FlyerTalk Forums - No/Low Currency Conversion Fee Card

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Quote:

Originally Posted by drbond

The fact is Visa and Mastercard updated their system to impose an association fee of 1%. All VI & MC cards will have a 1% Foreign Transactions Fee as a result of the "WALMART LAWSUIT SETTLEMENT" Everything Walmart does is good for Walmart and bad for everyone else. Now off of the soapbox. The associations charge 1% as a seperate line item.
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Capital One is 1%.

Are you sure about this? Can you post a link that definitively shows the Walmart settlement (and note, it wasn't just Walmart but thousands of other retailers) caused the 1% foreign transaction fee? Not quite sure I see the connection here. My feeling is that Visa/MC changed from foreign exchange to foreign transaction because they were losing revenue because various merchants (e.g., Hertz) were changing the amounts into USD and bypassing the normal Visa/MC surcharge.

I'm not sure what you mean by a "separate line item" being charged by Visa/MC. Visa/MC no longer charge the consumer the 1% directly (as they used to when they built it into the exchange rate). They now bill the issuer the 1% and the issuer can charge the consumer whatever amount they want. This is why old credit card T&C used to say Visa/MC will tack on 1% and we'll tack on 2%. They now simply say we tack on 3%. This policy change was implemented sometime last year. Many issuers now break out the overall foreign purchase surcharge on a separate line. This is due to a class action lawsuit about the lack of transparency/disclosure related to the foreign exchange surcharges.

And I'm pretty sure Cap One is at 0%. Many people here on FT have posted anecdotal evidence showing that. Bank Rate seems to think the same:
http://www.bankrate.com/brm/news/cc/20050624b1.asp

Let me report a recent case. I used my citi pp elite on 1/2/06 on a foreign website. The charge was converted to USD at a very good exchange rate. On my monthly statement, there was a SEPARATE foreign transaction fee corresponding to 3% of the transaction amount.

As a comparison, I also used my citi debit card to withdraw cash on a foreign ATM on 1/3/06. No foreign transaction/exchange fee whatsoever, but the exchange rate was 1% lower than that of the credit card.

My guess: If you use a debit card (to get cash at least), MC (or VISA) charges 1% but it is absorbed in the exchange rate; citibank charges nothing. If you use a credit card, citibank charges 2% IN ADDITION TO the 1% billed by MC to the bank, and the bank lists the total 3% separately as it is the financial charge by the bank to the customer.

This is Citibank:
Transaction Fee for Purchases made in a Foreign Currency 3% of the amount of foreign currency purchase after its conversion into U.S. dollars.
This is Capital One:
Could not find it in the disclosures, so I called and the CSR said 1%.