I've observed this in Costa Rica. My final charge on my CC was much higher (about 2-3% higher NOTE: - my CC does not charge me fees for the foreign transaction.) This was one of the Hilton chain.

Most of the other transactions such as Gas, restaurants etc showed up
at a reasonable exchange rate..


This happened to me too... it was a car rental in NZ. They asked me
which currency the CC was based in.. then charged me USD based on their
rate conversion. It was not a huge difference, but a few more cents in their
pocket. Charges in local currency were better for my wallet.

Not true, I usually read through the card agreement and all the cards I have that charge the percentage, do charge the fee for all international transactions, regardless of currency.

Or you could just use an AMEX, which will not allow merchants to charge you in anything other than the local currency.

I've had this happen a number of times. Last time in London at a restaurant. They had already converted it to dollars for me to sign. I think it was about 4% extra.

I use a Cap One card for international charges, just for this reason. That doesn't stop merchants from getting even more. Worst one was Bumrungrad Hospital in Bangkok. Either pay the posted price in Baht in cash, or pay 3-4% more when they converted Baht to US Dollars.

When it comes to hotels - US$ pricing can also work in your favor when the local currency goes up against the dollar. A common occurance nowadays.

In all other cases you should always pay in the local currency.

The processing of your card purchase is a three party procedure: the merchant making the sale, the card processor for the merchant and the card issuing bank. Dynamic currency conversion, as the little scam is called, is an arrangement between the merchant and the processor who sells the pos terminal to the merchant and provides the software which can usually convert to usd, canadian, pounds, euro, australian and yen. What they don't tell you is that they are required by the ccard companies visa and mc to provide the invoice in the currency of their country or GIVE YOU THE CHOICE TO ACCEPT THE CONVERSION to dollars or whatever.
There is big money here since the 'normal' rate is 3 percent above bank rate- all kept by processor or split with merchant. A typical contract gives the merchant one percent if he processes over 100,000 pounds annually.

I was on Donegal, Ireland in November and had this happen. I usually use my Cap One card, but left it in the US, so used another VISA. The conversion fee was not charged by my bank (MBNA), so I guess it was a wash.

I learned then to ask when getting the bill "In Euro please".

One night on Irish TV there was a segment on the most successful and innovative Irish businesses for 2007. One of the is the main player in dynamic currency conversion, and it was interesting to see their perspective. I think they said they are in over 100 countries to one extent or another.

MCT

My experiences tell that paying in local currency is usually better, sometimes better than the prevailing exchange rate.

Thank you for sharing this. I would never have known.

Paris and Dublin are hell for it. Unfortunatley you can't trust the cashier to do the honest thing. When I'm in the euro zone I just use cash (book the hotels etc through expedia so the amount is already converted). Sadly visa and mastercard won't do anything as it's a project they created

Mine go both ways.

Depends upon the card. My experience, at the El Corte Ingles mentioned earlier in this thread, was that I was not charged an international transaction fee since I paid in dollars. YMMV although I would suggest that a dollar-based transaction is not considered an "international transaction".

I have ridiculously bad luck in getting anyone overseas to take my Amex. Particularly here. The few merchants who said they would then said that they needed to tack on a 5-10% (!) service charge in order to do so, as it was "company policy."

I of course asked to see a copy of this policy, and was told that there wasn't a copy around but that this was for sure the policy, no mistake. So then I would say, okay, if you can just get a manager to write this down on a piece of paper and then give me his card, that would be fine.

They'd ask why, and I would say, so I can send it to Amex and ask them why they allow this. And then they would refuse to give me the statement, of course. And in the end, I'd always pay with my Visa.

I love Amex. I hate that no one here takes it.

I think that in the case of the Corte Ingles it was a USA based dollar transaction (no CC fee). They charged perhaps 1-2% for the conversion. This in theory is cheaper than the 2-3% the credit card would have charged.

While I haven't made a detailed study out of it, I have found that when you pay in dollars instead of the currency of the country where you are shopping, the exchange rate is at least 5% from the inter-bank rate, and I have sometimes seen significantly worse rates. So even if you are paying a 1 - 3% transaction fee, you would still be better off by performing the transaction in the local currency. I am adamant about the transaction going through in the local currency.