mia

Do I understand correctly that in this thread "DCC" refers to Direct Currency Conversion, in which the merchant submits the transaction in the card currency rather than local currency?

garyschmitt

That's what I understand it to be.

What's interesting about DCC is merchants often violate their contract with Visa. Visa states that DCC is only allowed if the merchant clearly and verbally gets the card holders consent in advance. Merchants will break this agreement, and simply sneak it in. They will get a signature or pin from a customer hoping that the customer does not notice the differing amount and currency symbol.

When customers discover what happened later on, they have no legal ground to act on, because Visa does not guarantee cardholders that merchants will get verbal consent in advance. That agreement is only in the Visa-merchant agreement. The card holder is not entitled to incidental benefits from other contracts, and cannot take legal action on a contract that they're not even a party to. But in reality, banks will generally remove disputed DCC fees as a gesture of good will.

There are other similar cases.. like merchants are not allowed to surcharge customers that pay by credit card. Yet European merchants often do, because Visa Europe is a pushover (they do not enforce these things, and they do not act on reports). So card holders often do not get the incidental benefits that they have come to expect in Europe.

percysmith

Not 100% sure verbal agreement is mandatory.

Visa Card Acceptance Guide "suggested" merchants "fully disclose...DCC is optional" http://www.emerchant.com/resources/v...de.pdf#page=19
Visa International Operating Regulations requires "advise" http://usa.visa.com/download/merchan...s.pdf#page=104, but does not mention this has to be verbal.

Amazon offers DCC http://www.flyertalk.com/forum/catha...hk-50.html#737 (the currency conversion feature cannot be used when Amex is selected). No-one calls me up to confirm DCC.


Some merchants are fully aware they are performing DCC and standing to reap profits http://www.flyertalk.com/forum/hong-...ersions.html#9

Others really don't realise: http://www.flyertalk.com/forum/china...on-19.html#271 (owner-operated business, FTers vouched for the owner).

In many cases, the card terminal's firmware is non-compliant (fxxked), in the sense there's no option to opt out of DCC. FTers proved this by taking over the terminals (with the consent of helpful staff) and trying to run a non-DCC transaction. Banks (acquirers) which distribute non-compliant terminals include HSBC China, Bank of China, Bank of Communications, China Construction Bank and Global Payments Taiwan.

The only way to opt out of DCC is to void any slip coming out of those terminals, and offering an alternate form of payment.


Agree. The VIOR-DR dispute mechanism is the only recourse to the cardholder if the transaction was not voided on the spot.


Actually, some banks (such as schwab, which moondog sends DCC slips to in large batches) simply make good their own customers out of pocket. No attempt is made to dispute with the foreign acquirer - maybe the effort is oo costly.


Visa Hong Kong too http://www.hongkongcard.com/forum/fo...ow.php?id=5110.

Visa in China is ineffective in policing DCC rules; it might have something to do with the fact the Chinese Government hates Visa anyway and is hoping for Unionpay to supplant Visa.

cbn42

Gary, I know how contract law works. There is no need to preach me on the fact that contracts are enforceable in court. However, this is completely irrelevant to what we have been discussing.

The reason a contract between cardholder and merchant has nothing to do with liability is because in the case of a fraudulent transaction, the cardholder did not enter into a contract with the merchant. The wrongdoer entered the contract, and the cardholder who was not present cannot be held liable by the merchant. HOWEVER, the cardholder does have a contract with the issuer, and therefore the issuer can hold the cardholder liable based on the cardholder-card issuer contract.

I'm not sure why you're bringing up DCC fees. DCC fees are part of the negotiated price you pay the merchant for the goods/services you are getting, and they have nothing whatsoever to do with liability.

jamar

On A tangential note, I've just gotten EMV debit cards from two banks in China. They're UnionPay-only and thus not that useful outside China (still need that EMV Visa until UnionPay gains wider acceptance), but the point is that they cost me less than US$2 each and the banks in question don't impose a minimum balance. At least *some* things go right over here.

garyschmitt

That link was in response to your claim that "it isn't true [that contracts have to be enforced in court], and no evidence has been presented to verify it." This is not the stance of someone who knows how contract law works. The need for the link to findlaw was absolutely needed, as you indicated the need to see evidence.

Liability for fraudulent transactions is entirely irrelevant to the liabilities brought on by the merchant-customer contract.

The card holder quite obviously is present in most cases. Again, you're back onto fraud, which has nothing to do with the post you replied to. The discussion you replied to was about predatory merchant-customer contracts. If a fraudster were to enter into a predatory merchant-customer contract, it's an unlikely problem -- not really worth discussing. But if you insist on discussing that case, the liability owner is the same as if the merchant-customer contract were not predatory, but with higher stakes.

There are liabilities attached to all contracts, not just the cardholder-card issuer contract. Just because the card holder has a contract with the card issuer, this does not obviate liabilities that emerge from a merchant-customer contract.

Of course they have to do with liability. If a customer agrees to pay DCC fees, they have accepted liability for the fees. DCC entered the discussion simply because it's a common predatory contract that merchants try to hook unwitting customers with. It's a sneaky way for merchants to pass on fees they would normally pay onto the customer, often without the customer being aware.

garyschmitt

Why do you say the card is not useful outside of China? That seems to have changed (as of 2006). The wiki says 104 countries accept it. Or do you mean for purchases from merchants?

percysmith

I think a majority of the so-called acceptance countries include countries where Unionpay can only be used at an ATM. Not ideal as far as acceptance is concerned.

On the retail level, Unionpay either has to be accepted directly or over some other card network. Direct acceptance outside of Mainland China isn't good, even in HKSAR. In US and Japan, they can piggyback off the Discover and JCB networks respectively, but neither are networks with ubiquitous coverage like V/M/AX.

kebosabi

There’s also the issue of how well the minimum wage earning cashiers actually know that a Chinese person ordering a Volcano Burritto at a Taco Bell suddenly whipping out an Union Pay card can be processed just like Discover Card. My guess: they don’t.

mia

Do they need to know? In my experience cashiers simply swipe card and see if it is accepted.

sdsearch

OTOH, that sounds (iin the US) no worse than a Diners Club card from outside North America. Diners Club cards (that aren't MCs, like the US/Canada ones are) are now on the Discover network worldwide.

So perhaps not ubiquitous, but for anyone who has used a current Diners Club non-US card, or for those who used the Diners Club US card before it went MC, I view it as "useful" if even not universally useful. Ie, you do have to pick merchants that accept it, rather than using it everywhere, but in most categories it's possible.

In fact, I'm not sure if it's that much harder to find, say, a Discover network restaurant in the US than to simply find a restaurant that takes any credit cards at all in some countries in Europe! Either way, you have to walk by restaurant after restaurant until you see the right logo posted (and then tolerate that sometimes the network logo stickers are out of date).

jamar

First point: yes. Quite a few countries are still ATM-only acceptance.

Second point: no, not even the JCB network. I tried a few times; the merchant has to have a special merchant terminal for UnionPay because only one acquirer over there takes it.

percysmith

Perhaps the more savvy PRC travellers will carry this leaflet http://www.discovernetwork.com/commo...uideCanada.pdf

percysmith

Oh....not full integration yet right http://www.rilv.com.cn/show.asp?id=250?

percysmith

Ignoring the fraud case, only addressing the overcharging case (without DCC):

Well there is normally a contract for sales of goods or contract for provision of services between the customer and merchant prior to the card payment. To initiate a card payment without an underlying sale of goods/provision of services will be non-compliant.

The customer having made a card payment, the responsibility of the cardholder to the merchant is superceded (right term?) by the responsibility of the cardholder to his bank under his cardholder agreement; the rights of the merchant to collect on the customer is similarly superceded by the rights of the merchant to collect on his acquirer bank under his merchant agreement.

Merchants worry less about their ability to collect as the customer's credit is substituted for the acquirer bank's, the cardholder only has to satisfy payment to his own bank; the cardholder acquires certain chargeback rights under his card agreement.

However should the customer be overcharged and the chargeback mechanism (which he should use in the first instance) fails him, I still don't see any reason why the underlying sale of goods/provision of services cannot be sued on - for failure to collect the correct amount of consideration.

Postscript for DCC - DCC is imposed by the merchant's acquirer, not the merchant. IMHO liability for imposing an unwanted DCC still lies with the acquirer, as the merchant has collected exactly what he's been authorised in his local currency. Whether the merchant collects commission, if any, is irrelevant as agreement for DCC is between the cardholder and the acquirer.