Jan 18, 2014, 10:10 pm
Last edit by: emilio911
What is it?
Dynamic Currency Conversion (DCC) is a "service" some merchants and ATM operators offer that will charge a cardholder in the native currency of the card rather than the local currency. A more complete definition and examples are available via this Wikipedia article on DCC. While sold as a convenience to cardholders traveling outside of their home country, it is a pure profit play by the merchants. You may end up paying a fee of up to 8% over the purchase price for accepting DCC. Always decline DCC and asked to be billed in the local currency!
Where will I see it?
You can be hit with DCC anywhere there is a difference between your debit or credit card's denominated currency and the currency of the location where you're trying to use the card. The most common example will be at a merchant overseas, but now some ATMs are offering the service too. While many US cardholders complain about getting tricked into accepting DCC overseas, some merchants in the US have started to use DCC as well.
What is the issue?
Unless you're the merchant or ATM operator, there isn't much benefit to using DCC. Some customers say they prefer knowing exactly how much they'll be charged in their home currency or may not know the exchange rate of the place where they are visiting. For example, if you are in Prague for two days and you don't know how much the Czech Koruna is worth relative to the US Dollar, you might feel more comfortable knowing that you're buying an item for $205.00 versus 4000 CZK. However, the real exchange rate as of January 18, 2014 would place 4000 CZK at $197.18. You just paid an extra $7.82 for the "convenience" of knowing how much you'd be charged!
DCC often charges about a 4% premium over the true exchange rate. The problems don't stop there since many US banks still charge a 3% foreign transaction fee (FTF) for purchases made outside of the US. Not only would you get hit with the $205.00 charge, you could also find yourself facing a total charge of $211.15 if your card has a 3% FTF.
This is a pure money grab from the merchants, and it's billed as an easy way to squeeze additional revenue out of the transaction. Numerous [1, 2] articles have talked about DCC duping many consumers. Discover even has a warning about being tricked into DCC when using a card abroad.
For example, this FlyerTalk member reported that Avis charged his Saudi credit card in Saudi riyals instead of USD for a car rental in Florida without his consent. This has also been a trend for hotels, particularly large chains as indicated here and here.
DCC is simply not worth it for the consumer. Unless you like paying a convenience fee of up to 5% of the total transaction just to know how much you will be billed, you should always decline DCC and ask to be billed in local currency when handing over your card.
Furthermore, it is in your interest to obtain a card that has a 0% FTF. FlyerTalk member kebosabi maintains a fairly comprehensive spreadsheet of EMV-enabled cards ideal for overseas travel, many of which offer a low or 0% FTF as a feature. There is also a wiki at FlyerGuide of various FTF of debit and credit cards.
What can I do to avoid DCC?
American Express currently does not support DCC on its network, so you are safe from DCC if using an American Express card. However, Visa and MasterCard card networks can support DCC, so be vigilant when purchasing abroad with a Visa or MasterCard branded card. There have been reports of being charged DCC with a Discover card in China [citation needed], but primarily the issue is happening with Visa and MasterCard cards.
Before handing your card to the merchant, always specify clearly that you want to be charged in the local currency and that you do not want DCC. For some transactions, you retain control of your card as you dip it into a chip reader and can view on a screen to select which currency you want to use for the transaction. Always select the local currencyto get the best exchange rate. Do not select the card's native currency!
Similarly, for ATM withdrawals, make sure you decline any kind of conversions. Some good examples of what to look for when using an ATM overseas are here and here. You're probably coming off of a long flight and fatigued, but educating yourself beforehand can save you from getting ripped off. The user interfaces on almost all of these ATMs are set up to encourage you to take the bait, and you have to be extremely vigilant not to fall for it.
If you are doing a PIN-based transaction, you should have the opportunity to review the total amount and denomination of the transaction before entering your PIN. If you are doing a signature transaction and the merchant has processed your transaction with DCC, cross out the amount and write "DCC refused" on the receipt. Do not sign the receipt, and demand that the merchant reverse the transaction and run it in the local currency. If no verification is required due to a small purchase amount, ask the merchant to reverse the charge and repeat the transaction using local currency. If all else fails, file a dispute with your card issuer when you return home. Even if it's immaterial, the banks will get the message like they did with EMV.
Some merchants will claim that their systems have to bill you in your native currency. This is a complete lie. But just like a mag stripe only card, this is battle where you have to be prepared. Don't settle for merchants claiming that "it has to be done this way" or "pay cash if you don't want this". Be prepared to walk away, and, if you must complete the transaction, write "DCC refused & merchant didn't give a choice" on the receipt and cross out the amount. Let the merchant know that you will be filing a dispute with your bank.
Disabling DCC
Disabling DCC on ANZ terminals in Australia
ANZ markets DCC as Customer Preferred Currency (CPC). Terminal operators can contact ANZ Merchant Services at 1800 039 025 to have this feature disabled. Currently, your Visa or MasterCard will be subjected to DCC if denominated in: CAD, CHF, DKK, EUR, GBP, HKD, JPY, MYR, NOK, NZD, SEK, SGD, THB, USD, or ZAR. All DCC transactions on ANZ will cause a 2.5% markup. Steps to avoid DCC:
If you see a signature slip with DCC verbiage and a checkbox indicating a currency selection, kindly ask the merchant to void the transaction. If it's a PIN-based transaction, you have an additional opportunity to cancel the transaction because it will ask for your PIN a second time. For instance, if you see "EUR 17.29 KEY PIN" refuse to enter your PIN and start again.
Disabling DCC in China
There are many reports of forced DCC in China, and there is a great thread [closed to new posts] on DCC in China on the the China Destinations forum.
Disabling DCC on Bankcomm terminals in Beijing http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #19
jair101's DCC instructions of March 2011 http://www.etveg.com/misc/DCC_China.pdf
Disabling DCC in Eurozone and UK
DCC offered in tourist traps (Harrods Knightsbridge/Galleries Lafayette Montparnesse/El Cortes Ingles Grand Via Madrid)
Unlike the rest of the world, Visa Europe does not require merchants to collect a ticked box on the slip (presumably because merchants there don't keep signed slips under Chip-and-PIN)
El Cortes Ingles collects a signature electronically and the DCC selection is made on the signature pad - the choice is respected.
Harrods and GL rely on cashier input in the POS for the currency choice - the cashier may forget to ask. The POS do not offer voiding (only refunds), but since you're given a slip to sign the best thing to do is to deface it before signing and submit chargeback request to issuer bank on return home.
There may be smaller merchants who also collect DCC but I seemed to have pre-empted most of them by saying "charge Euros (Pounds) please"
In Spain all merchants by law are required to provide you with a complaint form called an hoja de reclamaciones if requested. The form has two carbon copies. The customer retains one copy as a record of the complaint. The merchant maintains another copy, and the third is sent to the local consumer protection bureau. Merchants are also required to post a sign conspicuously informing the customer of the right to complain (usually in Spanish and English). Do not accept the lie that they don't have any forms. This is illegal, and you are able to call the police if the merchant refuses to provide you with this official form. It's interesting to see merchants start to squirm when you know the rules, and most merchants will start to be accommodating after you mention it. (Please still fill out the form even if the merchant cooperates after mentioning it because these are likely the merchants who won't otherwise change their behavior.)
Disabling DCC in Hong Kong and Macau
Hong Kong and Macau can get as non-compliant as China, possibly because many acquirers have cross-border operations and know they can get away with non-compliant firmware and procedures.
In practice, if you are given a DCC slip, and the cashier has not taken a choice before giving you your copy, the slip will be processed in your home currency - be prepared to dispute.
Unable to disable Global Payments DCC in Hong Kong instance #1, instance #2
Unable to disable DBS DCC in Fortress Electronics HK
Unable to disable BoC DCC in Free Duty HK
Disabling DCC in Japan and Korea
Japan's just starting out http://www.flyertalk.com/forum/japan...ing-japan.html and http://www.hongkongcard.com/forum/fo...p?id=3939&p=17 #168 but there are no reports I know of where cardholders are compelled to use DCC against their will.
Korea is also not much affected by DCC but where offered, trying to opt out is harder than Japan due to the language barrier (both verbal and written)
http://www.hongkongcard.com/forum/fo...hp?id=4303&p=3 #23
http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #11
Disabling DCC in the Maldives
Disabling DCC on Global Payment terminals in the Maldives
Disabling DCC in Thailand and Taiwan
DCC present but generally not an issue. Cashier will generate quote slip is usually generated and pass to cardholder. When cardholder refuses, a verbage-free slip denominated in THB/TWD will be produced.
Certain Taiwan hotels may take deposits in cardholder currency. But these are only pre-authorisations and can be voided in full for TWD-only final checkout payments.
Disabling DCC on Websites
Airbnb - (Since the "loophole" seem not to work anymore, please report if you chargeback the DCC.
)
Hotwire - You need to select your preferred currency before making a search.
PayPal - The instructions to stop the DCC on a recurring charge are here.
I got duped by DCC already before I found this thread. Is there anything I can do?
If you've been hit with DCC and the merchant did not follow the Visa/MC rules, you should file a dispute with your card issuer. Even if the transaction is a small amount, it's worth it to dispute the charge on principle. Do not let merchants get away with this scam uncontested!
If you were not clearly given a choice of currencies and did not specifically communicate a preference to be billed in your card's native currency - if you did not accept DCC - then you have recourse when filing a dispute with your card issuer. The Visa Product and Service Rules clearly state (p 339):
You can even use terminology from Visa Product and Service Rules when filing the dispute, giving Reason Code 76: Incorrect Currency or Transaction Code. Reason Code 76 is used when the transaction was processed with an incorrect transaction code, or an incorrect currency code, or one of the following:
MasterCard's rules also clearly state that the POI Currency Conversion must be decided by both the merchant and customer. When filing a dispute with a MasterCard, list chargeback Reason Code 4846 from the MasterCard Chargeback Guide, which covers POI currency conversion disputes in the following circumstances:
You do have a choice of currencies. Exercise that choice!
Do not get taken by surprise when faced with DCC, and know your options. As Visa/MC purport, you do have a choice of currencies, but you need to make that choice heard! Don't be complacent in this sneaky tactic by some merchants to pad revenues.
Before going to a different country, get educated. Understand the exchange rate relative to your native currency. Know how to recognize when the merchant is trying to force DCC on the transaction, and pull out all of the stops to make sure it doesn't happen to you.
If you have a chip-and-PIN credit card, it's easier to control the transaction to try to prevent DCC. With chip-and-signature, if you get an uncooperative merchant, deface the merchant's copy of the receipt. Write LOCAL OPTION NOT OFFERED, cross out the DCC currency amount, and sign the receipt.
This will give additional evidence when filing a dispute to get the DCC charges refunded. When filing the dispute, you can use the Visa Exchange Rate Calculator or MasterCard's Currency Conversion Tool to determine the Visa or MasterCard exchange rate on the date the transaction posted to your credit card. Compare this to the DCC value to figure out the amount by which the merchant overcharged you. Don't forget to add in any Foreign Transaction Fee if your card has one. (If it does, you should really consider finding a card for use overseas without a FTF.)
Example Images (click for a larger image)
Hotel receipts in China, the Netherlands, and Dubai respectively:
Purchase receipts in China and Korea:
Cancelled translation in Hong Kong:
Novotel in Shenzen:
Dynamic Currency Conversion (DCC) is a "service" some merchants and ATM operators offer that will charge a cardholder in the native currency of the card rather than the local currency. A more complete definition and examples are available via this Wikipedia article on DCC. While sold as a convenience to cardholders traveling outside of their home country, it is a pure profit play by the merchants. You may end up paying a fee of up to 8% over the purchase price for accepting DCC. Always decline DCC and asked to be billed in the local currency!
Where will I see it?
You can be hit with DCC anywhere there is a difference between your debit or credit card's denominated currency and the currency of the location where you're trying to use the card. The most common example will be at a merchant overseas, but now some ATMs are offering the service too. While many US cardholders complain about getting tricked into accepting DCC overseas, some merchants in the US have started to use DCC as well.
What is the issue?
Unless you're the merchant or ATM operator, there isn't much benefit to using DCC. Some customers say they prefer knowing exactly how much they'll be charged in their home currency or may not know the exchange rate of the place where they are visiting. For example, if you are in Prague for two days and you don't know how much the Czech Koruna is worth relative to the US Dollar, you might feel more comfortable knowing that you're buying an item for $205.00 versus 4000 CZK. However, the real exchange rate as of January 18, 2014 would place 4000 CZK at $197.18. You just paid an extra $7.82 for the "convenience" of knowing how much you'd be charged!
DCC often charges about a 4% premium over the true exchange rate. The problems don't stop there since many US banks still charge a 3% foreign transaction fee (FTF) for purchases made outside of the US. Not only would you get hit with the $205.00 charge, you could also find yourself facing a total charge of $211.15 if your card has a 3% FTF.
This is a pure money grab from the merchants, and it's billed as an easy way to squeeze additional revenue out of the transaction. Numerous [1, 2] articles have talked about DCC duping many consumers. Discover even has a warning about being tricked into DCC when using a card abroad.
For example, this FlyerTalk member reported that Avis charged his Saudi credit card in Saudi riyals instead of USD for a car rental in Florida without his consent. This has also been a trend for hotels, particularly large chains as indicated here and here.
DCC is simply not worth it for the consumer. Unless you like paying a convenience fee of up to 5% of the total transaction just to know how much you will be billed, you should always decline DCC and ask to be billed in local currency when handing over your card.
Furthermore, it is in your interest to obtain a card that has a 0% FTF. FlyerTalk member kebosabi maintains a fairly comprehensive spreadsheet of EMV-enabled cards ideal for overseas travel, many of which offer a low or 0% FTF as a feature. There is also a wiki at FlyerGuide of various FTF of debit and credit cards.
What can I do to avoid DCC?
American Express currently does not support DCC on its network, so you are safe from DCC if using an American Express card. However, Visa and MasterCard card networks can support DCC, so be vigilant when purchasing abroad with a Visa or MasterCard branded card. There have been reports of being charged DCC with a Discover card in China [citation needed], but primarily the issue is happening with Visa and MasterCard cards.
Before handing your card to the merchant, always specify clearly that you want to be charged in the local currency and that you do not want DCC. For some transactions, you retain control of your card as you dip it into a chip reader and can view on a screen to select which currency you want to use for the transaction. Always select the local currencyto get the best exchange rate. Do not select the card's native currency!
Similarly, for ATM withdrawals, make sure you decline any kind of conversions. Some good examples of what to look for when using an ATM overseas are here and here. You're probably coming off of a long flight and fatigued, but educating yourself beforehand can save you from getting ripped off. The user interfaces on almost all of these ATMs are set up to encourage you to take the bait, and you have to be extremely vigilant not to fall for it.
If you are doing a PIN-based transaction, you should have the opportunity to review the total amount and denomination of the transaction before entering your PIN. If you are doing a signature transaction and the merchant has processed your transaction with DCC, cross out the amount and write "DCC refused" on the receipt. Do not sign the receipt, and demand that the merchant reverse the transaction and run it in the local currency. If no verification is required due to a small purchase amount, ask the merchant to reverse the charge and repeat the transaction using local currency. If all else fails, file a dispute with your card issuer when you return home. Even if it's immaterial, the banks will get the message like they did with EMV.
Some merchants will claim that their systems have to bill you in your native currency. This is a complete lie. But just like a mag stripe only card, this is battle where you have to be prepared. Don't settle for merchants claiming that "it has to be done this way" or "pay cash if you don't want this". Be prepared to walk away, and, if you must complete the transaction, write "DCC refused & merchant didn't give a choice" on the receipt and cross out the amount. Let the merchant know that you will be filing a dispute with your bank.
Disabling DCC
Disabling DCC on ANZ terminals in Australia
ANZ markets DCC as Customer Preferred Currency (CPC). Terminal operators can contact ANZ Merchant Services at 1800 039 025 to have this feature disabled. Currently, your Visa or MasterCard will be subjected to DCC if denominated in: CAD, CHF, DKK, EUR, GBP, HKD, JPY, MYR, NOK, NZD, SEK, SGD, THB, USD, or ZAR. All DCC transactions on ANZ will cause a 2.5% markup. Steps to avoid DCC:
- Insert, swipe, or tap your payment card
- Have the cashier select credit (CR)
- The terminal will display CREDIT ACCOUNT
- If applicable, enter your PIN
- The terminal will display PROCESSING \ PLEASE WAIT
- The terminal will display EXCH <exchange rate> \ <currency> <amount> \ ACCEPT RATE? \ ENTER=YES CLR=NO
- Instruct the cashier to press the yellow CLEAR (CLR) button (If entering a PIN, you can retain the terminal to perform this step yourself. If entering a signature, you can ask for the terminal to control this process, not indicating that it's a chip-and-signature card.)
- The transaction should now process without DCC
If you see a signature slip with DCC verbiage and a checkbox indicating a currency selection, kindly ask the merchant to void the transaction. If it's a PIN-based transaction, you have an additional opportunity to cancel the transaction because it will ask for your PIN a second time. For instance, if you see "EUR 17.29 KEY PIN" refuse to enter your PIN and start again.
Disabling DCC in China
There are many reports of forced DCC in China, and there is a great thread [closed to new posts] on DCC in China on the the China Destinations forum.
Disabling DCC on Bankcomm terminals in Beijing http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #19
jair101's DCC instructions of March 2011 http://www.etveg.com/misc/DCC_China.pdf
Disabling DCC in Eurozone and UK
DCC offered in tourist traps (Harrods Knightsbridge/Galleries Lafayette Montparnesse/El Cortes Ingles Grand Via Madrid)
Unlike the rest of the world, Visa Europe does not require merchants to collect a ticked box on the slip (presumably because merchants there don't keep signed slips under Chip-and-PIN)
El Cortes Ingles collects a signature electronically and the DCC selection is made on the signature pad - the choice is respected.
Harrods and GL rely on cashier input in the POS for the currency choice - the cashier may forget to ask. The POS do not offer voiding (only refunds), but since you're given a slip to sign the best thing to do is to deface it before signing and submit chargeback request to issuer bank on return home.
There may be smaller merchants who also collect DCC but I seemed to have pre-empted most of them by saying "charge Euros (Pounds) please"
In Spain all merchants by law are required to provide you with a complaint form called an hoja de reclamaciones if requested. The form has two carbon copies. The customer retains one copy as a record of the complaint. The merchant maintains another copy, and the third is sent to the local consumer protection bureau. Merchants are also required to post a sign conspicuously informing the customer of the right to complain (usually in Spanish and English). Do not accept the lie that they don't have any forms. This is illegal, and you are able to call the police if the merchant refuses to provide you with this official form. It's interesting to see merchants start to squirm when you know the rules, and most merchants will start to be accommodating after you mention it. (Please still fill out the form even if the merchant cooperates after mentioning it because these are likely the merchants who won't otherwise change their behavior.)
Disabling DCC in Hong Kong and Macau
Hong Kong and Macau can get as non-compliant as China, possibly because many acquirers have cross-border operations and know they can get away with non-compliant firmware and procedures.
In practice, if you are given a DCC slip, and the cashier has not taken a choice before giving you your copy, the slip will be processed in your home currency - be prepared to dispute.
Unable to disable Global Payments DCC in Hong Kong instance #1, instance #2
Unable to disable DBS DCC in Fortress Electronics HK
Unable to disable BoC DCC in Free Duty HK
Disabling DCC in Japan and Korea
Japan's just starting out http://www.flyertalk.com/forum/japan...ing-japan.html and http://www.hongkongcard.com/forum/fo...p?id=3939&p=17 #168 but there are no reports I know of where cardholders are compelled to use DCC against their will.
Korea is also not much affected by DCC but where offered, trying to opt out is harder than Japan due to the language barrier (both verbal and written)
http://www.hongkongcard.com/forum/fo...hp?id=4303&p=3 #23
http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #11
Disabling DCC in the Maldives
Disabling DCC on Global Payment terminals in the Maldives
Disabling DCC in Thailand and Taiwan
DCC present but generally not an issue. Cashier will generate quote slip is usually generated and pass to cardholder. When cardholder refuses, a verbage-free slip denominated in THB/TWD will be produced.
Certain Taiwan hotels may take deposits in cardholder currency. But these are only pre-authorisations and can be voided in full for TWD-only final checkout payments.
Disabling DCC on Websites
Airbnb - (Since the "loophole" seem not to work anymore, please report if you chargeback the DCC.
)Hotwire - You need to select your preferred currency before making a search.
PayPal - The instructions to stop the DCC on a recurring charge are here.
I got duped by DCC already before I found this thread. Is there anything I can do?
If you've been hit with DCC and the merchant did not follow the Visa/MC rules, you should file a dispute with your card issuer. Even if the transaction is a small amount, it's worth it to dispute the charge on principle. Do not let merchants get away with this scam uncontested!
If you were not clearly given a choice of currencies and did not specifically communicate a preference to be billed in your card's native currency - if you did not accept DCC - then you have recourse when filing a dispute with your card issuer. The Visa Product and Service Rules clearly state (p 339):
- Merchants that offer DCC must be compliant with the regulations
- Inform the cardholder that DCC is optional
- Not impose any additional requirements to use local currency
- Not use any language or procedures that may cause the cardholder to choose DCC by default
- Not convert a transaction in the local currency to the card's billing currency after the transaction has completed
- Ensure that the cardholder expressly agrees to DCC
You can even use terminology from Visa Product and Service Rules when filing the dispute, giving Reason Code 76: Incorrect Currency or Transaction Code. Reason Code 76 is used when the transaction was processed with an incorrect transaction code, or an incorrect currency code, or one of the following:
- Merchant did not deposit a transaction receipt in the country where the transaction occurred
- Cardholder was not advised that Dynamic Currency Conversion (DCC) would occur
- Cardholder was refused the choice of paying in the merchants local currency
- Merchant processed a credit refund and did not process a reversal or adjustment within 30 calendar days for a transaction receipt processed in error
MasterCard's rules also clearly state that the POI Currency Conversion must be decided by both the merchant and customer. When filing a dispute with a MasterCard, list chargeback Reason Code 4846 from the MasterCard Chargeback Guide, which covers POI currency conversion disputes in the following circumstances:
- The cardholder states that he or she was not given the opportunity to choose the desired currency in which the transactions was completed or did not agree to the currency of the transaction, or
- POI currency conversion took place into a currency that is not the cardholder's billing currency, or
- POI currency conversion took place when the goods or services were priced in the cardholder's billing currency, or
- POI currency conversion took place when cash was disbursed in the cardholdeer's billing currency.
You do have a choice of currencies. Exercise that choice!
Do not get taken by surprise when faced with DCC, and know your options. As Visa/MC purport, you do have a choice of currencies, but you need to make that choice heard! Don't be complacent in this sneaky tactic by some merchants to pad revenues.
Before going to a different country, get educated. Understand the exchange rate relative to your native currency. Know how to recognize when the merchant is trying to force DCC on the transaction, and pull out all of the stops to make sure it doesn't happen to you.
If you have a chip-and-PIN credit card, it's easier to control the transaction to try to prevent DCC. With chip-and-signature, if you get an uncooperative merchant, deface the merchant's copy of the receipt. Write LOCAL OPTION NOT OFFERED, cross out the DCC currency amount, and sign the receipt.
This will give additional evidence when filing a dispute to get the DCC charges refunded. When filing the dispute, you can use the Visa Exchange Rate Calculator or MasterCard's Currency Conversion Tool to determine the Visa or MasterCard exchange rate on the date the transaction posted to your credit card. Compare this to the DCC value to figure out the amount by which the merchant overcharged you. Don't forget to add in any Foreign Transaction Fee if your card has one. (If it does, you should really consider finding a card for use overseas without a FTF.
)Example Images (click for a larger image)
Hotel receipts in China, the Netherlands, and Dubai respectively:
Purchase receipts in China and Korea:
Cancelled translation in Hong Kong:
Novotel in Shenzen:
Dynamic Currency Conversion (DCC) [2014-2016]
Sep 1, 2014 | 9:20 pm
#991
Join Date: May 2006
Location: PMD
Programs: UA*G, NW, AA. WR-G, HH-S, IHG, ALL. TT-GE.
Posts: 3,116
Having the UP and JCB logo may mislead card holders though. Seeing the JCB acceptance logo outside of Japan and the UP logo in Hong Kong does not mean Discover is accepted.
Sep 1, 2014 | 11:09 pm
#992
Join Date: Feb 2013
Location: Irvine CA & PEK
Programs: Hyatt Globalist, Marriott Titanium, Hilton Diamond, IHG Spire Ambassador, Qantas Platinum, United S
Posts: 664
Be aware of which network to use when outside Mainland China with the modified card.
Sep 2, 2014 | 2:18 am
#993
Join Date: Jul 2007
Posts: 1,762
Jeffjaguar: yes you're right, when first imposed.
http://www.washingtonpost.com/wp-dyn...2900927_2.html
This is the status quo til now. I don't know where Citibank Hong Kong got the 0.4% "The fee is charged by American Express" given Citibank US doesn't charge this fee, nor American Express itself to its own customers, nor any of the other 3 Amex licencees in HK.
But anyway, in the multi-currency processing situation, is this fee justified?
Card associations certainly bears more cost as it has to perform international settlement for airlines and other merchants who choose to skinflint their international collections by using a multi-currency processing from their head offices. If card associations chooses to pass it on then they have a case to argue they're not profiteering from it.
Airlines certainly profit from cost savings by centralised multi-currency processing from head office rather than setting up local merchant accounts and remitting the proceeds. They're passing international remittance and administration costs to passengers. Their disclosure this happens is inadequate and they try to shift blame/hide behind zombie CSes.
Banks who pass on published card association fees, not add any of their own and make full disclosure of their cost recovery can't reasonably be blamed. However banks who add fees or try to charge them on Visa cards are blatantly price-gouging - AFAIK there is no difference in interchange earned from processing a local currency-denominated transaction offshore as compared to onshore. So they're just doing it because they have an excuse to.
Similar to multi-currency processing, DCC on the grounds it will save costs (or rebuttal on the grounds that customers should not bear additional fees) is unjustified. Before FTF, it was exploiting a similar loophole in card association fee structure. It's not "greed" that card associations recover their costs and plug the loophole.
http://www.washingtonpost.com/wp-dyn...2900927_2.html
This is the status quo til now. I don't know where Citibank Hong Kong got the 0.4% "The fee is charged by American Express" given Citibank US doesn't charge this fee, nor American Express itself to its own customers, nor any of the other 3 Amex licencees in HK.
But anyway, in the multi-currency processing situation, is this fee justified?
Card associations certainly bears more cost as it has to perform international settlement for airlines and other merchants who choose to skinflint their international collections by using a multi-currency processing from their head offices. If card associations chooses to pass it on then they have a case to argue they're not profiteering from it.
Airlines certainly profit from cost savings by centralised multi-currency processing from head office rather than setting up local merchant accounts and remitting the proceeds. They're passing international remittance and administration costs to passengers. Their disclosure this happens is inadequate and they try to shift blame/hide behind zombie CSes.
Banks who pass on published card association fees, not add any of their own and make full disclosure of their cost recovery can't reasonably be blamed. However banks who add fees or try to charge them on Visa cards are blatantly price-gouging - AFAIK there is no difference in interchange earned from processing a local currency-denominated transaction offshore as compared to onshore. So they're just doing it because they have an excuse to.
Similar to multi-currency processing, DCC on the grounds it will save costs (or rebuttal on the grounds that customers should not bear additional fees) is unjustified. Before FTF, it was exploiting a similar loophole in card association fee structure. It's not "greed" that card associations recover their costs and plug the loophole.
Sep 2, 2014 | 3:28 am
#994
Ambassador, Hong Kong and Macau
Join Date: May 2009
Location: HKG
Programs: Non-top tier Asia Miles member
Posts: 22,113
jeffjaguar: I believe BA does not immediately translate the amount to GBP.
I just reran the 679 Avios redemption YQ I just I listed. Today BA.com lists HK$673.00 for Avios redemption and CX.com lists HK$723.00
HKD 380.00 - CX Fuel / Insurance Surcharges YRVA
HKD 120.00 - Hong Kong SAR - Air Passenger Departure Tax HKAE
HKD 173.00 - Thailand - Passenger Service Charge TSLA
HKD 50.00 - Hong Kong Security Service Charge HKS
The difference between BA and CX is the HK$50 HKS. For reasons unknown to me (but I'm very grateful) BA does not pass that on.
The HKD173 moved - it was HKD179 when I ticketed. This is obviously denominated in THB.
The other charges are denominated in HKD.
Given BA.com charges exactly the same as CX.com for the charges, my hypothesis is - BA does not convert the charges to GBP but keeps the amounts in HKD and hands them over to CX and HK Airport Authority.
If there's a conversion to GBP, I believe we should see a slight difference in amount charged e.g. the the YRVA will be 380.01 or 379.99 not exactly 380.00.
It's only a hypothesis but I hope it is seen as a reasoned one.
---
Does BA save? I think it does.
It is relieved from the administrative cost of setting up merchant accounts in every jurisdiction it operates, and bank charges for remitting proceeds back to head office.
But it still achieves compliance with the requirement of billing each passenger in the currency of the starting point of travel.
In lieu of BA paying remittance costs, the passenger is charged 1% (or 0.8%?) for sending payment to BA UK. Or the bank absorbs the card association cost (MC). Or the card association bears the cost (Visa).
---
Tying this back to DCC, the DCC merchant asserts cardholders save on foreign currency conversion fees.
This is true if the card used has no FTF. Even if so, an international fund transfer has occured, so the DCC merchant has merely exploiting the card association's absorption of fees to settle between member acquirers internationally or the issuer's absorption of the card association's fees.
Having arranged for a fee-free transfer of funds to the DCC operator, the DCC operator still has to convert the proceeds. The conversion rape (sorry, rate) is a constant rip-off - for HK, the exchange rate rort consistently exceeds any FCC savings we might earn.
I just reran the 679 Avios redemption YQ I just I listed. Today BA.com lists HK$673.00 for Avios redemption and CX.com lists HK$723.00
HKD 380.00 - CX Fuel / Insurance Surcharges YRVA
HKD 120.00 - Hong Kong SAR - Air Passenger Departure Tax HKAE
HKD 173.00 - Thailand - Passenger Service Charge TSLA
HKD 50.00 - Hong Kong Security Service Charge HKS
The difference between BA and CX is the HK$50 HKS. For reasons unknown to me (but I'm very grateful) BA does not pass that on.
The HKD173 moved - it was HKD179 when I ticketed. This is obviously denominated in THB.
The other charges are denominated in HKD.
Given BA.com charges exactly the same as CX.com for the charges, my hypothesis is - BA does not convert the charges to GBP but keeps the amounts in HKD and hands them over to CX and HK Airport Authority.
If there's a conversion to GBP, I believe we should see a slight difference in amount charged e.g. the the YRVA will be 380.01 or 379.99 not exactly 380.00.
It's only a hypothesis but I hope it is seen as a reasoned one.
---
Does BA save? I think it does.
It is relieved from the administrative cost of setting up merchant accounts in every jurisdiction it operates, and bank charges for remitting proceeds back to head office.
But it still achieves compliance with the requirement of billing each passenger in the currency of the starting point of travel.
In lieu of BA paying remittance costs, the passenger is charged 1% (or 0.8%?) for sending payment to BA UK. Or the bank absorbs the card association cost (MC). Or the card association bears the cost (Visa).
---
Tying this back to DCC, the DCC merchant asserts cardholders save on foreign currency conversion fees.
This is true if the card used has no FTF. Even if so, an international fund transfer has occured, so the DCC merchant has merely exploiting the card association's absorption of fees to settle between member acquirers internationally or the issuer's absorption of the card association's fees.
Having arranged for a fee-free transfer of funds to the DCC operator, the DCC operator still has to convert the proceeds. The conversion rape (sorry, rate) is a constant rip-off - for HK, the exchange rate rort consistently exceeds any FCC savings we might earn.
Sep 2, 2014 | 6:35 am
#995
Join Date: Feb 2013
Location: Irvine CA & PEK
Programs: Hyatt Globalist, Marriott Titanium, Hilton Diamond, IHG Spire Ambassador, Qantas Platinum, United S
Posts: 664
This is a side topic.
I remember when we were talking about ATMs in Seoul charging oversee debit using fees, someone mentioned Korean banks' ATMs do charge additional fees for withdrawing money from oversee debit cards.
Last week I just tried using my Schwab Visa debit at a Woori Bank cash dispenser in Myeongdong, and there was no additional fee at all.
Coupled with the fact that I withdrew money from my UnionPay debit card from the same CD without paying additional fees, I think it is not hard to avoid ATM fees in Seoul: stick to the local banks.
I know for sure CitiBank CDs do charge 3000 won for using oversee debit cards.
I remember when we were talking about ATMs in Seoul charging oversee debit using fees, someone mentioned Korean banks' ATMs do charge additional fees for withdrawing money from oversee debit cards.
Last week I just tried using my Schwab Visa debit at a Woori Bank cash dispenser in Myeongdong, and there was no additional fee at all.
Coupled with the fact that I withdrew money from my UnionPay debit card from the same CD without paying additional fees, I think it is not hard to avoid ATM fees in Seoul: stick to the local banks.
I know for sure CitiBank CDs do charge 3000 won for using oversee debit cards.
Sep 2, 2014 | 10:38 am
#996
Join Date: Apr 2008
Programs: AA EXPLT, Marriott Titanium (LT PLT), HHonors Gold, AMEX PLT, UA Silver, National EXC
Posts: 1,238
Got hit with this twice (maybe more) - even when I tried to avoid it. Will call the bank tomorrow to give them the disputed amount in USD. Its only about $2, but these merchants are scamming us!
Sep 2, 2014 | 10:44 am
#997
Join Date: Apr 2008
Programs: AA EXPLT, Marriott Titanium (LT PLT), HHonors Gold, AMEX PLT, UA Silver, National EXC
Posts: 1,238
Sep 2, 2014 | 11:04 am
#998
Join Date: Jul 2007
Posts: 1,762
Percy...from reading your replies I'm still confused. We agree the additional 2% near criminal banks like Bank of America, Citibank,JP Morgan Chase add to the 1% ftf is a total rip off and a fee simply because they feel they can get away with it and Coangress doesn't want to tell them to knock it off. Fine.
But where does the 1% come from in the example we're discussing. Does their acquirer charge BA 1% which BA passes along to the customer? Or does the cc network charge 1% because they feel their perogative to charge 1% on currency conversion is being violated? Especially if no currency conversion takes place. Whose 1% is being passed along before the 2% is added on? Is it the acquirer? Is it the credit card network? Is it the merchant? I was always under the illusion it is the credit card network which adds the 1% and then gives the customer's bank the option of adding the additional 2%. So for those relatively good banks (relatively good as some banks absorb the whole thing) that only charge the 1% ftf and claim they are simply passing on the fee from well from whom. That's the part I still don't understand.
But where does the 1% come from in the example we're discussing. Does their acquirer charge BA 1% which BA passes along to the customer? Or does the cc network charge 1% because they feel their perogative to charge 1% on currency conversion is being violated? Especially if no currency conversion takes place. Whose 1% is being passed along before the 2% is added on? Is it the acquirer? Is it the credit card network? Is it the merchant? I was always under the illusion it is the credit card network which adds the 1% and then gives the customer's bank the option of adding the additional 2%. So for those relatively good banks (relatively good as some banks absorb the whole thing) that only charge the 1% ftf and claim they are simply passing on the fee from well from whom. That's the part I still don't understand.
Sep 2, 2014 | 11:56 am
#999
Original Poster
Join Date: Jul 2009
Location: SJC
Programs: AA, AS, Marriott
Posts: 6,961
The rules of the road are always insist on being billed in the local currency proactively. If they say, "No choice." then you smile politely and nod. However, when given the signature receipt cross out the "I have been offered a choice" verbiage, write "merchant refused local currency", and sign. Also taking a digital photo with your phone is good supporting evidence. When you get home, use the wiki to determine the exchange rate for the date of the transaction and dispute on the difference. Try to ask for a reason code 76 chargeback. Fully expect that for small amounts the card issuer will give you a courtesy credit, but hopefully on some of the larger purchases you can get the full chargeback issued.
Sep 2, 2014 | 12:51 pm
#1000
Join Date: Apr 2008
Programs: AA EXPLT, Marriott Titanium (LT PLT), HHonors Gold, AMEX PLT, UA Silver, National EXC
Posts: 1,238
The rules of the road are always insist on being billed in the local currency proactively. If they say, "No choice." then you smile politely and nod. However, when given the signature receipt cross out the "I have been offered a choice" verbiage, write "merchant refused local currency", and sign. Also taking a digital photo with your phone is good supporting evidence. When you get home, use the wiki to determine the exchange rate for the date of the transaction and dispute on the difference. Try to ask for a reason code 76 chargeback. Fully expect that for small amounts the card issuer will give you a courtesy credit, but hopefully on some of the larger purchases you can get the full chargeback issued.
When you say "full chargeback" - do you mean you are getting a full refund go the entire purchase, not just the difference in exchange rates?
One hell of a way to stick it to the ripoff merchants in that case. In my case the difference is maybe $2-5 total, which I intend to collect out of principal. But I want to see these b#%#^ds change their ways. In particular one restaurant where I first learned of DCC - horrible service, hidden fees (coperto plus 15% gratuity) and the like made for a disappointing dinner. After that I became much more aware of the Italian trickery and tourist traps.
Sep 2, 2014 | 1:10 pm
#1001
Join Date: Apr 2005
Location: SAN
Programs: AS, Silver, AA Gold, DL Platinum
Posts: 1,273
Just want to say thank you to all of those here that take the time to complain/chargeback regardless of the dollar amount. That is the only way (besides lobbying) to put pressure on the banks to make changes. Now if only CNN would run a special report, "Travelers Beware" style.
Sep 2, 2014 | 4:30 pm
#1002
Join Date: Apr 2008
Programs: AA EXPLT, Marriott Titanium (LT PLT), HHonors Gold, AMEX PLT, UA Silver, National EXC
Posts: 1,238
Just want to say thank you to all of those here that take the time to complain/chargeback regardless of the dollar amount. That is the only way (besides lobbying) to put pressure on the banks to make changes. Now if only CNN would run a special report, "Travelers Beware" style.
Sep 2, 2014 | 4:35 pm
#1003
Join Date: Jun 2014
Posts: 46
Full chargeback means that the bank actually "charges back" the merchant and has them redo the transaction in the local currency. As the consumer it doesn't make a difference; you still get the same amount of money as a credit. The bank will just suck up the cost ( of the DCC) as the cost of business and give you a coutresy credit because chargebacks could cost more time and money than just the $1 difference.
Sep 2, 2014 | 5:49 pm
#1004
FlyerTalk Evangelist
Join Date: Jan 2014
Location: San Diego, CA
Programs: GE, Marriott Platinum
Posts: 15,743
The Kickstarter closed just now. According to Chase's notification emails/texts, their exchange rate worked out to be about 0.4% in their favor compared to Visa's. Definitely not high enough to make DCC a factor. ^
Sep 2, 2014 | 8:01 pm
#1005
Ambassador, Hong Kong and Macau
Join Date: May 2009
Location: HKG
Programs: Non-top tier Asia Miles member
Posts: 22,113
But where does the 1% come from in the example we're discussing. Does their acquirer charge BA 1% which BA passes along to the customer? Or does the cc network charge 1% because they feel their perogative to charge 1% on currency conversion is being violated? Especially if no currency conversion takes place. Whose 1% is being passed along before the 2% is added on? Is it the acquirer? Is it the credit card network? Is it the merchant? I was always under the illusion it is the credit card network which adds the 1% and then gives the customer's bank the option of adding the additional 2%. So for those relatively good banks (relatively good as some banks absorb the whole thing) that only charge the 1% ftf and claim they are simply passing on the fee from well from whom. That's the part I still don't understand.
So when I get my bill, I get it that the additional 2% Bank of America or Citiblank or Chase may impose is a total rip off. We agree there. But what about the 1%? Who profits from that? Visa? British Airways? British Airways acquirer processor? That's the part I don'tunderstand in equating what the airline does to dcc.
Visa and MC also charge 1% when a currency conversion has taken place, but I'm sure neither one of us is thinking about that.