Someone please help me solve this mystery.

I have a US-based debit card that does not charge any foreign ATM fees, and a US-based credit card without a foreign transaction fee. I am in a foreign country (Australia, in this case) and I withdraw cash from an ATM with the debit card. There is no surcharge on this ATM. Less than 5 minutes later, I go into a store and buy something with my credit card.

I compare the receipts and it turns out that the credit card gave me a slightly better (more AUD per USD) exchange rate than the debit card.

Shouldn't they both be converting based on the interbank rate? Both cards are issued by the same bank, both are Mastercard, and there are no foreign transaction fees on either one, so why are they different? I don't think the official exchange rate changed in 5 minutes. Any insights on what causes this discrepancy?

They should be converted according to the terms of your agreement, which probably (vaguely) describes how the rates are set. The rates are established by the transaction network, not by the card issuer. Credit card transactions are typically converted based on the posting date, not the transaction date.

There is no "official" exchange rate, and rates do change continuously, but I would expect ATM rates to remain the same for an entire day, based on "a" rate from the previous day.

MasterCard is the network for your debit card's POS transcations.
That's the logo in the front.

Your debit card is may be using use a different network for ATM transactions.
The ATM / PIN Debit network logo is usually on the back of your card.

e.g. If it say Plus on the back of your card, it is Visa's exchange rate.

Read the ATM card's description carefully. There is a difference between no foreign ATM fees and no foreign exchange fees. No foreign ATM fees means that they won't charge you for the use of an out-of-network ATM. It does NOT mean no network fee. Your debit card may be passing on the VISA/MC 1% forex fee. Is the difference between the 2 rates (ATM vs CC) about 1%?

My ATM card also has no ATM fees. But the MC 1% network fee is passed onto me. My CC has no foreign exchange fees.

My experience is the same, after drilling down a bit I was told my Visa ATM card had a 1% fee charged by Visa.

I would not be surprised if exchange rates varied slightly. The transactions might have been posted on different days. I think some banks use the most adverse rate in effect anytime during the day.

I will say this, I have a very large number of foreign transactions (my wife lives in Canada and we share credit cards) and I have found that when a credit card says "No foreign transaction fee" I am usually getting an exchange rate that is not "loaded" to reflect a fee. I feel like they are dealing fairly with the situation.

My debit card doesn't have a debit logo on the back. I'm assuming it's Maestro/Cirrus, since it's a MasterCard. Both cards are Capital One, by the way.


It's not that big. About 0.4%.

The ATM card said no fees for using non-Capital One ATMs, including foreign ATMs. If they are passing on a MasterCard fee, shouldn't they say that? Credit cards that say no foreign transaction fee mean no foreign transaction fee. If they are not absorbing the network fee, the foreign transaction fee would be 1%.

But thanks for all the replies, everyone. I'll try this again in a different country when I get a chance.