Exchange Rate Rip Off

Ben8282

I have encountered this problem when using UK credit cards in Spain. In recent months on two occasions the chip/pin terminals have converted the Euro amount to £ without me being given any option to pay in Euros. On one occasion the receipt actually stated that I had been given the option to pay in £ or Euro when I had not.

bris

You could have canceled the sale and went to the cash line. The bottom line is you knew what you were being charged and paid it, there is no law relating to what rate a merchant can charge.

Paul_Herring

chattychappy wrote: »

This is a classic case - Irish person, UK merchant, the "must be offered local currency option" is probably in a contract which the cardholder is not privy to.

"Must be offered" is probably contractual. Between the mechant and their bank. Or at least as a courtesy to holders of foreign cards. For those who would prefer it, or who would like to remain oblivious to the excessive charges normally placed on such transactions.

"Must only be offered" is against quite a few agreements between various companies. Including between VISA, MasterCard and AMEX and their merchants.

callum9999

chattychappy wrote: »

Sounds to me like the merchant either didn't know or didn't want to know how to get the machine to offer GBP when the Irish card was put in.

With DCC, the bank do set the rate, but with a significant loading enabling a kick-back to the merchant.

Are you sure the bank decides? I've seen wildly varying DCC rates from the same bank, going from 0% at their cash machines all the way up to about 6.5% at a store terminal. I always assumed the merchant decided when it got set up.

Ben8282 wrote: »

I have encountered this problem when using UK credit cards in Spain. In recent months on two occasions the chip/pin terminals have converted the Euro amount to £ without me being given any option to pay in Euros. On one occasion the receipt actually stated that I had been given the option to pay in £ or Euro when I had not.

It was probably the person there assuming you wanted pounds - even if they didn't press anything on your bit of the device, they could probably do so from the till. When I'm in Spain it's often set up in £ for me and I have to explain to them that I actually want to pay in € (which is where knowing Spanish comes in handy! Despite it being common knowledge on forums like this, out in the "real world", few people really know about it being a rip off!).

Unless it's just something I've never come across, I don't think they make them without giving you a choice (it's whether the merchant passes over that choice to you, or makes it themselves, that is often the issue!).

Paul_Herring

callum9999 wrote: »

which is where knowing Spanish comes in handy! Despite it being common knowledge on forums like this, out in the "real world", few people really know about it being a rip off.

Does 'offering to go find a cashpoint to withdraw euros' encourage them to remember the relevant bit of their training on using said machines? Or hasn't that been tried?

Ben8282

Paul_Herring wrote: »

Does 'offering to go find a cashpoint to withdraw euros' encourage them to remember the relevant bit of their training on using said machines? Or hasn't that been tried?

Offering to go find a cashpoint to withdraw sone Euros would probably please them actually; they will be paid in cash so no credit card commission for them .....

Ben8282

callum9999 wrote: »

It was probably the person there assuming you wanted pounds - even if they didn't press anything on your bit of the device, they could probably do so from the till. When I'm in Spain it's often set up in £ for me and I have to explain to them that I actually want to pay in € (which is where knowing Spanish comes in handy! Despite it being common knowledge on forums like this, out in the "real world", few people really know about it being a rip off!).

QUOTE]

You may well be right. I didn't realise they received a financial incentive if I chose pounds so had no reason to imagine that they would be making the choice for me before they handed me the terminal.

janiebquick

I'm not sure I understand this at all. I regularly shop in France with a UK credit card and NOT ONCE have I even been asked if I want to pay in sterling. I have heard that it happens and that you should make sure you pay in the local currency if it does.

Miss_Havisham

There will be an exchange rate conversion in such transactions whichever currency is used to pay. If paid in £ the payment will be converted to euro when the money is taken off the cc by the OP's bank.

If paid in euro, the payment will be converted to £ so it can be paid into the restaurant's £ bank account.

So I'm not sure what the issue is other than the actual e/rate used. Perhaps I'm missing something ?

chattychappy

callum9999 wrote: »

Are you sure the bank decides? I've seen wildly varying DCC rates from the same bank, going from 0% at their cash machines all the way up to about 6.5% at a store terminal. I always assumed the merchant decided when it got set up.

I believe the merchant can choose the loading. I've seen variation too, but I think visa/mastercard sets the rate on which a loading is applied. (Willing to stand corrected.)

Miss_Havisham wrote: »

There will be an exchange rate conversion in such transactions whichever currency is used to pay. If paid in £ the payment will be converted to euro when the money is taken off the cc by the OP's bank.

If paid in euro, the payment will be converted to £ so it can be paid into the restaurant's £ bank account.

So I'm not sure what the issue is other than the actual e/rate used. Perhaps I'm missing something ?

Yeah, that is the issue. In the normal case (charge in local currency), the conversion is done at the visa/mastercard rate which is near the interbank rate. A loading may then be applied according your T+Cs, often around 3%, but sometimes nothing (eg Clarity).

When the conversion is done by the merchant, the exchange rate is usually much more seriously loaded. Also, on the spot, it can be difficult to work out exactly what it is - especially if you are just offered a GBP amount to sign for.