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

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• Mark LLL says:

  5 Mar5 March 10:11

  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.

• Leo_C says:

  5 Mar5 March 10:37

  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

  Leo

• Lili says:

  5 Mar5 March 10:46

  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.

• Talay says:

  5 Mar5 March 10:51

  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.

  • Guru says:

    5 Mar5 March 11:31

    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.

    • Matt says:

      5 Mar5 March 13:24

      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.

• Guru says:

  5 Mar5 March 11:42

  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:

    5 Mar5 March 12:20

    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.

    • Guru says:

      5 Mar5 March 12:41

      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.

      • Alan says:

        17 Mar17 March 23:06

        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.

  • DV says:

    7 Mar7 March 20:21

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

    • Guru says:

      8 Mar8 March 21:12

      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.

• Matt says:

  5 Mar5 March 13:21

  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.

  • Matt says:

    5 Mar5 March 13:22

    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.

    • Mark says:

      5 Mar5 March 14:48

      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:

    5 Mar5 March 16:16

    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.

    • Matt says:

      5 Mar5 March 20:37

      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:

        5 Mar5 March 22:55

        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!

      • DV says:

        7 Mar7 March 20:22

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

        • Guru says:

          8 Mar8 March 21:08

          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.

• Lee-Anne says:

  5 Mar5 March 15:21

  Been wise to DCC for quite a few years thanks to Martin Lewis / Moneysavingexpert. Also have a Halifax Clarity credit card which has no FX fees. We travel to Thailand most years and they always ask – and show you on paper the two rates. However I’ve never had anything pushy or underhand since I have become wise to this.

  However am really annoyed that an agent am currently using in South Africa for a safari this summer is trying to get us to pay using an online portal called Exchange4Free. This portal will only let you pay in your local currency (GBP) and gives no option to pay in ZAR!! I refused when paying the initial balance to use the portal and insisted a different route (essentially manual via the lodges themselves). But they are trying to sell it again as a great way to make all the various deposits or balances in one easy convenient payment. Convenient for how? Not me!!! Am not sure if the agent is trying to play dumb or really doesn’t understand what I am saying when I say that it is disadvantageous to me.

  What also annoys me is that the portal payment page states no expensive international transfer or swift fees which almost implies no fees in that regard at all…………………………………………..however at the bottom of the page after you enter the amount of ZAR to be paid it shows transfer fee £0.00 and below that an unspecified fee of £37.31!!!

  The difference on our balance is around £80 even factoring in 3% fees for credit card payment!

• Joe says:

  5 Mar5 March 15:24

  Using it in any country will automatically use that country’s currency and the exchange rate used is the same as the rate seen on xe.com. What’s especially good is that it ties in with an app on your phone so when you sign up you get a digital card immediately. You can also freeze your card from the app at any time. I’m not affiliated with them in any way – just thought it’s a genuinely useful and interesting service.

  • Matt says:

    5 Mar5 March 15:57

    So how do they make any money?

    • abc says:

      5 Mar5 March 16:40

      I would assume in the same way as other card issuers I assume, via merchant fees.

      • Joe says:

        5 Mar5 March 17:22

        Exactly:

        “We earn a nominal fee paid to us by merchants every time you spend on your Revolut Card.
        Revolut was launched to offer a fair and transparent service. It has been designed to offer the best value and the best user experience.”

  • John says:

    5 Mar5 March 18:36

    No, it will never be the same as xe.com unless it doesn’t use visa, MasterCard or amex.

    • Joe says:

      7 Mar7 March 07:34

      From their FAQ – I don’t know if this is the same rate as visa, MasterCard or amex. I also couldn’t see the footnote though due to the formatting of their site:

      Our rates mirror the Spot Interbank exchange rate*. The interbank market is the top-level foreign exchange market where banks exchange different currencies. It is a wholesale market through which most currency transactions are channeled and, as such, offers the best possible exchange rate available. This spot interbank exchange rate typically beats that of banks and other consumer foreign exchange services by 3-5%.

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