Use your US credit card (billed in $ USD) outside the US, how should the currency conversion work? How about in this commonplace scenario:

A car company's central reservations here in the States quotes an amount in $ USD for a rental at a franchise location outside the country, that amount supposedly inclusive of all taxes and fees. They ask what credit card you will be using, and may even ask for the card number, though they tell you the card will not be charged in advance. They send you an email confirming the reservation for your dates and the amount to be paid for the particular type car. Later, when you turn in the car (no damages and gas tank full), you present the same US credit card you said you would be using to pay. Instead of entering the charge in dollars or entering it in the local currency at a rate approximating what your credit card company would use for the exchange, the car rental company uses their own arbitrary rate, which is close to 10% higher, claiming it is their right to do so because of the more than dozen places you have initialed to indicate accept/decline various options, one shows a fixed exchange rate printed there.

I think this imposition of a very hefty "surcharge" of the local company's choosing amounts to a scam. While I have used my credit cards any number of times outside the US, I have never encountered this before, or at least I wasn't aware of it.

How should it work when one expects to pay a sum in USD (the reservation confirmation stated the amount in USD and that sum appeared on the front of the contract itself)? Does the merchant have an option of whether to enter the sum in the local currency or in USD as originally quoted? And if the charge is to be entered in the local currently though originally quoted in USD, they are free to set the exchange rate themselves?! What is the role of the credit card issuer in it all? If anyone understands the "mechanics" of this, and how to protect oneself from such shenanigans, I would be interested to hear.