While I haven't made a detailed study out of it, I have found that when you pay in dollars instead of the currency of the country where you are shopping, the exchange rate is at least 5% from the inter-bank rate, and I have sometimes seen significantly worse rates. So even if you are paying a 1 - 3% transaction fee, you would still be better off by performing the transaction in the local currency. I am adamant about the transaction going through in the local currency.