Originally Posted by jbcarioca (Post 22719089)

The date the FX rate applies is the "settlement date", which is the date on which the merchants processor is paid by the issuing bank processor. Many people, including here, offer precise dates on which that takes place, but in fact there is no precise date because time lags can happen between merchant, merchant processor, network transmission, issuing bank processor (if applicable) and issuing bank. Usually all that happens very quickly, often in a single day or two, but not always and not consistently. Time zones, cutoff times, holidays and other factors intervene to reduce consistency.

Even so, as you observe, credit card FX rates, assuming no DCC and no FTF, are virtually always far better than a consumer can get elsewhere. Ditto for debit cards. Between Visa, MC, Discover and American Express different procedures apply. Discover does almost all theirs through a large bank, Royal Bank of Canada, IIRC, while American Express does their own in many countries and use local partners in a few of them. Visa and MC have long standing procedures that generally are quite consumer-favorable. Still everyone makes money in this process. There are exceptions: for example, Argentina has horrible rates because the central Bank sets an artificially low rate for all official transactions, thus almost all regular travellers use cash that they buy through an unofficial market. Those exceptions are not common these days.

Originally Posted by zyxlsy (Post 22722602)

Your settlement theory makes perfect sense. Thanks!

Originally Posted by reclusive46 (Post 22721890)

I'm just glad my Lloyds Amex has no foreign transaction fees because DCC is starting to become a pain in the US, especially at restaurants where one or two even apply DCC after adding the tip.

Originally Posted by zyxlsy (Post 22722602)

Your settlement theory makes perfect sense. Thanks!

Originally Posted by percysmith (Post 22722639)

Besides Visas, MCs and Amex cards, we have Unionpay cards from HK banks.

China Unionpay publishes the applicable exchange rate, daily, on http://en.unionpay.com/front_ExchangeRate.html (or at least they used to until this month - the engine's broken).

For non-HKD/RMB transactions we get to run via Unionpay, we get the exact exchange rate that unionpay.com webpage said we would, for the posting date.

Originally Posted by jbcarioca (Post 22723792)

FWIW those are summaries of actual procedures, without all the steps.

I stated writing a history of all this, but then realised it would be massive overkill in this thread. If anybody cares I have lots of background on this since I began in the industry with the setup of what became Visa, which happened when the network went global in the very early 1970's.

Originally Posted by othermike27 (Post 22721384)

By my calculation, you were scammed for about 4.8% = (70.42-67.19)/67.19, assuming your currency conversion from GBP 40 to $67.19 was correct for that day. That seems typical of the many reports here (and, by the way, higher than even the AMEX 2.7% FTF).

I don't recall if I was given a choice the one time I was DCCed at a hotel a few years ago, but I probably thought, "Oh, that's nice. They converted to dollars for me." Ignorance is bliss...

Originally Posted by Newark7 (Post 22724692)

Yeah, I'm guessing their DCC rate is around 4.5 - 5% above the market rate & the tour company thought they could sneak it by since it was a phone transaction. Now that it's in dispute, they will soon realize they tried to scam someone who's in the know about DCC fraud :cool:

Originally Posted by JEFFJAGUAR (Post 22720101)

I wonder how common a practice this is i.e. on phone or on line orders to perform a dcc transaction without asking. And I would wager that most customers don't know the difference or are even grateful that they are charged in their own currency. Do remember the people here on this board are somewhat more sophisticated and in tune with what is going on in the travel industry.

Originally Posted by JEFFJAGUAR (Post 22725006)

Maybe or maybe not. The tour company probably deals with lots of tourists and many prefer to be charged in their own familiar currency and perhaps, although I'm not defending it mind you, they feel that is the best way to handle all these things and deal with the oddball who doesn't believe in it.

Originally Posted by kebosabi (Post 22725778)

Throwing an idea from third base here:

Basically I think that the underlying thing that many are pissed about DCC because it's charged like a hidden tax, in percentage of the total value, a "cut" scheme that goes to benefit the merchants.

What if the DCC was a low fixed amount, like $0.10 per foreign transaction?

So at a rate of 100 JPY = $1:

a 600 JPY charge would come up as $6.10
a 6000 JPY charge would come up as $60.10
a 60000 JPY charge would be $600.10

Basically, the DCC would be fixed at $0.10 per transaction whether you buy something at $6, $60, or $600, rather than being a percentage of the total value, and ten cents is all that the merchant gets for each transaction rather than being a percentage "cut."

Originally Posted by alexmt (Post 22727810)

Originally Posted by cbn42 (Post 22727483)

If it's a fixed amount, then what rate would they use? I doubt any merchant is going to find a bank that will convert foreign currency for them at a flat 10 cents without any percentage commission.

Remember that when a merchant uses DCC, their bank gets paid in a foreign currency. Visa or Mastercard does not do the conversion, which means that someone else has to do it.