I never ate at A Lorcha http://www.flyertalk.com/forum/china...on-44.html#660 again - I've found way better restaurants in Macau to go to. I never bothered to contact them after the meal either - I don't know if they have an email address and I'm not paying for IDD if I can avoid it.

I imagine one of two things happened:

1. My issuer took the HK$562.73 back. Banco National Ultramarino deducted MOP564.30 from A Lorcha. A Lorcha asked BNU to charge me again in MOP this time based on their merchant copy and the slip was re-presented.

2. My issuer took the HK$562.73 back. As BNU already had the copy of the slip it recharged my issuer MOP564.30 without reference to A Lorcha.

Unless a Citi Prestige-like offer comes along it'd be more worthwhile for me to use Unionpay in Macau - Unionpay rate is competitive here, no foreign currency translation charge and decent $6/mile earn rate.

I remember you telling me you use UnionPay for taxis and the like in Macau. Do you find yourself using UnionPay in the Mainland too or only in Macau where the exchange rate is fixed? Certainly fewer headaches not having to worry about DCC. :D

More of an acceptance issue.
My best unionpay earns 1.3 miles per usd (roughly 1.67% if I use a 1.28cpm valuation). Unionpay is usually 1.5% cheaper than fubon visa (below) except in Macau and China where it's 2%

Fubon v/m earns double miles (3.33%) overseas

So it's a wash. I didn't bother pulling out the unionpay in france.

Hi FT'ers,

I understand this thread is predominantly about DCC when you are present at the POS but I have a case where this happened to me on an internet purchase.

I booked a hotel with IHG at an Intercontinental property. I have not stayed there yet but it is a prepaid rate and so I cannot cancel it. The reservation was online and the final price was quoted in EUR. When I checked my credit card statement online yesterday I saw that they had performed DCC and charged my card in GBP. I have a credit card with 0% forex fees and a very good exchange rate so the amount was significantly worse than if my credit card provider had performed the conversion. It was nearly £20 more than I was expecting.

I am still waiting for the reservations department of the hotel to get back to me as the front desk agent denied they had performed the conversion and insisted my credit card company must have converted it to GBP.

Does anyone have any experience of this? I am guessing the same rules apply and that they have to have my consent to do the conversion?

Thanks,
Andy

Hi AndyRobin

Yes DCC on prepaid rate (Amsterdam). The hotel sent the scalp back as a credit to the card.

Just a couple of clarifying points. Neither DCC nor FTF are actual foreign exchange transactions. The FTF is a fee imposed by a card issuer whenever a transaction is originated with an acquirer outside the issuers country. It has no logic in costs or justification other than additional profit fir the issuer. The name changed following the loss of a class action lawsuit against several issuer for falsification of charges. DCC is also NOT a foreign exchange fee but a fee imposed by a merchant for restating tge charge in the issuing bank home currency. As you stated both DCC and FTF are often assessed on the same transaction. The actual FX transaction is usually made (practice varies by issuer,country and acquirer) by the first processor in the issuers currency. In general those rates are near typical interbank exchange rates when the transaction is processed, which also varies. The typical variation MC, V and AE are mostly a result of timing. All three make profit on FX, but generally well within typical corporate rate bands. The historical 1% of MC and V also was an arbitrary charge in increase profits.

Other things remaining equal it works that way. But, some countries are different, including China a perhaps the most highly variable case.

But doesn't the FX transaction use the rate set by Visa/MC in the case of declining DCC? I could still justify the 1% for the risk of the actual FX transaction even if the 1% is arbitrary.

Do you have this in writing? I would definitely escalate and be sure to give them negative feedback in any surveys that you get. I had this garbage happen to me at the Frankfurt Marriott, and they also comped me after the fact.

Jbcarioca: "The FTF is a fee imposed by a card issuer whenever a transaction is originated with an acquirer outside the issuers country. It has no logic in costs or justification other than additional profit fir the issuer."

1. At least in the case of 0.8% with mastercards, doesn't MasterCard inc. earn this, not the issuer?

2. If no foreign conversion occurred, can't FTF be justified by cost of cross-border settlement anyway?

For instance if Ba.com collected HKD679.00 from the uk. Assuming my hypothesis that BA received HKD and have not converted it is right, Visa has de facto HK$679 remittance for BA.

It might do this by offsetting, but eventually Visa will have to make some remittances to net settle its positions from time to time. Surely it is entitled to earn a fee for that?


The cheapskate is britishairways.com and others airlines having similar practices, for being able to perform multi-currency transactions at its head office and having card associations or customers pay the cost of patriating funds home (as opposed to using a merchant account in each country).

The reason I used wire transfer receiving fee as an analogy, is that banks are required to do something (although I'm not sure how much) for receiving cross-border funds, and the price tag for that is around $40.

In the case of CC, if a transaction happens abroad, and although everything is done electronically by Visa/MC, are banks still required to perform extra tasks for these cross-border CC transactions than for domestic transactions?

My point is wire transfers are done electronically by SWIFT network as well, and I doubt banks sort these SWIFT telegraphs by hand...

Please don't get me wrong, if home currency is charge abroad, Visa/MC won't charge the 1%, then charging 3% is pure ugly more profit for banks. Maybe banks adding 2% on top of the networks' 1% was intended to offset the somewhat workload for performing cross-border CC transactions. And, maybe banks realized DCC took it all away and there is still extra work for cross-border home currency transaction...

Historically currency exchange was something performed by banks. Assuming we're talking about travellers, not corporations exchanging millions of one currency for another, this was a part of the game when travelling abroad before credit cards. I well remember either having to go to the bank to get travellers cheques or actual foreign currency or exchanging currency upon arrival in some other country. Many people still do this today of course (usually those who still live in the 20th century).

But today so many of these transactions are either done via ATM's in the country of arrival or via credit card transactions for pujrchases. Now foreign currency fees were based on the idea that banks had to stock the various currencies and physically make provisions to move banknotes in the various currencies. But today, for example a credit card charge, the exchange is electronic in nature. Visa (or MC or Amex) handles millions of these exchanges daily and they are all done on paper not based on actual currency. Same goes for ATM transactions. The ATM dispenses local currency. The actual amount charged to the consumer is electronically determined by whatever the exchange rate is at the moment the transaction hits the network. If I pull £20 from an ATM in London, when the transaction hits the network it is converted electronically to the USD equivalent. No physical exchange of currency tgakes place.

So the excuse that foreign currency and foreign transaction fees are needed to cover the costs of stocking the various currencies is unadulterated nonsense.

Yes, that's my understanding of banking nowadays, that everything is electronic, and no moving around paper banknotes.

But is there extra workload in handling cross-border CC transactions? I say this is that I assume the "workload" is the basis for charging international wire transfer receiving fees (dealing with SWIFT telegrams, remittance, and so forth).

I forgot to mention DCC is a currency conversion process, not a fee.

This is my primary card for overseas general expenditure. ^

lcpteck - but foreign currency conversion fees are pretty steep on that card - 3.25%. For SCB HK AE it was 2%...

Well, you win some, you lose some. :)

Great news! Most of the CSRs & dispute managers for my credit cards (CapitalOne & Chase) are totally clueless when it comes to DCC and the resulting overcharges. Most have never heard of it before & seem quite surprised after I explain what it is and how widespread it has gotten. This leads me to believe that very few people dispute forced DCC overcharges & most assume it's just how it works when using your card overseas.

Anyone in this forum has publicity or related-NGO background?

This public awareness issue is something that can be worked on.

I would say the vast majority of people don't even notice DCC. If you look at your Chase credit card statements, it's not obvious that it has happened other than you won't see an exchange rate below the charge. It looks like a regular charge that you'd make in the US. Furthermore, if there seems to be a discrepancy between the posted transaction amount and the original charge, I assume that many consider it to be exchange rate fluctuations or FTF. People don't know they've been screwed.

One must remember the people who participate on this forum tend to be seasoned travellers. Many Americans are not. They have no idea about currency and the like. Some are even surprised that foreign merchants do not take US currency b ecause after all, or so they think, the US dollar is supreme and everybody should take dollars. So after a day or two trying to deal with foreign currencies, going into merchants who tell them something costs €4.80 just hold out a bunch of coins and say take what you need. So when they come to a merchant who tells them they can be charged in USD, to them it is a relief and they have no concept they are being ripped off or they believe one of the 3 great lies (we have no control over it, you lock in a good rate, no speak English) and think this is being done for their convenience. Especially after exchanging cash and having been ripped off there (do remember most cash goes about 10% over interbank rates, dcc at 7% above interbank seems a bargain not unjderstanding that with a proper choice of credit card, you can more or less get the interbank rate).

Hence dcc lives on as a sucker is born every day.

I am going to London and Dublin in a little over 3 weeks and I am already getting antzy and freaking out, man! :eek: Only previous international trip was Mexico City and the hotel charged me in pesos, and I paid cash for everything else on the streets so no issues at all. One thing on my mind is DCC for sure. I want to use my Barclay card arrival as much as I can so I can hit the spend for the signup bonus.

What worries me is I fear I may be forced to pay DCC. If I eat out at a restaurant or pub where you pay the bill after you have consumed the product what if I am forced into DCC by the merchant and they lie and say it is for my convenience, the machine can only do dollars for American credit cards, etc not like I can make a stink and refuse to pay since I have already consumed food and drink.

My first plan is to just straight up say I know what DCC is, most other american tourists may think you are doing them a favor, charge me in local currency, whats the problem mate? For every one person like me who makes a stink, you probably get 100 who think you are doing them a favor. Scam them instead and leave me be!

If that fails I will then say I will make a complaint with my bank, the rules state I must be given the option. Write on the recept DCC refused, then dispute when I get home.

Sounds like a good plan?

When I ask for the check/pay at the cashier I always specify that I want to pay in (insert local currency). Sometimes they know exactly why, sometimes they act confused and wonder why I wouldn't pay in euros or whatever.

You have the benefit of being able to converse in English at least. Often a clerk will feign ignorance or genuinely not be able to understand what you're talking about.

With Chip cards overseas you usually have the terminal directly in front of you with the ability to select menu options on the keypad. (i.e. currency selection.)

I would say be wary, but specify upfront that you want to be charged in pound sterling. My most recent trip to the UK was three years ago, and the only place I got hit with DCC was at the Heathrow Marriott. Hotels, department stores, and airport duty free shops are notorious for DCC, so I'd be especially vigilant both when checking in to a hotel and when making purchases. I've read reports that Marriott is bad about DCC in the UK, but I can't speak for the other hotel chains. I made plenty of purchases in the UK on my credit card, and I didn't remember DCC being too prevalent there.

I can't speak for Ireland as I've never been there, but I do know it was the birthplace of DCC. Even fast food restaurants like Burger King pull the scam there. The worst part is that for transactions like that the dollar value is below the threshold requiring cardholder verification, so you just get handed the receipt and it's a done deal. Fortunately in those cases US card issuers have been quick to issue courtesy credits. While the cardholder doesn't lose out in this case, I still am unsatisfied with the resolution because the merchant doesn't get hit with a chargeback.

Aside from transactions where there won't be cardholder verification - like American fast food joints in Ireland - I would say that you'll have no problems opting out of DCC in most places as long as you specify pound sterling upfront in the UK or euros in Ireland. In fact, some waiters and cashiers will give you a confused look that says, "What else would I charge you in?" but it's better to specify upfront than to find out the cashier can't void the transaction after the fact. (Fellow member percysmith found this out at Harrods.)

If faced with a forced DCC situation, kindly ask the cashier to void the first transaction and walk you through the steps. If the cashier refuses to void the transaction, deface the receipt by circling the local currency amount, writing "merchant refused local option/DCC forced", and crossing out the exchange rate. I highly doubt it will come to this last case, but if it does please come back and we can help out.

I would say restaurants aren't likely to be a problem because at many places the waiter brings the payment terminal to the customer after the meal. You get to handle the terminal during the transaction, and any compliant terminal would offer an opt-out from DCC - assuming it's compliant that is. If you're presented with a question like "DCC Accept?" or "USD/EUR 1.333" or "USD/GBP 1.539 OK?" or anything that looks like DCC or an exchange rate, press the red cancel button immediately. It's a counter-intuitive process, and this is part of the reason why DCC is so sneaky.

Hotels are much less likely to be a problem. Just make sure you don't use express or quick checkout. Always go down to the desk and make sure they run the card on file and you get the final receipt from the POS terminal or their payment system that shows billing in local currency. If there is any mention of an exchange rate on the folio, demand that they void that transaction and rerun it. Check everything twice before you sign. (But also check to make sure the room rate is correct. Don't be like me in Hong Kong last week where I was so fixated on making sure I didn't get DCC that I didn't notice they had overcharged me by mistake! :D)

Please report back on your experiences and enjoy your trip!

But weren't you faced with forced DCC in Poland even if the terminal was in front of you? How have you gotten out of it in cases where the cashier knows what's going on and immediately presses OK/Green or Accept?

Not forced like the Chinese locked terminals at least. But it was unfortunately unavoidable sometimes whether it was the wording, language barrier, the clerk's reflexes, or willful.

Poland's MO seemed to be more deceptive language than anything else. The terminal switched to English with a large "Approve Transaction?" Way down at the bottom in small text it would have USD above Green, Red for (local currency).

Nearly all the convenience and grocery stores had a customer facing terminal, but the cafes, restaurants, lodging, and some tourist attractions did not. Since the cashier sometimes didn't read enough English to decode it or didn't care to since it was busy, they just hit the green button probably only seeing the approve transaction part. (Giving them the benefit of the doubt in that event.) At sit-down restaurants they wouldn't hand me the terminal since they wanted to avoid the tip being placed on the card and not made in cash. (Per the locals.) Even though you just round up the amount so it's not much to begin with.

It tended to happen more in high volume locations like cafes during a lunch rush where I'll believe it wasn't willful. After I started pre-specifying that I wanted to pay in Polish złoty it happened less frequently, but still sometimes. I only had one place that I'm sure did it out of spite since they really wanted me to pay in cash. Plus a few touristy places (museums, one bar on a crawl.)

I'd always ask to have the transaction re-run if there was available time (not a quick line at a busy cafe.) If that didn't work I'd cross out the DCC language and USD amount on the receipt, and circle back with Chase who issued courtesy credits. Followed by a negative yelp or tripadvisor review if it seemed intentional and/or they refused.

ATMs complied but made it seem like you would unleash world war three if you declined their offer. Several required multiple opt-outs of their amazing opportunity.

I head back in six months so I'll be able to conduct further observations and experiments.

Thanks for the detailed explanation. I'm still cautious about giving merchants the benefit of the doubt under these circumstances. In the place that did it out of spite I would have flat out refused to sign for the purchase and asked them to void the transaction. I have zero tolerance for merchant games.

I feel like from these observations that some of it is a language barrier, but it other cases it's definitely willful disregard of your DCC opt-out choice. It also seems like in Poland DCC is everywhere.

I've had my fair deal of "automatic clearance" myself, and it never happened that DCC was put upon me in such case. Isn't DCC automatically switched off when there is an automatic function? As the default option in the automatic system - even if the Banks don't like it - will be the local currency, and not the DCC scam.

But maybe they've even changed that little bit in some countries?

Well the rules state that the customer must be given a choice for DCC, for small transactions that dont need authorization naturally the default should be local currency since you can't choose anything.

Thanks for the heads up all on deceptive choices on the terminal. I will be sure to decline anything that looks like an exchange rate or US dollars anywhere. I know some airlines are also deceptive for online transactions. Like you will be given a choice to choose between a set exchange rate (DCC) or an unknown rate. Naturally most people don't want to risk the unknown even though the interbank rate even at its worst is still less than DCC.

I can't speak for it since I've only encountered DCC with transactions that have required a signature. However, most of the time at small cafes and fast food places in Europe I use cash, so I can't say for certain how it works at Burger King in Ireland.

There are the rules and Visa/MC policy as stated, but then there are other things in practice. It's just like how percysmith and I couldn't opt-out of DCC at Greyhound Cafe in Hong Kong the other week. The terminal simply didn't provide the option. There are locations that are highly compliant with DCC: Singapore, Korea, Thailand, Taiwan, and a few others. However, a few more merchants need to be smacked so a clear and conscious choice will be offered.

Definitely. It was more rare to find a terminal that didn't offer it.

Most of my Central/Eastern European journeys were the opposite.

I can't say I made many credit card purchases during my trip last year, but I didn't get hit with DCC at:

Germany: Deustche Bahn, Rhine-Main S-Bahn, Vapiano, Drogerie Markt, Air Berlin, local restaurant in Koblenz, McDonald's at FRA
Austria: Renaissance Vienna
Slovakia: No data points
Czech Republic: Shell Kalna and two local restaurants in Prague

The only place that hit me was the Frankfurt Marriott. I used AmEx at the Frankfurt Airport Sheraton, so I don't know what the policy is there.

The Intercontinental Vienna definitely does DCC, in fact you get DCC'ed when you don't opt-out (Which is possible, but if you don't ask to be billed in €, they'll happily scam)

Germany was rare for me too, Finland, Estonia, Northern Italy, the Balkans, Greece, and Turkey as well.

Although some of those places are mostly cash based to begin with and therefore I don't have many datapoints. My worst DCC offender was in Berlin though.

Yeah, that sounds like Marriott properties in Europe. I'm pretty sure hotels are big offenders here worldwide. In fact, the only times I've been hit with DCC have been at hotels.

My first and only DCC experience was at the FRA Sheraton. That was in 2008, well before I heard of DCC, so that was their policy at least at that time.

Full disclosure: on that trip (first out of the country in decades), I used a VISA that had a 3% FTF and before the trip we loaded up with $500 worth of Euros at our local Travelex office, and my wife brought along some traveler's checks too. No wonder the banks and hotels were all smiling when they saw us!

That sounds like a trip I took in 2008 around Spain. I was paying $5 + 3% for ATM withdrawals and 3% for all of my purchases. I just calculated and paid $137.59 in 3% FTF on my credit card, $22.90 in 3% FTF and $20 in international ATM withdrawals. That was $180.49 thrown away. On the upside, the frustration led me to find FlyerTalk in search of a better way. ^

On a related note, neither the Hotel Alfonso XIII nor the Westin Palace, both Starwood properties, hit us with DCC. Perhaps it wasn't as common in Spain at the time. On an unrelated note - but appropriate for the EMV thread - I paid a péage on an autoroute in Southern France with my magstripe only card. :eek::eek::eek: I also looked at my 2006 trip, and I was hit with DCC for each of my four purchases at El Corte Ingles. What's interesting is that I was not hit for the FTF at the time, so somewhere along the way Chase switched from a currency exchange fee to a foreign transaction fee. The 2006 trip was my first trip out of North America in 8 years and my first international trip where I was paying my own way.

I got taken to the cleaners at every corner, and you're right about everybody smiling at the time! Ever since I wised up to DCC I feel like things have gotten a lot more confrontational. Part of the it is the verification process to make sure I've opted out of DCC and the back and forth of "check [X]LOCAL CURRENCY and it's LOCAL CURRENCY." and my reply of, "What input is there on your part to make sure that happens? The back office won't do it!" The other part is merchant/ATM games of "Are you sure? Are you really sure you want to opt out? I can't help you with the exchange rate if you opt out!" "I'm willing to take my chances. Thank you." All of this gets my wife to say, "Please, please... just pull out your AmEx!!!" :D

Spain 2011
 

Was hit with DCC at a local hotel at Seville. The guy never offered the option to choose currency, ran my Schwab card (0% fee) on a handheld and it spit out the USD bill. I was upset but he refused to void it. Amount was like $70 so I let it go. Besides it was during the Semana Santa - we literally had no place to go, actually were lucky to find a night at this place, and the next night (Friday the highlight) we had to move to a hotel way out next to a local hospital, the only place found thru Citi's ThankYou network, prepaid. Everything was solidly booked, including dumpy hostels.

Restaurants did not DCC us on that trip.

What I've said a few pages before.. DCC will help Amex mostly, as they're immune to it. I'm getting slightly worse rate with Amex (but I bit more Miles, it's about even in the end) but I don't have to worry about DCC: I'll use Amex whenever possible.

I have to wonder how many merchants just expect people to say, "Forget it." over a small transaction, which in aggregate ends up netting them a lot of profit. Now is all cases I proactively say, "Charge <local currency>." In the case of Spain, I might pull out the hoja de reclamaciones trump card, which usually forces merchant cooperation. If they say, "We're out of complaint forms." then you know they're lying. A merchant is required to have them, and a customer can call the police to make sure the complaint form is received and filled out. Sometimes there's a bit of a standoff, but in the end the merchant will always capitulate.

My current best practice is that I always allow for enough time to resolve these matters. I'm not saying you took the wrong action here either. Back in 2011 I probably wouldn't have even realized I had gotten ripped off, but reading stories like this infuriates me.

The issue in the US is that there are few AmEx cards that waive foreign transaction fees. The Delta Air Lines AmEx products, the Platinum Card, and the Centurion Card are the only three lines that waive the fee. Furthermore, unless you fly Delta, you're unlikely to have the affinity card. This leaves the Platinum Card - or Centurion, but I imagine if you have the Centurion you don't really care about fees anyway - but the Platinum card only earns at 1x. Other cards can be more lucrative for their category bonuses, even with overseas spending.

Now, the DCC markup would more than wipe out any category bonuses you could receive, so it's possible AmEx Platinum is the solution for those cases of unavoidable DCC. The problem is that not every place accepts AmEx, and the exchange rate can be poor compared to the Visa or MC rate.