legal?

My main concern is in the convertion rate of the service provider.
 
Beano said:
My main concern is in the convertion rate of the service provider.
Click to expand...
The DCC service provider? Could be anything and often undisclosed.

In most countries they’re obligated to tell you the conversion but that’s usually just the AUD amount they’ll charge. Unless one’s a maths whizz or you’ve had the chance to estimate the AUD equivalent at the spot rate prior to paying, quite often it might not be obvious they’re charging a very coughpy conversion. Plus you then have to add your card provider’s X% (as applicable).
 
SYD said:
The DCC service provider? Could be anything and often undisclosed.

In most countries they’re obligated to tell you the conversion but that’s usually just the AUD amount they’ll charge. Unless one’s a maths whizz or you’ve had the chance to estimate the AUD equivalent at the spot rate prior to paying, quite often it might not be obvious they’re charging a very coughpy conversion. Plus you then have to add your card provider’s X% (as applicable).
Click to expand...
Correct, which is why I prefer to use the local currency., even though the mark-up is not unreasonable.
 
p--and--t said:
I can't find the default currency setting on my UBER app?
Click to expand...
It’s been local currency until now. And only on those regions mentioned in the article. So anyone in Oz probably can’t see a setting to change/opt out?
 
TheRealTMA said:
Uber notes say…

Payment in your preferred currency is currently available in the United States, Canada and the eurozone.
Click to expand...
I was confused because I read that as meaning when you were visiting USA, Canada or Eurozone it would be available.
 
Rich said:
I was confused because I read that as meaning when you were visiting USA, Canada or Eurozone it would be available.
Click to expand...
Yeah, I initially thought that also. But it’s probably currently only for US, Canada and EU registered users!
 
Gold Member said:

Uber now defaulting to DCC without your consent. Manual setting change now required to turn off in app. Deceptively labelled as Preferred Currency Pricing (“PCP”) to ensure the customer isn’t aware they’re paying another fee.

It’s like one of our infamous local Airlines who deliberately hide their exorbitant carrier fees and surcharges and conveniently call them “Other” charges.

Of all the evil companies out there that might do this, Uber would up there with the best.
Click to expand...
When I travel I set up my Uber to use my Wise card so it should just take it out of the appropriate currency bucket
 
Kremmen said:
In Asia, this is not necessarily a good idea. You can find foreign exchange booths that give you rates within 1% of the mid-rate. (If you carry large USD notes, you can get much closer than that!) In Thailand, most ATMs charge a 220 baht fee (over $10) for all foreign card transactions, which is a huge percentage on most withdrawals.
Click to expand...
I'm not sure that any currency exchange in Thailand will give you within 1% of mid-market rate and if there is I have not found them.

In Pattaya TT Currency exchange is the best that I have seen. Pre-covid it used to be within 20 points of mid-market rate but now with 35-40 points of mid-market rate and if you use them late evening or weekend could be extra tourist tax on top.

I've now had (different) credit cards compromised 7-8 times in past years. I only use them in 7-Eleven, Big C, Tops, HomePro and Global House. Racking my brain trying to work out how the card is compromised when it doesn't leave my possession and last trip it all clicked. Hire car twice in Chiang Mai. They take credit card for hire car deposit and take photo copy of passport, driver's licence and credit card. Bingo!!!!)
 
apeman said:
Next time I book with them I will select the hotel country currency as I use a Comm Bank OS transaction free card.
Click to expand...

I have an email from Agoda somewhere and I'll tell you that you'll struggle to avoid Agoda dynamic currency conversion.

Say you're staying in Thailand and you choose AUD as charge currency they'll go from THB-USD-AUD but use very poor exchange rates and it works out to 5% or more but never less.

If you choose THB you'll pay in THB but they'll convert to USD and back to THB and there'll be 5% or more difference.

I may use Booking.com pay at hotel feature but never use Agoda pay later feature. I pay now if I'm happy with AUD amount.
 
I am surprised that some people say they get the spot conversion rate and no fee. This doesn't sound at all good business practice. Any company offering a product for sale to the public must make a profit to survive and pass on any costs they have to the buyer. My only conclusion is that the seller is making their money in some other ways, e.g. a high annual card fee. No business I know will sell wholesale without some mark-up or recovering costs in some way.
 
Beano said:
I am surprised that some people say they get the spot conversion rate and no fee. This doesn't sound at all good business practice. Any company offering a product for sale to the public must make a profit to survive and pass on any costs they have to the buyer. My only conclusion is that the seller is making their money in some other ways, e.g. a high annual card fee. No business I know will sell wholesale without some mark-up or recovering costs in some way.
Click to expand...
It's interesting what XE says of its rate

The mid-market rate is the mid-point between the rate a currency can be bought or sold. These rates are not available to customers - not even Xe can buy currency at this rate.
Click to expand...
 
Beano said:
I am surprised that some people say they get the spot conversion rate and no fee. This doesn't sound at all good business practice. Any company offering a product for sale to the public must make a profit to survive and pass on any costs they have to the buyer. My only conclusion is that the seller is making their money in some other ways, e.g. a high annual card fee. No business I know will sell wholesale without some mark-up or recovering costs in some way.
Click to expand...
No one is getting the “spot rate”. VISA and MC, it’s about 0.5%. They are processing thousands of transactions every minute and making their fair share!

But there can be swings and roundabouts in timing on when/what they’ve set their rate and when your purchase goes through. On small purchases, it’s often a few cents difference - which looks like you’re getting “spot” rate but it’s usually about ~0.5%. Sometimes the FOREX can move in your favour and you do better than what should have been the spot rate.

CC/DCs that are international fee free usually don’t offer frequent points and insurance plus other bells and whistles. They’re still making money on every transaction you make. Where do you think those 1% to 2% POS surcharges go when using your card in Oz? The merchant is passing on the fee to the consumer…. Elsewhere, the merchant absorbs the cost or builds it into the price.
 
SYD said:
No one is getting the “spot rate”. VISA and MC, it’s about 0.5%. They are processing thousands of transactions every minute and making their fair share!

But there can be swings and roundabouts in timing on when/what they’ve set their rate and when your purchase goes through. On small purchases, it’s often a few cents difference - which looks like you’re getting “spot” rate but it’s usually about ~0.5%. Sometimes the FOREX can move in your favour and you do better than what should have been the spot rate.

CC/DCs that are international fee free usually don’t offer frequent points and insurance plus other bells and whistles. They’re still making money on every transaction you make. Where do you think those 1% to 2% POS surcharges go when using your card in Oz? The merchant is passing on the fee to the consumer…. Elsewhere, the merchant absorbs the cost or builds it into the price.
Click to expand...
That's exactly what I am getting at, and DCC makes no difference to the process. If you already pay POS fees of 1% to 2% in your home currency then it shouldn't be a surprise if someone overseas does it as well and adds a currency conversion fee and variable spot rate.
 
For anyone who doesnt already know yet: Paypal does DCC too. When you add a card to Paypal to use when making online purchases, it defaults automatically to "Use Paypal Conversion" which with any DCC is rip off. You have to go into your settings and manually opt out of "Use Paypal Conversion" and select "Use my bank's conversion" instead.
 
Beano said:
That's exactly what I am getting at, and DCC makes no difference to the process. If you already pay POS fees of 1% to 2% in your home currency then it shouldn't be a surprise if someone overseas does it as well and adds a currency conversion fee and variable spot rate.
Click to expand...
Except it’s not the merchant directly charging you the forex fee. It’s a 3rd party creaming a junk service fee that’s completely useless.

The merchant will happily take your payment in local currency (and usually no card payment fee - unlike AU/NZ).
 

Become an AFF member!

Join Australian Frequent Flyer (AFF) for free and unlock insider tips, exclusive deals, and global meetups with 65,000+ frequent flyers.

AFF members can also access our Frequent Flyer Training courses, and upgrade to Fast-track your way to expert traveller status and unlock even more exclusive discounts!

AFF forum abbreviations

Wondering about Y, J or any of the other abbreviations used on our forum?

Check out our guide to common AFF acronyms & abbreviations.

Recent Posts

Currently Active Users

... and 29 more.
Total: 1,038 (members: 79, guests: 959)
Back
Top