Bank Scam On Purchases Abroad

Tesco's in Calais have started offering their customers the opportunity of settlement in € or £ in the second part of this year. After the first time I realised that their rate merely skimmed off around 3% more than the Nationwide BS would have charged had the the transaction remained in €uros. I now specify that the transaction stays in € and they can accept the payment in either form.

I noticed a couple of such transactions whilst in Catalunya in September, but they only amounted to a pound a or two extra and I was not tuned in to them at the time or would have protested. I think the issuing banks will merely point to the written authorisation on the slip you have signed, but it is probably a good idea to protest at each event in order to keep the card companies and retailers in check.

It is not Nationwide, it is the retailers or their banks.

Most people don't complain because they both win and lose. You get their poor exchange rate but your own credit card would have also given a poor exchange rate because they load it with fees (see Martin's article), so it roughly cancels out.

However if you are sensible and use Nationwide you have lost out because they would have given you the best rate without skimming off any profit for themselves.

EDITED: cos wot I said was rubbish

Do you not mean "if you are sensible and use Nationwide you have *NOT* lost out because..."

RD?

No RD, what Reaper says is correct. To illustrate, if I were to buy something worth $190 (£100) in the US. If I were to pay using a Nationwide card, I would be debited £100. But with another card that charges, say, a 2.75% fee for such transactions, I would be debited an overall amount of £102.75.

On the other hand, quite likely that the retailers from whom you buy trick you by doing the ccy conversion themselves, thereby charging you an extortionate exchange rate. This would mean that they would directly settle with your card issuer in pounds and save you the 2.75% if you are using a non-Nationwide card, but sock you a bad rate, leading to you anyway having an effective outflow of £103 (exch rate used being 1.8455 instead of the better rate of 1.9 that the card issuer would have offered you)

We thus have four scenarios for the same purchase:

1. Using a Nationwide card, with ccy conversion done by issuer --> outflow of £100

2. Using a Nationwide card, with ccy conversion done by retailer or his bank --> outflow of £103

3. Using a non-Nationwide card, with ccy conversion done by issuer charging 2.75% --> outflow of £102.75

4. Using a non-Nationwide card, with ccy conversion done by retailer or his bank --> outflow of £103

One would like to fall under category 1 by using Nationwide, but still would lose out of the benefit if the retailer were to do the ccy conversion, causing him to inadvertently fall under category 2.

Boy, hope that made sense at the end of all that typing... Phew...

Doesn't sound like a nationwide issue to me.

They are just correctly processing the transaction sent to them in either Euros or £ by the retailer.

I guess the retailers are being clever because they make a bigger margin on the exchange rate rather than the bank.

It is probably fair to say that Nationwide are the silly ones here. They are taking the higher cost of processing overseas transactions (Visa charge them more) and they are taking some foreign exchange risk, but they are not passing on these additional costs to their customers.

I agree that a 2.75% fee is too high but why shouldn't customers pay a small charge for using their card overseas?

Even with a 2.75% fee, the cost of using a credit card abroad often works out less than using cash or travellers cheques because the exchange rate is so much better than that offered by bureau de change.

R.

It is probably fair to say that Nationwide are the silly ones here. They are taking the higher cost of processing overseas transactions (Visa charge them more) and they are taking some foreign exchange risk, but they are not passing on these additional costs to their customers.

I agree that a 2.75% fee is too high but why shouldn't customers pay a small charge for using their card overseas?

R.

Nationwide have done their sums and are not going to expose themselves to unecessary risk. All they are doing is not taking the cream that other cards do, and are passing it to the customers instead.

You do pay for using any card overseas. The exchange rates are loaded so that visa et al. get commision on currency conversions just like other companies.