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Bits: my worst ever Dynamic Currency Conversion scam, Flybe sale, good Iberia Plus wine offer

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Lots of small stories today as I try to clear a backlog after my trip last week.  And speaking of that trip ….

The worst example of Dynamic Currency Conversion I have ever seen

I was in the Waldorf-Astoria Ras al-Khaimah last week which I will review soon.  It is a very impressive hotel but, at check-out, I experienced the worst Dynamic Currency Conversion scam ever.

Hotels like to give you option to pay ‘in your home currency’ because they use an exchange rate far worse than the one your credit card company uses.  The total cost will be higher than if you paid in local currency and then paid the 3% FX fee on your card.  If you have a Post Office, Lloyds Avios or Halifax Clarity card, there will be no FX fee.

You MUST be offered the choice of paying in local currency.  A hotel is violating its credit card agreement otherwise.  Some hotels will ‘try it on’, however, and give you a card machine which displays a Sterling figure.  You need to reject this and insist you are charged in local currency.

What the Waldorf-Astoria did was worse.  I was given the card machine and the amount showing was in Dirham.  I entered my PIN.  The screen then flashed up ‘£ XXX.XX charged’ as it processed the transaction – in Sterling.

This was clear theft.  What was even more shocking is that the payment slip that came out of the machine showed the total in Dirham and only in small print did it say that I had actually paid in Pounds.

I immediately told the hotel to reverse the transaction.  It turned out that this particular card machine had been especially programmed to do this and could not work in any other way, so a different card reader had to be found.

Using the 2nd machine, I was given the option of paying in Pounds or Dirham.  I chose Dirham and charged it to my Curve MasterCard which has a 1% FX fee.

Because you see instantly the value of Curve transactions on your smartphone, I could see within seconds that I had saved £30.36 compared to the first transaction.  This was 4% of the total bill meaning that the hotel had charged me 5% for the ‘privilege’ of ‘paying in my home currency’.

You should ALWAYS reject the option to pay in £ when overseas, even if your credit card has a 3% FX fee – you will still be better off.

waldorf astoria ras al khaimah

Flybe Super Size Spring Sale launched

Flybe has launched another short term sale – the key difference with this one is that it covers May half-term and all of the Summer.

Flights are priced from £24.99 and must be booked by 8th March.  Travel dates are from 12th April to 19th October.

Remember that you collect 4 Avios for every £1 spent on Flybe flights, excluding taxes.  Full details can be found here.

Flybe sale

Earn 480 Avios in Iberia Plus with a new wine offer

Finally, Iberia Plus has launched a new offer with its UK wine partner Vinoseleccion.

As you can see here, £48 gets you six bottles of 2011 Rioja.  This includes free UK delivery.  You will also receive 480 Avios into your Iberia Plus account, which is one way of activing it in order to use ‘Combine My Avios’.

A few HFP readers have used Vinoseleccion in the past and the general feedback about the wine has been positive.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

Bits: 500 Avios with first LOVEtheatre booking, new Qatar business class seat on the way
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  1. Duncan S says:

    I had a similar problem at a hotel in Dublin. Was tired when paying and didn’t notice they’d charged my Halifax Clarity in GBP instead of EUR. I insisted the manager refund the original transaction and process it again in Euros. I was never given the choice.

    Out of interest, am I to assume that the SuperCard > Curve > Amex route doesn’t work? I have to assume so based on you using Curve directly and getting hit with the 1% fee.

    • Unlikely to. Curve is classed as a prepaid card and you can’t link prepaid cards to a Supercard. It would in any case completely screw Supercard’s business model due to the high fees so if it did work I can see them shutting it down pretty quickly.

  2. Anna Tomlinson says:

    Thanks for highlighting this. I always choose sterling, when asked, but on a recent trip to Düsseldorf also had the experience of another commenter when the receptionist used my check in swipe to conclude the transaction in Euro. I asked for it to be reversed and it was. I had previously had the experience of getting immediate fx credit card refunds and then finding when my statement arrived that in the few minutes between the purchase and the refund a rate change meant I paid more than I got refunded. However, this time the rate change worked in my favour and I came out with a 20p profit. Result!!

    • Why do you always choose Sterling and voluntarily get screwed on the rate?

      Raffles is advising you to always choose local currency when offered as the rate is significantly more favourable to you.

      • Brendan says:

        Not sure if this is the case here but I know people who need to claim business expenses back weeks later prefer to pay in £ as it saves hassle with exchange rate movements going against them when they come to claim,

        • And if they’re putting business expenses through a personal card they’re probably benefiting from more points due to the higher cost….

          These days most people have online access to transaction details. I’ve always put foreign currency expenses through at the amount of the converted Sterling charge. If you have something like a Supercard (or Curve) it should be even easier.

        • Genghis says:

          I don’t really understand why it’s better for business expenses to pay in GBP using DCC. Surely you just take the GBP cost which hits the credit card statement as the expense (which is cheaper paying in local currency?)

  3. I’ve had this too at the (now closed I think) IC Rome, where they swiped the card in GBP and got me to sign a folio on an A4 piece of paper with the Euro amount shown prominently in several places but the fact it was actually charged in GBP hidden in small print, so I didn’t notice until the transaction showed up on my card bill. Complained to hotel, IHG and Visa, and none of them did anything. Turned out to only cost £1.50 more than the IHG cards fees, but I had originally tried to pay with a supercard which was rejected, likely because the transaction was in GBP – obviously if I could have paid with that it would have been cheaper. It’s put me off IHG massively though – what’s the point in the brand if they aren’t going to stop their hotels scamming you? – so I’m switching to using instead as you get 20% back and can prepay in your home currency, stopping these scams.

    It’s also worth noting AFAIK AmEx won’t let them charge your card in anything other than your home currency, so it’s frustrating they don’t offer foreign exchange fee free cards themselves in the UK (as then I’d just pay with AmEx and know they couldn’t DCC scam me).

    • Brian says:

      You’re wrong about the Amex. The Lloyds Amex, for instance, is designed specifically for foreign currency transactions.

      • DCC is not available on AMEX, only visa and MC because AMEX want to retain the revenue they make from the transaction and they dont want that taken away from them.

        I agree that AMEX should have fee free transactions and am not sure why they dont offer that with the Platinum card, after all is costs a lot to have it.

      • This isn’t offered by AmEx themselves though – I chose my words carefully 😉 after what I’ve heard about Lloyds customer service, I don’t want to use their card.

        • Gavin says:

          Had the card for 6 months, never had any issues with it or cause to interact with their cs

          • If you do you’ll find their normal cs is useless for anything you couldn’t do yourself online. I also accidentally pushed the card slightly over the credit limit by a couple of pounds (my fault) which although I took corrective action within a day or two resulted in a cascade of charges and interest many times the amount I was over by some of which was incorrectly applied.

            I have to say though their official complaints channel was very responsive and quick to deal with issue, refunded the charges in full and some compensation on top less than a day after I raised it.

    • In my experience DCC is rarely if ever offered on Amex transactions. I’m not sure whether it is possible but it certainly reduces the risk.

      As Brian says the Lloyds Avios Rewards Amex (£24 per year fee) does offer loading free transactions making it a good option if you’re getting value from the upgrade voucher to justify the annual fee.

      • Talay says:

        It certainly is at Boots in AUH airport as they scammed the women in front of me and I told them not to even think about it with me,.

    • Richmond says:

      “I’ve had this too at the (now closed I think) IC Rome, where they swiped the card in GBP and got me to sign a folio on an A4 piece of paper with the Euro amount shown prominently in several places but the fact it was actually charged in GBP hidden in small print, ”

      I had exactly the same happened in Hilton in Mainz. Folio showed amount in Euro, I never paid by card in terminal, they just charged my card. Then days later I noticed very small print that my card was charged in £. I complained and was totaly ignored.

      I always ask before payment to be charged in local currency. I used Nationwide card which has no fx fee.

  4. Esperluette says:

    I have also been caught out on the PayPal site where one gets offered a choice of home versus local currency. My Halifax fx free card is what I want to use , in local currency,but the screens are awkward and I have been unable to use local currency on a couple of occasions when I was expecting the very small print option to appear.
    Raffles and fellow readers ,do you know if the PayPal conversion rate is much worse than the MasterCard one?the transactions involved were small and I could not tell the difference , specially after a few minutes of fx fluctuations.
    Seems like a super complaint by which is needed for institutionalised scamming!

  5. DCC is also one of my pet hates. I suggest a one star negative review on TripAdvisor calling them out for overcharging (which is effectively what it amounts to, worse still it is deliberately hidden overcharging). If they refuse to refund, after making a fuss at the time I also dispute the transaction and request the difference to be refunded by the card company. Even if it is a few pence it’s the principle.

    The worst bit is retailers are being encouraged to ‘offer’ DCC as an additional revenue stream. No wonder some them ‘forget’ to give you the choice or claim to have machines that can’t.

    • Callum says:

      In my experience, ignorance about DCC is as prevalent amongst cashiers as it is amongst the general public. While I’m sure some of them are deliberately scamming you, I’d wager most don’t think they are. Many I speak to (in less touristy areas than upmarket hotels) are genuinely confused when I say I’d rather be charged in the local currency and had no idea that DCC charges you more.

      I also met a few small business owners (who I knew a little beforehand so was confident they weren’t lying) in Australia who were specifically told by the Travelex reps who sold them the machines that it’s better for the customer to use DCC.

      • Sussex bantam says:

        I used to be the finance director of a set of retail stores which operated in airports. Barclaycard actively sold DCC as a way for us to make more profit by overcharging our customers. They literally pointed out how to set artificially low exchange rates and presented us with a business case showing increased profits

  6. Mark LLL says:

    On an unplanned visit to Ireland, I presented at a Dublin Tourism Office and arranged a seven night stay at a city centre hotel. The office required ten percent of the price upfront (which the hotel would deduct from my bill) all prices in euro. I argued they should ask for ten pc of first night only, but no matter because whatever I paid would be deducted later, so no loss.
    On check-in I surrendered the Tourism Office receipt for the amount I’d paid.
    At check-out, – very rushed, my biggest mistake – the hotel billed me in Sterling. I paid it using cc. Felt aggrieved about their dodgy exchange rate, but no time to argue.
    Later realised that hotel had not deducted the ten pc which I’d paid upfront.

  7. Leo_C says:

    Thanks Rob for this- it not only alerts new people to the issue but also illustrates how much you can save by following the advice


  8. Yeah, it happens a lot everywhere, last one I had was in duty free in Rome. The worst is that many machines don’t display the value when you enter PIN, so you can’t see that currency is wrong until confirmation is printed. If there is one useful regulation EU should enforce is for every chip&pin machine to have to display charge you’re accepting – otherwise frankly I’d much rather have goold-old signature, at least I know what I’m signing!
    In Rome I had to get the charge reversed and then charged in Euros – the lady said that it just went straight through to pounds but I wonder if it’s really the case, or did she select the home currency without thinking much or asking me. She could then use euro on the same machine after I complained I wanted to be charged in euros.

  9. Talay says:

    I do not own hotels but I use Elavon as a merchant acquirer for card transactions.

    They offer DCC with a 3% or 5% uplift but you don’t get it all, as they rob you as well as the customer. I don’t use it as I think it is simply theft but some do.

    I have local currency banks in many places I visit so can pay in local currency.

    • Elavon only charge 3.5% uplift for doing the conversion and not 5% and you are correct a % of that stays with the hotel.
      I am not quite sure how you can say you are being robbed for offering DCC to your guest, you dont have to have it activated on your terminals.

      • There is no robbery taking place. Elavon is not a charity and takes a % of the mark up for providing the service. Bigger companies negotiate the %. Smaller companies just work with set options. As a merchant it is a good income source for little work.

  10. The think what seems to have been totally missed here is that a lot of banks outside of the UK will charge more than 3.5% in fees for foreign transactions. Sure you have a 1% card and that’s great for you but your write up makes it sound like 1% cards are standard practice. This is not the case.

    You totally forgot to mention the benefits of DCC when calling it a scam and that might suggest that you have not really thought about what DCC really is.

    For a bit of balance on this…
    The customer gets to pay the final amount in a currency that they understand
    The customer gets the exchange rate fixed for the transaction so they don’t need to worry about ex rate changes before the transaction is posted.
    The customer is often covered by a rate guarantee, meaning that if it turns out the issue/bank offered a better rate on the same day then they can claim the difference back.

    Whilst these benefits may not be important to you, they can be very important to other people and are anything but a scam for them.

    DCC may not appeal very much to people in the UK but can be very attractive to people coming into the UK, especially if the the bank/issues they use charge conversion fees in excess of 3.5%.

    DCC is a choice and is different for everyone, I am not sure how you can call that a scam?

    • TGLoyalty says:

      Surely the scam Rob is talking about is not being given the choice in the first place.

      I can’t think of a single reason to choose it unless you are buying in a country with extremely volatile exchange rate (RUB ZAR BRL come to mind atm) even then I’d take the chance and just let my 0 fees card sort it out.

      • And TGLoyalty you are lucky in the fact that you have a 0 fee card, not everyone has this and in some cases banks often charge a lot more than 3.5% to do the conversion.

        Yes you are correct you should always be offered DCC, if you are not offered it and they process it without your permission then you can claim the full amount back from your bank.

        Lets not forget, just because it is not suitable for you is not to say it is the same for everyone.

        The hotel in question was wrong to do what they did but I would hardly brand DCC as a whole a scam and that is what this blog post has attempted to do.

        • Which cards charge a lot more than 3.5%?? Many US cards are fee-free, UK are almost all either fee-free or 2.5-2.99%, no Australian ones I saw were over 3% – I’d be interested to know which cards charge so much more. Given the predominantly UK audience for the blog any UK examples would be of particular interest.

          The way DCC is actively hidden from many customers (and it appears from the comments often retailers too) in the fine print and that the company carrying out the conversion makes a tidy sum on the side certainly makes it a scam in my (and many others’) view.

    • Utter balls. DCC is a scam. How can the customer evaluate the “choice” he is offered.

      • The customer can evaluate with the information they have at hand and from perhaps knowing what the bank/issuer will charge them. If they cant do that then they would have a rate match and this would mean if the bank did offer a better rate on the same day then they could claim the difference back.

        I don’t know of any bank that will offer a rate match the other way round, In my mind this is a win win for the customer by using DCC.

  11. I work in this area so I can add some insight.

    Usually the DCC mark up in Europe is around 3%. In the Middle East from 3 to even 7% can be seen on occasions.

    DCC is not always a bad option, and often the bad reputation is from articles where people are not analysing the full picture. For instance my Barclays Premier and AMEX Platinum cards charge me a 2.75% currency conversion fee, I know some other credit cards charge 3.5% or so when transacting in a foreign currency. If I pay 3% mark up on DCC then the benefit is that at least I know what I am going to be charged in £’s on my statement, whereas if I pay in local currency I do not know the exact amount.

    If the card issuer charges a mark up then the card issuer makes a profit on this mark up. In DCC the merchant and the card acquirer share in this mark up – whereas the issuer does not get anything. If a bank is truly offering an FX Free card then this product will be a loss leader for them. Every company, no matter its size will have a cost of providing a foreign currency transaction – as essentially to that bank they need to exchange foreign currency in order to allow payment in local currency.

    Even a large bank with its scale does not get the exact spot rate on FX, therefore I would suggest that whilst they may not be charging a fee per se, you may not be getting the actual published rate that you may be expecting from looking in the financial pages. Finally, many card providers do not update their internal rates on a realtime basis, so an FX fee covers the volatility of the market movements, without having any spread in place the banks runs the risk of its rates set earlier in the day being loss making at the point when you make your purchases.

    • Just to add to this. Visa and MasterCard operating rules are very clear that cardholder must be offered a clear choice in both currencies, and any DCC by force or without choice is against their rules. I have seen merchants get significant fines for DCC non compliance, which can run into very high amounts just for one or two transgressions.

      • Which is the core issue of course, and why I always dispute the charge and ask to be refunded the difference if the retailer refuses to do so or claims they cannot.

        If enough people do this the rules will be enforced and the retailers will quickly find it isn’t worth breaking them.

    • Mr Dee says:

      Haven’t seen a situation where DCC has been a good option, as many have already said that the 3% fee charged when just using a standard credit card is still lower than a DCC transaction. Yes you get to know the amount in GBP that you would be charged but when its always going to be more than not having the DCC it still makes no sense in choosing it as you would still need to pay your bill either way.

      • It’s a service that you can chose yes or no to use. If the DCC rate is 3% and the card issuer will charge you close to this then there may be value in knowing how much you will be billed. I sometimes choose DCC despite knowing its workings quit closely.

        • Mr Dee says:

          Fair enough some people maybe interested to know the costs upfront before agreeing to them.

          There are plenty of options for cards with no fx fees especially for transactions in Europe, even 3% is too much for me.

          Can’t wait for the curve card!

        • Nonsense. It’s a scam. Stop trying to defend it. How does the customer make an informed choice?

          • The customer makes an informed choice because they know that, for example paying in Euros means uncertainty and accepting the exchange rate on offer means they know exactly how much will show on the bank statement.

            It’s even more informed if they have checked all the bank/issue fees before going on holiday.

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