GUWonder

Is Aegean now trying to get consumers using non-European bank cards to get on board with the dynamic currency change scam thing when processing bank cards?

The latest Aegean app update has something about choosing the currency to look at prices and to complete payment. Is there a DCC type charge element to this?

NextWhiteDeath

There is a chance that they do it like BA does it. They reference the IATA currency rates so at times the rate they use is better then the current exchange rate. It has to be tested to see if it is dynamic currency conversion with a mark up.

giorginho

I am not exactly sure what you're referring to, but the website has been letting you choose between currencies for quite some time now.
Perhaps the website programming automatically selects the currency for you, according to which country's website your visiting or, if you're logged on, which country your coming from, or even which country you're flying out of, which you, of course, select when searching for flights.

Again, I'm not sure what the "scam" is supposed to be, but almost every company that accepts payments in a specific currency will charge a conversion fee if you wish to pay using a different currency (which would save you the conversion fees of your own bank).

simcity4000

If it is the same currecny of your bank cards and payment (e.g.:SEK) with different settlement currency (e,g.: Your outbound ticket starts from UK, the settlement will end in GBP), there will be DCC applied in Visa and Mastercard.

johnirvine

GUWonder is quite correct in referring to the 'dynamic currency change scam' with non-Euro Area bank cards. With my tourism-sector company in Cyprus, we are given strong financial incentives by JCC (the main credit card processing company) to persuade customers to accept charges in their own currency (mainly GBP, Rouble and US$) rather than the EU€. Each month, we receive a breakdown of FX commission received and how much more we would earn if only we could persuade specific increased percentages of customers to accept that JCC do the conversion. A lottery is also operated with prizes being awarded to staff.

As a result of this experience, I will never ever accept dynamic currency conversion since you often end up paying substantially more. Legally, customers are supposed to be offered a choice, but staff in many companies are instructed not to do this. When I am tricked in this way, I always insist on the transaction being reversed.

Knobbgb

I did notice when I checked a few days ago that flights originating in LHR are now offered in Euro rather than GBP. To be honest I'm lazy and I always just paid for them in GBP anyway as the amount charged on my Greek Euro card always seemed 'about right'. I don't even remember if there was an option to select Euro. I've booked one-way flights from RAK and IST and they was charged in Euro by default - not sure why GBP was treated differently. I guess the real 'scam' was for non-Euro currencies though.

One thing this does (would have) make easier was the thing with vouchers. I remember reading that vouchers covering cancelled flights paid for in GBP would be issued in GBP and thus could ONLY be used on flights originating in the UK.

sokolov

No, it won't save you that. A common misunderstanding.

Credit cards levy that fee in two cases: Transaction in foreign currency OR transaction in a foreign country.

Say you have a Euro credit card and do a transaction for Euro 100 with a Swiss airline. You will still be charged a markup, because the transaction was processed in Switzerland, which is not Eurozone.

:D!

Your question can be easily answered with some calculations. The answer appears to be YES, all flights are priced in euros and choosing to pay in another currency incurs a DCC scam markup of around 5-6%.

Interestingly, A3's Russian ruble DCC rate is around 15% *cheaper* than the actual exchange rate right now, but I think that nobody with a RUB-denominated card is going to be able to use it on A3's website right now, so anyone who wanted to try this would be gambling that the Mastercard / Visa rate from their card currency to rubles remains in their favour at the time of transaction posting (unless you use a product like Curve or Revolut which fixes the exchange rate at the time of authorisation).

This appears not to be the case for A3. Anyway, you can only change currency with BA on phone bookings, which incurs a £15 fee in the UK, or a similar amount elsewhere, otherwise it's based on the currency of your flight origin country (not always the local currency, for example BA Romania flights are in euros).

I haven't flown Air Canada for about 8 years but back then, I recall that their website did allow you to select a wide range of currencies to pay in regardless of your flight origin country, and the IATA exchange rate would be used.

Also Norwegian, when I last booked with them in 2019, was allowing you to pay for any flight in any of their supported currencies (a selection of around 10-15 currencies, used in the countries they flew to). They did not use the IATA exchange rates, but it was not DCC either. The rates were somewhat random and by experimenting, you could sometimes save over 10%, but IIRC you had to redo the search from the beginning. Flights tended to be cheapest in GBP and/or SEK, even for flights that did not involve the UK or Sweden, but given the cheap prices, spending 15 minutes to end up saving £1/€1/10kr was not always worthwhile plus there was a risk that the exchange rate would move against you by the time the transaction processed.

One option to pay Norwegian was in Argentinian pesos. I recall that for one flight I was looking at the peso price was nearly half the price in the other currencies - now the blue market rate is around half of the official rate, but I wasn't sure if it was some sort of error or what rate my card would end up using, so I didn't risk it, after all that flight was only £30 or so. This is probably similar to the ruble situation I mentioned above.

The scam is that A3 charges a 5-6% fee for this conversion, and people may not even notice, for example Knobbgb says the rate always seemed about right. Had I booked some A3 flights recently, I might also have fallen victim to this as I assumed flights out of LHR would have a base price in GBP - but it is in euros. This also explains why OTAs such as Expedia pricing in GBP, at the IATA exchange rate, are cheaper than A3 direct - ignoring discount OTAs which are unreliable.

I have bank cards which do not charge any conversion fees to pay in a different currency, so I would use these to buy a flight priced in euros. I would only be subject to the Mastercard markup of typically -0.25% to +0.5%, or the Visa markup of typically +0.5% to +1%. (Well, I do have a card which charges 1.95% for non local transactions, but also pays 2.4% cashback on transactions in a user-selected category, with the option to select foreign transactions as the qualifying category).

This is not DCC. DCC is when the merchant determines the exchange rate. If your card is in SEK but you buy a product in GBP, the merchant can charge you their actual price in GBP. This will be converted by Visa/MC/Amex etc at a slightly worse rate than interbank, with MC very occasionally slightly better (note that China Unionpay doesn't have any markup and doesn't allow forex fees), and your bank may apply a further fee.

Or the merchant can charge you in SEK, and usually they would add a DCC markup of 4-5% when calculating how much SEK to charge you. I don't think any Swedish banks charge more than 3% forex fees, so it's always better to decline DCC, unless you think the SEK is going to drop vs GBP by more than 3% in the next 24 hours - then you would "lock in" the 5% worse DCC rate now to avoid paying 5% more when your transaction is processed after the SEK drops.

Well, this varies by card issuer. Some only charge the fee when transacting in a different currency and don't care about the country of processing.

Harper50505

I notice this week that booking a return ATH-HEL I was quoted in GBP, I thought it probably was dynamic currency exchange which I've been scammed by before so I opted to pay in Euros.

DELLAS

I always pay in the local currency unless I see its an acceptable small % to have it in € . Those credit card machines and ATM withdrawals in your own home currency are nearly always a rip off.

giorginho

Like I already wrote previously, nearly every merchant does that. Back in 2010 or so I had a Visa debit card, that even though it was issued in Greece and thus handled everything in Euros, would not charge me anything for paying for my purchases on the British Amazon website in GBP. BUT, that only lasted 2-3 years (before they started charging full conversion fees), only worked with the debit Visa of that specific bank (not any credit card) and only worked with Amazon UK as far as any foreign currency was concerned. My other Visas and Mastercard (debit or credit cards) have always charged me for any kind of conversion (well, I was mostly purchasing stuff in USD and GBP, but I have a few examples of purchases in HUF, AED) and they've always charged me exactly what the conversion rate was on the Visa or Mastercard website plus 2,5% for transactions with Mastercard and 2% for transactions with VISA (though that's 99,9% the bank's commission and not the card issuer's). If I opted to buy stuff on Amazon UK in EUR then the price was always higher than the price ING GBP + 2,5%, usually much higher, probably around the 5%-6% area mentioned here, same goes for pretty much all other websites/merchants. But I did test this once (using Amazon's currency conversion to pay in Euros) and I didn't get charged anything more than the price displayed on the merchant's website (I also avoided paying with my Amex in any foreign currency, since they charged way more than 2,5%!).
​​​​​Anyway, the "logic" in my eyes is quite simple: If you pay the recipient of the money in a different currency than what they use themselves (btw kudos to all who managed to open accounts in various countries and run their transactions through the "corresponding" country of the customer's currency, so as to offer better prices!), then they will have the conversion done on their end and on most cases this won't happen instantly, as the payment first has to clear on the customer's end, make its way to the merchant, then get credited their accounts and get converted in their currency before it clears with their own bank.
​​​​So they have to account for possible fluctuations in the exchange rate between the time the customer hits "buy" and the time that amount finally gets converted in their currency by their own bank.
I find this understandable and to be expected on virtually all transactions. The real scam is exchanging cash, which I only had to do once (it wasn't even any of those dubious exchange kiosks, but a very well-known German Bank!) and I learned never to do it again. Long live Revolut ​​​​​​!
I really can't judge whether this DCC thing as far as Aegean is concerned is a scam or not. If indeed 5-6% is the case, that seems almost fair enough (2,5% conversion fee from card issuer / bank and another 2,5%-3% to prevent losses from currency fluctuations). Also, where one sees an airline trying to generate income, a customer might see an opportunity to reduce their hassling with their banks about transactions in foreign currencies and their fees. I would like to say that I don't like the fact, that I have to get my calculator and open xe. com on my browser every time I want to check out some prices in Budapest or ex-BUD​​​​​​. I still book in HUF, but it's a nuisance already... ​​​​

:D!

OK, well in the UK there are many credit and debit cards available in the UK which charge 0%, so there is no need for any UK consumer to pay any fees when spending in euros or forint or dirham or whatever, unless they are bankrupt / sanctioned and therefore unable to open one of these accounts. I know that in the EU/EEA many cards do charge fees.

Some of my UK cards charge up to 3% + a fixed fee of up to £2 for any transactions not in GBP, but since I have several options to pay 0% fees I never use those cards outside the UK.

As I said, all these cards will use the Visa / Mastercard / Amex exchange rates, which are usually slightly worse than interbank, but there's no way to avoid it if paying by card.

Yes, this is DCC.

If GBP/EUR is 1.20, the Mastercard exchange rate may be 1.205. You buy something on Amazon UK which normally costs £10. If you pay in GBP with your euro bank Mastercard that charges 2.5%, £10 becomes €12.05 at the Mastercard rate + 2.5% = €12.35. If you use Amazon UK's DCC which is around 4-5%, Amazon says the price is €12.60, you pay €12.60 with your card and you won't get any extra charges.

This is not how DCC works. The merchant typically doesn't have accounts in multiple currencies. Of course Amazon will have bank accounts in many countries and I don't really know how they work internally. But if it was a small company, they would just get the £10 minus their fees, whether you choose to pay €12.60 or £10. They don't ever see that you chose to pay in euros and they don't get any euros into their bank account. The bank may share some of the profits from DCC with them though - this is one way banks get merchants to sign up to DCC.

Exchanging cash at a bank is almost always a scam, you may be paying up to 20% more. But certainly in some Eastern European countries, Turkey and some Asian countries, if you find the right bureaux, exchanging cash can be cheaper than using card especially if you need to pay 2.5% fees to your card.

Aegean doesn't have any currency risk! They only get paid in euros and the bank takes all the risk (but not really, because the banks operate DCC in both directions with merchants all over the world). There is a risk to you the consumer, but unless you trade currency options there is not really any way to remove this risk.

LHR-ATH 5th April 1215: light fare is €299.09.

XE.com rate is £248.13.
Revolut rate is £249.51 (but it's the weekend, will be less on weekdays).
Visa exchange rate is £250.34.
Mastercard exchange rate is £250.38.
However you won't know the rate for your transaction in advance, as the rate that applies will be determined 1-2 days after you actually pay.

If I change the currency to GBP on A3's website, the price becomes £262.16!!

Even if your card charges an extra 3%, the £250.38 Mastercard rate becomes £257.89 which is still cheaper. With a 0% fee card, why would I pay £12 more?

The only reason to is pay £262.16 today is because you think it might become £266 by the time the transaction is processed. But if you are so sure the rate will move in this way, you should trade forex. It might just as likely go to £253 tomorrow. On average it will move in your favour 50% of the time and against you 50% of the time, but if you pay the extra £12 you will be losing 99.9% of the time, unless your country is about to be sanctioned by half of the rest of the world.

Thanks to GUWonder for highlighting this.

giorginho

The part, to which you replied here, was written to support your reply on sokolov's comment, that some card issuers just care about currency, not country.
Pretty much my point exactly! I did say it gets converted before it clears with the merchant's bank. But the merchant publishes their own prices, so if they charge 12.60€ instead of 12,35€, then they won't get 10GBP, they'll get more (how won't they get more?)! Amazon not only handles payments in different currencies, but they even issue receipts with the VAT of many countries (within Europe they have bureaus in various countries, so they even pay the appropriate VAT to the specific government of the receipient's country)! But that's certainly an exemption. Still, the UK website wants to get paid in GBP, the german/french/spanish etc. in EUR etc., or they'll add their fee on the conversion rate (with which they'll get paid more).
I'd love to hear how that's supposed to work. I know the last "red" part about the +1-2 days is true, but then how is Aegean's pricing completely risk-free? If the conversion rates change significantly, say 10-20%, which is of course extreme, but perhaps look at some currencies like the turkish Lira a few months ago (!), then the bank will credit Aegean's account with 10-20% less Euros than what the price and xe.com rate at the time of booking originally lead Aegean to expect. If "you don't know" the rate in advance then Aegean or any merchant also won't "know it"! Which is exactly why these "DCC" prices are higher than paying in the merchant's currency, in which case indeed only your bank is involved in the risk-taking part of the transaction (but like you said, they're the "house", so long-term they always win).Yes, it is and always will be cheaper! Never doubted that and this is exactly how I do it, how you do it and probably how 90% of FT's members do it. But, like I said, I can imagine someone opting to pay those extra 4.27 Pounds or 5 Euros, if they want to avoid losing time figuring out how much is each ticket in their own currency (checking for fares on various dates can be a pain, when having to manually calculate all those prices, of course there's probably a browser add-on that does that for you, but, again, I am talking about a minority here) or having to verify all those charges with their bank statements, causing them to lose more time (how much of your own time would you value at 5 EUR? ). So people who care won't pay more, people who don't care or who would otherwise lose that $$ in the form of lost time, might pay more. I am confident, that there is a market for such offerings and I stand by my opinion (which I didn't express so directly before), that the "we know our stuff" people shouldn't get "tricked" by such options into paying more in the first place.
Anyway, apart from the "no risk for Aegean" part I think we agree on basically everything.