Originally Posted by
nexusCFX
There are Tim Hortons and Wendys locations that publish their exchange rate for US dollars on the menu. The hotel can simply apply 10 USD credits against whatever is being purchased, processed at the prevailing exchange rate. That's how paying with a Marriott gift card, available only in USD, works in countries that do not use USD including Canada.
I think this is misleading implying Canadian store processing goods in US dollars. It is very clear in Canadian law, you can only use Canadian dollars to pay for goods in Canada. The situation you are talking about is the purchase is in Canadian dollars. The store first give a value added service by doing a currency exchange for you from US dollars to Canadian dollars. Then the main transaction of applying the now converted Canadian dollars to buy the Canadian Tim Horton coffee/donuts. Then the cashier returns Canadian dollars to you and not US dollars.
As for foreign credit cards, the store always receive Canadian dollars. The credit card company does the foreign conversion and the currency spread (ie the fee you pay for the conversion) and bill the purchaser of their home currency.