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You’re being ripped off by card currency conversion charges

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You’re being ripped off by card currency conversion charges

Interchange fees expert Eric Grover has some news of all those who use their cards when globe-trotting – you could be getting ripped off… badly.

A lot of people love their cards. They allow them to avoid the enormous inconvenience of having to worry about exchanging money before a trip and give them the peace of mind that they have access to credit wherever they are in the world. However, there are some issues to be noted. Considerable ones.

The early 21st century is enjoying an unprecedented tsunami of innovation in terms of payment making. This includes mobile acceptance provided by ballyhooed Square and iZettle, UK banks’ P2P payment system Paym, as well as the headline-making cryptocurrency like Bitcoin and digital wallets.
Competition and buyers watching out for themselves and their interests in free markets reward firms delivering value-creating innovation. Those who don’t are punished.

There are however unfortunate exceptions where, because of lack of awareness and inadequate disclosure, competition can produce perverse results. Dynamic currency conversion (DCC) is a case in point. It lets travellers using credit and debit cards pay in their home currency. However it comes at a cost. For this service they pay a hefty 3 to 4% (often higher) foreign-exchange markup.

Not knowing of this, people use their cards and rarely complain, because they don’t know their money’s gone in the first place. Consumers are more comfortable paying in their home currency because it’s familiar.  Cardholders see the local and their native currency prices and, fleetingly, the exchange rate. They don’t however know by paying in the local currency they receive a wholesale exchange rate, 4% or so better than the DCC rate merchants offer.

This is good to keep in mind next time you jet off on your travels.

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deVere FX Queries

6th Floor, ABSA house,
Ebene Cybercity,
Mauritius,
J. Balcikonio str. 9,
LT- 08314, Vilnius,
Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

Contact

Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.