Dynamic Currency Coversion Should Be Illegal
 

Dynamic Currency Perversion is a disgrace and a sly way to rip off travelers. I have heard it discussed but never came across it while abroad until now. In a recent trip to Tenerife, Spain (otherwise great destination) I found that a couple of the gift shops offered-- I mean forced this on me. It actually said on the receipt that I certify that I was offered a choice of currencies and choose to have my Euro purchase converted to US dollars. I told the shopkeepers that this is not true, that I want to pay in Euros, and that I refused the dynamic conversion. They didn't understand why I was angry and had no way to overriide it-- said it was a function of the banks not them, showed me a pile of receipts from other tourists who paid in other currencies. So I crossed off the dollar amounts and the "I agree to pay in USD" on the receipt but of course I found when I got home that the charges had gone through anyway at the inflated conversion rates, with the additional VISA surcharge on top of it. This is patently unfair and sleazy and should be illegal but I got tired fighting about it and didn't spend enough money on gifts to dispute it with my credit card company-- though I feel I should do so just on principle. Not one of the restaurants tried this, just gift shops catering to tourists.

Do it--there's no better pleasure to know that the original merchant will have to pay $25 or more in fees because of your dispute.

Revenge can be sweet! :)

I mark through and write "I demand to be charged in Euros, no conversion authorized." I mark out anything else on the receipt and sign it. If it comes in any other way I charge it back. If enough of us do it, they will stop the crap. You should do it and so should everyone else so that they get tired of charge backs and stop this practice.

If it doesn't cost them more than they profit from it, then they will continue to do it.

Absolutely dispute it.

Visa requires you to be given a "meaningful choice".

http://usa.visa.com/personal/using_v....html#anchor_4

I recommend disputing it too. Unfortunately, this seems the only way to stop or slow down DCC-it will tie the merchant up in paperwork and maybe at the end of enough chargebacks, they'll stop using processors who do this.

Is there anyway for the merchant to force the credit card processing machine not to use DCC? I ran into this a few times in Ireland 4 years ago and in every case the merchant had no clue how to override DCC.

They are supposed to have to select DCC or not for *each* individual transaction.

But is it the original merchant who is making the markup, the issuing bank, a foreign bank or Visa?

DCC benefits the merchant and their processor.

The merchant, if they aren't giving you a 'meaningful choice', has violated the rules.

Is there a place to report to Visa merchants who do not provide a choice and rather charge without asking?

IMHO best thing to do is to dispute via letter to special billing error address on your bill. This brings into effect consumer protections of Fair Credit Billing Act. You have 60 days from date of mailing of bill with disputed charge.

A phone dispute or an email will not protect you.

A letter to your Congressional rep is not a bad idea, either.

Yea, makes sense. I just didn't know if there was a way to report a specific merchant or perhaps a user-run database of places that do DCC without asking. I had it forced on me a few times, but I finally convinced them to cancel the charge and run it in the local currency.

yeah I have been there too, but I have learned something, before I give my card I now always say I am paying in the local currency, eg. I am paying in Euro, Dollars, Thai Baht and so on.

Yea, thats kind of a pain though. Although if there was a list of known places that force DCC on you, then we would know where to make sure we specify it (or just pay in cash).

To be honest it is a pain, and to be more honest I am not always saying in what currency I want to pay. But if I have any bad experience with DCC in the area where I am travelling, I will do it.
I think most tourist travelling will just say how smart, I can see the bill in my own currency, I have done it too, stupied me:
"They didn't understand why I was angry and had no way to overriide it-- said it was a function of the banks not them, showed me a pile of receipts from other tourists who paid in other currencies."
The problem with DCC is that most people are "ripped-off" without knowing it. Even if people are asked what way they want to pay, they have no idea on the difference.

an experience with Avis in Zurich
 

Even when we specified to pay in local currency, the contract still spilled out with a clause that we "are informed, and agreed" to have local currency converted to our billing currency. The manager claimed it was a default option on the contract and he forgot to check it off despite he fully agreed that we had requested so. He re-did the contract but did not give us an English translation any more.

At car return we crossed out the clause and demanded the clerk to verify with the system that such option was dropped. It took them a few minutes to fiddle on their keyboard to get it done. Bill came out in Swiss Franc.

Now we have an Avis bill from Auckland airport that I have to see the card statement when we return home to know whether it is billed in NZD or in USD. The authorized amount is some 5% lower than the billed amount, led me to suspect that it has suffered the conversion eventhough the contract / receipt from the return are shown in NZD.

This should be a "sticky" on AM, Diners and Other Credit Cards. Any moderators?

yea, I think we should also keep a list of 1. places that force DCC without asking.

You may still be charged with conversion.

I often rent with AVIS but only recently I detected the fine print you are mentioning.
All my bills showed Euro. However, they converted Euro to US $ and than charged my Euro CC with Euro ... higher than the amount of the bill.
Last time when I returned the car I asked the Avis agent to change this. He did. By now are NO charges on my Euro CC card?!? And I returned the car to FRA one month ago!?!

Is there a way to change that default option
"the clause that we "are informed, and agreed" to have local currency converted to our billing currency" when we make a reservation or even better in the account?

I just lost HK$50 in (around US$6.5) in inflated RMB/HKD exchange rates and about HK$63 (around US$8.1) in my card issuer's foreign currency transaction cash back due to Dynamic Currency Conversion on my HKD Visa card.

The transactions were incurred in Mainland China. Consumer rights and customer service levels are pretty low. The merchant (when I called them back to review) said they had no choice to turn off DCC, even for future transactions.

I notice AE doesn't have DCC for similar Mainland China transactions or for Amazon. Can we use to avoid merchants adding on DCC? If yes, I'm voting with my feet - let Visa/MC know that *crime* doesn't pay!

I've always understood that with US card companies, you are responsible for, and only for, the charge you sign for.

If the charge is in local currency, your card company (not the merchant's processor) will convert that foreign currency charge to dollars. This is almost always at an acceptable exchange rate, though you may pay an exchange fee charged by your card company. If I were charged anything other than I've described, I would deny the charge with my credit card company since I never agreed to it. Denials like this not only protect your money, but offer the added satisfaction of really clogging up the system with paperwork between the DCC banditos-the merchant and its processor.

If you were offered a choice between local currency or dollars, or you were offered dollars (with or without an opt out) and signed the charge slip, I'm afraid you're stuck. Here again, you agreed to the charge and that's what you gotta pay.

I was in Denmark earlier this year and using a credit card there was like a carnival arcade. Some places charged a flat 2.5-4.0% surcharge for using a foreign credit card, with signs stating that their bank "makes them do it". Others don't take foreign cards at all. One offered me DCC but had an opt out notice on the charge slip. I asked to be charged in foreign currency and they redid the charge-from the way they handed it, I think that happens a lot at that merchant. At dinner on our last night in Copenhagen, an American woman at the next table got slammed with the everything-the waiter said there was a 3% surcharge for using an overseas card, he said they did the charge in dollars to "save you a fee", and to top it off, told her no tip had been added to the bill "yet"-true if you ignore the flat service charge built into all restaurant tabs.

I know your topic was DCC should be outlawed and I agree. I thought adding a summary might help others.

I won't even bother disputing with my HK issuer. This particular issuer also has the worst record of customer service in HK (but had a 3% rebate promotion going on when I processed my transaction).

There were no opt out notice in my China slip, by opt out do you mean I can tick a box and still get billed in local currency, or must the transaction be voided?

Also, is DCC with Visa and Mastercard only, or has anyone figured out how to do it with Amex?

By opt out I mean the charge is presented in your home currency, but there is a stated notice on the charge slip that you can choose to have the charge in local currency. Whether the charge has to be voided if you opt out depends on whether it was run through before presenting it to you to sign-usually it would have been so it would have to be voided and a new charge run through in local currency.

I think DCC is the work of the merchant's processor so I imagine it could be done on Amex as well, though I don't know that for a fact.

If you're not willing to push this back through your card company, then you're signing up for whatever shenanigans are thrown at you, which in places like China will be a lot. Your choice.

Always pay in local currency, unless for some strange reason your home currency is cheaper.

I'd simply refuse to sign the slip if presented as USD.

Good if you can spot it. My slip is like:

RMB 324.00

RATE: 1.20022 NO Commission Fee
TXN CUR (BASE AMT): HKD388.87

I'm wondering - outside of China, is the local currency amount stated as well as the DCC currency amount?
Stating both (esp with one larger than the other) is hugely misleading.

Resuscitating my old rant thread because just got back from another trip and this sleazy practice is alive and well. Was in Antigua, Caribbean, and several restaurants and shops presented me with bills converted into USD. When I said I want to pay in local currency, XCD, they said that it is impossible, that their registers cannot do that with foreign cards. Short of standing there and causing a scene or keeping records of the amount in local currency, coming back and calculating and disputing every DCC transaction at inflated rates, what can you do?

Here are some misconceptions that I see here:

Merchants do not sign up directly with VISA. VISA has a relationship with a local bank, the local bank then loans out the machines to the merchants for them to process VISA transactions.

Banks, "in their best interest", do not give detailed instructions to the merchants on how to use the credit card machine. At best, they give one of those "simple setup" papers which show "swipe card/insert EMV chip here," "enter amount here," "let the machine do the rest" "don't touch anything else, if you do, we're not liable for you breaking the machine and you owe us [insert inflated price] for the credit card machine that's loaned to you."

That's the extent of training merchants get. Care to guess what the default setting banks set their credit card machines loaned out to merchants are set to? DCC on.


And merchants who are especially technologically challenged (i.e. mom-and-pop gift stores) or have frontline high turnover rate minimum wage earning cashiers who really don't care since they're not making a career out of being a cashier all their life, are not going to spend the nook and cranny of figuring out the detailed concept of what DCC is, how foreign currency conversion works, etc.

Furthermore, merchants only care about getting paid in their local currency. If they punch in HKD 800, DCC rate comes out to USD 110, they still only get HKD 800 from the bank. Merchants profit nothing from DCC because from their agreement with their bank, is to get what was due in local currency.

So who do you guys think is getting that extra HKD 52 from DCC (real conversion rate HKD 800 = USD 103, DCC rate HKD 800 = USD 110, real conversion rate USD 110 = HKD 852, HKD 800 paid out to merchant, who profits the extra HKD 52)? Who do you think really wants DCC? The local bank.

I waited 26 minutes for St Regis Shenzhen to void a HKD slip that should be charged in RMB. Then charged it to a RMB card.

But if voiding is not possible then photo the merchant slip (if thermal, ignore if carbon copy), with the local currency box (XCD) selected (if no such box appears then the slip is prima facie non-compliant with Visa International Operating Rules).

Send the merchant slip copy back to your card issuer in the US. Raise a Reason Code 76 Chargeback Request. Do not accept any settlement by your card issuer out of pocket - make sure they make the Carribean bank pay. Took me four months when I did a Reason Code 76 last but I made the Macau bank and merchant who scammed me pay.

Though not really too sure if the merchant scammed you (they only get paid what was due in local currency as per their agreement with their local bank) a detailed step-by-step instruction with a template document (suggest Google Docs) to send to the card issuer would be helpful. You should start a blog about this. :)

The more it overwhelms the system with paperlog will force DCC to end.

In fact, it should be this way. Rather than get all frustrated, just accept that it happens so keep all your foreign credit card transaction receipts until you get back home. If that's not an option for some reason, take a nice clear photo of them on a digital camera.

Then print out template explaining your situation, mail copies of receipts to issuer, then wait for refunds to appear several months later. That alone would accomplish many things: less stress, it'll eventually be refunded, clogs up the paperwork for the local banks not to keep the DCC setting on "for their best interest."

I'm under the impression that many merchants are offered lower merchant fees for using DCC. Otherwise why would so many big hotels try this petty scam?

Let's look at the real life scenario when a merchant tries to sign up with a local bank to accept VISA. Trust me, I've worked on this in real life:

Merchant: I want to accept VISA to help my business. Can you help me out?

Bank: Great decision! Here's what we have blah-blah-blah

Merchant: Ok. Sounds fair.

Bank: Oh, have you considered you may have foreign customers?

Merchant: Hmm, never thought of that

Bank: Well, you should in this global economy. The reason why we say this is because we have an agreement with VISA to allow customers to choose their home currency at the point of payment. So let's say an British tourist comes into your store and he uses his VISA card issued in the UK. Our machines, with our exclusive deal with VISA, allows us to show them their amount in British Pounds. It's called dynamic currency conversion and it's another level of service to help your business. (conveniently omits any discussion about the details of DCC and how it really doesn't help the British tourist)

Merchant: Oh cool.

Bank: We usually charge a fee for this service, but since we like you so much, we're going to actually give you a substantial discount on your fee for this if you agree to stick with us for [insert some contract date range].

Merchant: Sounds like a deal to me!

Bank: It definitely is! (for us!) :D

That´s exactly it..... both parties, the merchant and the card processor, benefit from DCC.
Look at AVIS which is actively pushing it by making it the standard in your profile.

Most intelligent merchants, billion dollar hotel chains, mostly, are going to understand it. There going to be fighting chargebacks and rerunning receipts on a regular basis. They're not going to do this unless it's real money in their pocket.

I'm headed out to the Bahamas in two days, I guess I may be running into this issue as well. Thanks for bringing this thread back to life!

I will try to ask to pay in local currency.

Of course, this is if you consider most mom-and-pop stores or front-line employees who do not have an MBA to figure this out as well.

Have you tried explaining the intricate details of DCC and how credit card processing works to a 75 year old youth hostel inn keeper in the Chung King Mansions or the minimum wage earning cashier in a major Portuguese supermarket chain in Lisbon, Portugal to be adept at these things? You usually get blank stares. :p

It's faster and less stress to:

1. Always don't select DCC (primary stand ground)
2. Accept that $hit happens when the charge comes out wrong; don't get frustrated over it
3. Keep your foreign credit card transaction receipts
4. Mail copies of any objectionable ones to your issuer when you get back to your home country (secondary stand ground)
5. It'll eventually clear itself out

Just like my experience with an Indian Restaurant in an upscale area of Delhi, India. Took a while, but it eventually came back correctly.

No- You should NEVER select DCC. That's the whole point. And unless you notice how the charge is going through at the point of sale, you won't necessarily notice anything on your credit card statements. Checking my Chase card, both the charges that went through in XCD and those the merchant converted against my will to USD show up as USD without the conversion noted. And to be honest, your average American on vaca in the Caribbean probably does appreciate seeing it price out in USD (or wants to be able to pay in US cash), not caring if he is losing some in the process. But for the rest of us, we should have the choice and not have to dispute with the card issuers every little transaction.

Sorry that was a typo. Should be "don't"

Always keep the receipts as proof. If it's somehow not doable, take a good photo of it with your digital camera.


Accept that $hit happens. 50% of the time it works, 50% of the time $hit happens. And when $hit happens, faster and less stress to create a template like this:

and mail it out to your credit card issuer. It'll be resolved as that and it has worked for me.

Keep it simple but concise. Bullet point what needs to be done, point out the irrefutable proofs, and it'll be re-credited back to your account.

Just ran into this in Aruba with several merchants. Not ONE had any idea how to charge me in local currency. They were all small enough charges that I let it go, but yes, this is very alive and well. Same crap in Dublin earlier this year. It's just all automatic and the clerks either stare blankly or even get agitated (if they are busy) when you question it. Certainly for a larger charge like a hotel bill or car rental, I wouldn't let it slide....

Now consider this the other way around.

You are a Starbucks employee in Manhattan. A Japanese tourist asks for a latte and whips out his/her Mizuho Financial/ANA VISA card issued in Japan. You get the card and swipe it like any other card. The swipe process realizes it's a Japan issued card and for "convenience" the bank has defaulted non-US issued cards to be charged in their home currency. So the receipt defaults to JPY and spills out a receipt for her to sign. He/she then asks for it to be re-processed again in USD instead of the default JPY DCC option.

What's the likely outcome?

Blank stares from the clerk who is just following the screen prompts and have no idea what to do because all he did is swipe the card just like any other credit card and long lines of agitated customers thinking "oh for crying out loud, nobody f--ing cares about your problems about few dollars and cents more, DCC or whatever brainy-a$$ technical mumbo jumbo, would you hurry up and get going and stop bothering the others in the line, or if you have problem just pay cash! Sheesh!"

Yep- this was the sort of reaction I got the first time I raised the DCC issue with a restaurant in China. Clueless stares. And it turned out that two things had to be done to be able to not be charged in home currency for that particular merchant's acquiring bank (HSBC):

1. Must use an EMV card.

2. Must press "Cancel" when the terminal is connecting to HSBC to ask for their DCC rate. It will just back out of the whole transaction if you use a mag-stripe card.

Both of which are rather counter-intuitive (and one of which was the motivation for me to get an EMV card).

Also, on the topic of Japanese tourists:

Both Mitsui-Sumitomo and Mitsubishi-UFJ issue UnionPay cards that would avoid the DCC issue altogether in China. And yet that restaurant where I was first DCC'ed by HSBC showed me a pile of receipts from Japanese visitors using Visa/MC and agreeing to be charged in JPY and I've never seen anyone use one of those banks' UnionPay cards in China. They really don't care, do they?

And a completely different DCC issue I had to deal with:

I also have a Canadian bank account for when I need true Chip+PIN and not just Chip+Sign (as my Citi cards are). Tried the debit card at a restaurant and the terminal gave me a choice of RMB or USD. I don't even get to select the card's native currency? What?