Originally Posted by
Majuki
But now Australia has mandated that businesses can't charge unreasonable surcharges beyond the cost of doing business, which is about 1% for Visa/MC and 2% for AmEx. (I imagine large retailers are well below these amounts.) DCC as of now is unregulated. While the exchange rate isn't as bad as Travelex at the airport, it's almost never better than the Visa/MC rate. I would think Visa and MC would be opposed to DCC for similar reasons as surcharges because if customers knew they were getting ripped off they'd be far more likely to pay cash, especially for small purchases. A meal at your local fast food place that's charging 1% surcharge on top of the 4-5% DCC? No thanks.
Visa/MC don't want price discrimination based on form of payment. They want the price to be the same as cash price.
The reason the DCC scam works more consistently than a surcharge is due to customer ignorance. If people are told, "I'm going to charge you 3% to use a credit card," many switch to cash for small purchases. Just take a look at how many people pay the cash price in NJ at gas stations. With DCC, many customers and some merchants are unaware of the process. Customers might think it's "cool" that they're charged in their home currency, but they don't know they're getting duped on the exchange rate. If merchants were required to list the exchange rate compared to the Visa/MC rate then I think far fewer people would fall victim to DCC.
Here's another thought on why some allow themselves to be suckered by dcc. They don't have a clue at to how exchane rates work, they don't understand what the interbank rate is as opposed to the rates they are quoted by their banks or see in the window of the banks when they arrive. For argument's sake, let's say the interbank rate of the € is $1.40...they go to their bank, the customers who think they need cash, and are told they can buy euro (or sell dollars) at $1.54 for each euro plus exchange fees (or if there is no fee, it might be as high as $1.57 or so) so the bank can advertise commission free (in other words it's built into the rate). Upon arrival in euroland, they pass by a bank and see the bank is selling euro for $1.53 or so...so when they go in and the merchants tells them or the sales slip shows them they are being charged $1.50 for each euro and the clerk tells them it's a better rate than the bank pays, they fall all over themselves to save a buck or two little suspecting the official rate, the rate mc or visa w3ill charge them is $1.4014. And then to top it off, of course, if they're moronic enough to use a credit card from some near criminal banks like Citibank, Chase, BofA which have their cards for the serfs not paying asinine annual fees tagged with a 3% ftf, they still get socked for that fee even though the clerk is told to tell them an advantage of being dcc'd is no foreign currency fees. It's a sticky cycle of deceit and ignorance that allows this cancer to keep spreading throughout the tourist world.