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foreign currency error on Visa credit card

foreign currency error on Visa credit card

Old Oct 14, 16, 4:29 pm
  #1  
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foreign currency error on Visa credit card

Shortly after Brexit, to take advantage of the weakened British Pound (GBP), I purchased a cruise with a travel agent in the UK, using my UA MileagePlus Explorer Visa credit card, issued by Chase, with no foreign exchange fee.

The exchange rate used by Chase, provided by Visa, was incorrect, causing me to overpay by a not insignificant amount. The transaction posted on June 26, 2016. Chase has refused to help because it is an exchange rate dispute. Visa International has also refused to acknowledge their error, despite the (unsuccessful) intervention by Channel 7 On Your Side, a consumer advocacy service provided by my local TV station.

To find historical exchange rates for mastercard and visa:

https://www.mastercard.com/global/cu...ion/index.html
https://usa.visa.com/support/consume...alculator.html

For the date in question (June 26, 2016), here are the various conversion rates from British Pound (GBP) to USD:

visa 1.436642
mastercard 1.376046
xe.com 1.367535
oanda 1.3650
usforex 1.368045
x-rates 1.367535

As you can see above, visa's rate is substantially higher than those of its competitor (mastercard) as well as the various benchmarks.

I have done further research and found that Visa exchange rates from GBP to USD were incorrect for the 4-day period from June 24 to 27, while the rates for mastercard and the other benchmarks were all correct for the same period. In addition, for the same 4-day period, visa's exchange rates were also incorrect from GBP to Euro, as well as from GBP to Australian Dollar. I did not check other currencies but assume there was a similar issue. Clearly there was some systematic error in the way Visa selects and publishes its daily currency exchange rates to have caused this issue.

When I first spoke with Chase, one of its representatives told me that other cardmembers have reported exactly the same issue with GBP to USD conversion during the same time frame. They of course referred the issue to Visa, who is rightfully the owner of the problem but unfortunately has refused to help.

I have filed a complaint with Better Business Bureau and Consumer Financial Protection Bureau. Are there more effective ways to get Visa to own up to and rectify their problem?
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Old Oct 14, 16, 5:31 pm
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Sit tight. You filed a complaint with the CFPB. Wait for a response.

Your relationship is with Chase and nobody else. If Chase has an issue with some other entity, that is between Chase and that entity. Don't get in the middle of it.
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Old Oct 14, 16, 5:35 pm
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Originally Posted by Often1 View Post
Sit tight. You filed a complaint with the CFPB. Wait for a response.

Your relationship is with Chase and nobody else. If Chase has an issue with some other entity, that is between Chase and that entity. Don't get in the middle of it.
I named Visa instead of Chase on my complaint filed with CFPB. Do I need to amend that complaint?
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Old Oct 14, 16, 8:31 pm
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CSP Visa forex rates have been bad for a while now (I haven't used it when traveling internationally in over a year - I use exclusively Citi or AMEX). Haven't seen them this out of whack but more discussion here:

http://www.flyertalk.com/forum/credi...all-cards.html
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Old Oct 15, 16, 2:10 am
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FYI - Brexit has not yet happened.
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Old Oct 15, 16, 8:01 am
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Sounds like you paid the correct price and were unable to take advantage of a Visa mistake. Not the sort of thing people usually complain about.
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Old Oct 15, 16, 8:25 am
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I traveled to Bakia Faso a few months ago. I used Chase united milage card for my hotel bill. My total was almost 8% higher than the other people in my party. The client wanted to see the credit card bill, because of the discrepancy. I will never use that card for a hotel bill again. Will use my Amex from now on.
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Old Oct 15, 16, 8:58 am
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Originally Posted by sfvoyage View Post
The exchange rate used by Chase, provided by Visa, was incorrect, causing me to overpay by a not insignificant amount.
Does either Chase or Visa guarantee at any point in their contract with consumers that the rate must match one of these providers? If not I believe arguing that the rates is "incorrect" may be an uphill battle.
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Old Oct 15, 16, 9:22 am
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Originally Posted by sfvoyage View Post
When I first spoke with Chase, one of its representatives told me that other cardmembers have reported exactly the same issue with GBP to USD conversion during the same time frame.
I see where you might be confused.

Let me try to explain why you have zero chance of legally being entitled to a refund on the difference. But you may be able to get a goodwill gesture.

Say I was trading FX (like banks do) normal market conditions means there IS a difference between the buy and sell rate of a currency, this is ALWAYS there. It is called a 'spread'

During unstable political/economic changes, this 'spread' of the buy and sell rate HAS TO become bigger, to cover the volatility of the market swings, or the banks would loose TRILLIONS as FX trades are leveraged.

So you could put on a short 'bet' that USD will devalue against GBP, for 1. But stand to make a gain of 10 if it comes true. NORMAL market conditions would mean that a equal loss of 10 would be possible. BUT this was NOT a normal market event, so stop losses were not respected and Banks stood to loose 40 on a 1 bet!

For this reason banks and other big volume traders do not place FX 'bets' during political/economic events. Trade volume decreases and spreads increase to cover losses. Exactly what you experienced.

Basically, you should have checked the Visa exchange rate, which you can do online.
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Old Oct 15, 16, 11:30 am
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Originally Posted by ft101 View Post
Sounds like you paid the correct price and were unable to take advantage of a Visa mistake. Not the sort of thing people usually complain about.
??? It's exactly opposite of what happened to me. I wasn't hoping to take advantage of any mistake. In fact, I suffered financially because of a mistake in Visa's currency exchange rate.
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Old Oct 15, 16, 11:39 am
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Originally Posted by telabadmanwot View Post
I see where you might be confused.

Let me try to explain why you have zero chance of legally being entitled to a refund on the difference. But you may be able to get a goodwill gesture.

Say I was trading FX (like banks do) normal market conditions means there IS a difference between the buy and sell rate of a currency, this is ALWAYS there. It is called a 'spread'

During unstable political/economic changes, this 'spread' of the buy and sell rate HAS TO become bigger, to cover the volatility of the market swings, or the banks would loose TRILLIONS as FX trades are leveraged.

So you could put on a short 'bet' that USD will devalue against GBP, for 1. But stand to make a gain of 10 if it comes true. NORMAL market conditions would mean that a equal loss of 10 would be possible. BUT this was NOT a normal market event, so stop losses were not respected and Banks stood to loose 40 on a 1 bet!

For this reason banks and other big volume traders do not place FX 'bets' during political/economic events. Trade volume decreases and spreads increase to cover losses. Exactly what you experienced.

Basically, you should have checked the Visa exchange rate, which you can do online.
Thanks for your explanations, but my issue has nothing to do with "spread" and little to do with political/economic landscape. I know that credit card exchange rates are typically slightly higher than forex benchmarks. However, the Visa's rate for the date in question was substantially higher than mastercard's, which is subject to the same political/economic landscape and same spread consideration as does visa.

Hence, I suspect something is wrong with visa's rate for those few days, and visa needs to be transparent and provide a valid answer as to how that happened.

Regarding your point that I should have checked the Visa exchange rate online, you must know that there's typically a two to four day lag between the purchase date and the transaction posting date. I knew what the rate was when I made the purchase, but I did not count on the rate to have been inaccurate by the time the transaction officially posted four days later. If only I could see into the future...
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Old Oct 15, 16, 4:15 pm
  #12  
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Originally Posted by sfvoyage View Post
I wasn't hoping to take advantage of any mistake.
Uhhh.....

Originally Posted by sfvoyage View Post
Shortly after Brexit, to take advantage of the weakened British Pound (GBP),
So maybe get the story straight.

Originally Posted by sfvoyage View Post
In fact, I suffered financially because of a mistake in Visa's currency exchange rate.
You keep calling it a mistake. Where are you seeing it say that Visa is obligated to use a particular rate??
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Old Oct 15, 16, 8:02 pm
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Originally Posted by sbm12 View Post
Uhhh.....



So maybe get the story straight.



You keep calling it a mistake. Where are you seeing it say that Visa is obligated to use a particular rate??
You are totally not getting my point and are confusing the issue. I made the purchase after the British pound began to weaken - this has nothing to do with any kind of mistake fare or taking advantage of a mistake. The British pound is going to fluctuate on the market as it does.

In fact, I can take out the Brexit angle, and the issue still remains: an exchange rate that's out of line with every one else's.

Regarding Visa's mistake, I call it a mistake for the simple reason that it is an outlier when compared to all the other forex benchmarks as well as their main competitor's. The difference is too big to be due to some minor random fluctuation.

In addition, visa's rates were in line with the benchmarks in the days leading up to and following the 4-day period from June 24-27; it was only during the 4-day period that their rates were out of line. Something didn't seem right.

While Visa can use any exchange rate they want, if the rate is so far off their competitor's as well as all the benchmarks, is it not reasonable and correct to ask for an explanation? Why the negativity?

In any case, I started this thread to report this issue and to see if others have similar experience and suggestions. In my limited data points, it seems that, while mastercard and visa typically have similar forex rates, mastercard may be better in more cases. Someone earlier on mentioned switching to Amex, which I don't have much experience with when it comes to forex. How does Amex compare to Visa and Mastercard when it comes to forex?

Last edited by sfvoyage; Oct 15, 16 at 8:28 pm
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Old Oct 15, 16, 8:47 pm
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Check out the thread I posted earlier - people with far more experience in that thread can talk about the nuances.

AMEX doesn't publish their FX rates but they tend to be closer to Visa than MC.

Visa doesn't apply the rate until the charge actually posts. MC charges the rate on the day of purchase. It's therefore believed that Visa charges ~1% to cover the spread between when you purchase and when the charge posts and they actually apply the FX.

The result is Visa can actually end up lower if there's a big drop between when you purchase and when it posts (e.g., if you bought something the night before Brexit, Visa you'd benefit from the pound drop the next day, MC you would not).

It's also seems that some CC issuers are willing to eat this 1% (e.g., my Schwab Debit Visa tends to be have a better rate than my CSP - most likely Schwab is willing to cover that small spread that Visa charges or has negotiated with Visa to remove it) whereas Chase has chosen to pass it on.

As noted upthread this is why I almost exclusively use on of my MC when traveling (typically Prestige or Premier) unless there is a specific reason to use my Visa (e.g., Hyatt Visa at Hyatt hotel, CSP for insurance, etc.)

EDIT: Just to add, it's believed that Visa uses the highest rate on a given day whereas MC uses either the average or the close.

On the day in question (June 26th) it looks like the highest rate was 1 GBP = 1.4371 USD so their rate is actually right in line with that. FWIW, the close was: 1 GBP = 1.3694 USD and the average was: 1 GBP = 1.4059 USD so MC appears to be just below the midpoint

It's a pain and it means you may have to put the Visa in the wallet for international travel, but with those numbers I unfortunately don't think you are going to get anywhere with CFPB since their rate came in just below the high of the day.

Source: https://www.poundsterlinglive.com/be...-on-2016-06-26

Last edited by Duke787; Oct 15, 16 at 8:57 pm
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Old Oct 15, 16, 10:23 pm
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Originally Posted by Duke787 View Post
Check out the thread I posted earlier - people with far more experience in that thread can talk about the nuances.

AMEX doesn't publish their FX rates but they tend to be closer to Visa than MC.

Visa doesn't apply the rate until the charge actually posts. MC charges the rate on the day of purchase. It's therefore believed that Visa charges ~1% to cover the spread between when you purchase and when the charge posts and they actually apply the FX.

The result is Visa can actually end up lower if there's a big drop between when you purchase and when it posts (e.g., if you bought something the night before Brexit, Visa you'd benefit from the pound drop the next day, MC you would not).

It's also seems that some CC issuers are willing to eat this 1% (e.g., my Schwab Debit Visa tends to be have a better rate than my CSP - most likely Schwab is willing to cover that small spread that Visa charges or has negotiated with Visa to remove it) whereas Chase has chosen to pass it on.

As noted upthread this is why I almost exclusively use on of my MC when traveling (typically Prestige or Premier) unless there is a specific reason to use my Visa (e.g., Hyatt Visa at Hyatt hotel, CSP for insurance, etc.)

EDIT: Just to add, it's believed that Visa uses the highest rate on a given day whereas MC uses either the average or the close.

On the day in question (June 26th) it looks like the highest rate was 1 GBP = 1.4371 USD so their rate is actually right in line with that. FWIW, the close was: 1 GBP = 1.3694 USD and the average was: 1 GBP = 1.4059 USD so MC appears to be just below the midpoint

It's a pain and it means you may have to put the Visa in the wallet for international travel, but with those numbers I unfortunately don't think you are going to get anywhere with CFPB since their rate came in just below the high of the day.

Source: https://www.poundsterlinglive.com/be...-on-2016-06-26
Thanks a lot for your informative and useful reply.

I had also wondered if it's a matter of timing intraday. In my case, it seems to support your comment that visa chooses the highest rate of the day, whereas mastercard uses the average or the close. It would then follow that the other benchmarks also use the average or the close, instead of the highest of the day. I had thought that each company would pick a specific timing (e.g. opening, mid-day, close of day) and stick with that consistently, but I guess that's not how it works. It would be good to have some transparency.

In any case, thanks again, and I'll check out the thread you mentioned.
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