Originally Posted by Majuki (Post 23692267)

That's right. Somewhere along the way issuers in the US switched from currency exchange fees on cards to foreign transaction fees. So even if the customer accepts DCC or the case of an online merchant whose acquirer is overseas, you still get whacked with any FTF that your card imposes.

The bottom line is that Visa/MC impose a 1% currency exchange fee and pass this on to the issuer when a currency exchange happens. The issuer then typically adds a 2% markup. I tend to think customers just bend over and take it when it comes to overseas transactions, assuming that's just the price one pays for traveling abroad.

I personally find the 1% fee that Visa/MC impose to be acceptable due to the costs of handling different currencies. I can even somewhat justify AmEx's rate of 2.7% for personal cards with a FTF since their operations are smaller worldwide. However, I would still contend AmEx's true cost of conversion is much lower. I understand that there are risks converting currencies, and there are some currencies that fluctuate relative to one another than others such that the 1% fee is reasonable. It would be far too complicated to have a list of different exchange rates for different countries, so they set the bar at 1%. I'm fine if banks pass along this 1% fee to me as the customer but only if the conversion actually takes place. In the case of DCC or a foreign acquirer pricing in USD, the issuer that charges 3% is pocketing the entire amount.

On the other hand, I've described DCC exchange rates as usurious, which they are. I've seen anywhere between 3.95-4.99% as the offer, but the high exchange rates a... exchange risk that a single acquirer assumes results in a rip-off exchange rate.

Originally Posted by jbcarioca (Post 23695959)

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.

Originally Posted by AndyRobin (Post 23695735)

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?

Originally Posted by JEFFJAGUAR (Post 23698862)

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.

Originally Posted by percysmith (Post 23685184)

Singapore has a pretty good overseas earning Amex - the UOB PRVI which earned 2.5 miles per 1S$ (roughly 3.25 miles/US$) spent overseas.

HK *used* to have a similar Amex - the Standard Chartered American Express which earned 1 mile per HK$2.5 (roughly 3.12 mile/US$) spent overseas. Sadly the card's overseas earn rate has recently been halved and the next best foreign currency earning card is V/MC only.

Originally Posted by percysmith (Post 23701130)

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

Originally Posted by cxua (Post 23692879)

Wow. I received a call from Chase dispute department just 5 minutes ago. Long story short:

The customer rep who just called me was the original person who had received my dispute document via fax. She entered the information into the dispute system and called me, but missed her call. Her colleague followed up with what transpired last night.

The original rep made a reminder for herself to try me again and saw the notes on my account as what had happened. She called me just now and said, are you satisfied with the resolution of your dispute?

I said, well no. And she said, Yes I agree. She understands what DCC is and the impact, and said the paperwork I have provided is black and white. She initiated the charge back and put a temp credit of $83.76 USD on my account and asked me to wait 45 days for the merchant to respond. If not, it becomes permanent.

I told her she had restored my faith in people knowing to do the right thing. She replied, that its not ethical what the merchant did, and thanked me for being so patient.

^

Originally Posted by Newark7 (Post 23710037)

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.