Originally Posted by
lin821
No, it's not a mainly USA thing.
Foreign transaction fees have been universal since the last decade in Asia as well. Ever wonder why "no foreign transaction fee" being advertised as a nice "feature/benefit" of certain CCs?
As I recall, in the mid-1990s, issuing banks used to "absorb" whatever fees International MC/Visa/Amex imposed on international charges, usually from 1% to 3%. And staring in early 2000s, you'd find
most banks bill foreign transaction fees as standalone charges in the billing statement. If you like, you can dig up more discussion about this fee in the other master thread on foreign exchange:
Best card for foreign exchange?
There's also another shorter thread about
cards that charge no foreign-transaction fee back in 2006. You should just be glad that none of your chosen cards in whichever countries haven't implemented foreign transaction fee. Consider yourself lucky.
I have never closely examined how this thing works (if anybody is interested I'm more than sure it's described in some detail in MC's and Visa's annual shareholder reports), but my understanding always was that neither MC nor Visa ever instituted any foreign transaction fees by itself - any fee you're being charged goes directly to your credit card issuer's bottom line. Both companies certainly have some (very reasonable) spread on exchange rates it uses to convert currencies one into another to cover its currency risks - as of today (07/24) for Visa this spread was 0.4% and exchange rates are transparent and published daily in the internet (for Visa
http://usa.visa.com/personal/using_v...x_rates_us.jsp). So your bank has no discretion at what exchange rate the transaction will be converted. So it doesn't seem that banks are really so generous as to "absorb" these fees. It's more like with luggage fees - first everyone universally introduced them and then everyone started to present returning back to basics as a huge marketing deal.
With AmEx the situation is different though - it has always explicitly stated (through inclusion of your CC agreement) that it is "hiding" substantial exchange rate spread (for cards I had either 1.5% or 2.5%) in your exchange rate. That's why you will always never see a foreign exchange fee on AmEx branded credit cards even if not issued by AmEx itself (i.e. FIA cards).
That being said, suggestions made in this forum should not be taken as apples to apples comparison - even though both AmEx Platinum and Chase BA Visa have no transaction fees, it's almost certain that USD amount of charge for the same EUR-nominated purchase will be higher on your AmEx card than it will be on your Visa card.
Unrelated to that fact, even if foreign transaction fees may not be entirely USA banks inventions, it is certainly not a world-wide practice. In Russia where banks charge you for many things we take for granted in the USA (how about $100 annual fee for no-rewards no-cashback debit card?), foreign transaction fees are almost non-existent.