how to pay a regular subscription in usd from a uk bank

I am considering subscribing to software which requires a monthly payment of 10 US Dollars.


The software company tell me that they can directly debit the amount from my debit or credit card, and they don't make any charge.

The UK bank (Natwest) says yes that is possible, and the exchange rate would be the bank rate prevailing on the day (no extra charges or percentage charges).

Does anyone have any experience of, or recommendations on this sort of transaction?


Thanks
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Comments

  • agrinnall
    agrinnall Posts: 23,344
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    That's really the only way to do do it, and if nobody is levying any charges it's also the cheapest way to make foreign payments. I'm not sure what sort of recommendations you are looking for.
  • tfc
    tfc Posts: 43
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    Thanks, perhaps I should have been more precise.

    Perhaps :-

    "If you have had any experience of such transactions could you let me know whether there were any charges and/or problems.

    Or, if you have any suggestions for/against would you recommend them or a different facility."

    Do I assume from your reply that you have actually used such transactions successfully?
  • eDicky
    eDicky Posts: 6,547
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    edited 30 October 2018 at 4:03PM
    You talk about paying by credit or debit card, and then about asking your bank to do it - a bank transfer is something else.

    By card the Visa or MasterCard exchange rate would be applied, with the card company adding up to 3% 'loading'. But there are credit and debit cards without any fees or loading on non-sterling transactions, see the MSE travel money advice:

    https://www.moneysavingexpert.com/travel/cheap-travel-money/#need-10

    It's unclear what Natwest mean by what they told you, or what you actually asked them. The Natwest debit card does not have a fee for non-sterling purchases, but the rate is loaded by 2.75%, with a minimum of £1 - that's about 12% load on your $10 payment.. !
    Evolution, not revolution
  • tfc
    tfc Posts: 43
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    Thank you, I appreciate what you say, but I am not talking about paying by debit card or credit card used overseas.

    I am talking about a US company directly debiting my account (bank, debit card, or credit card) in the UK.

    I described it to the bank exactly as that, a direct debit. The bank mentioned direct debit from an account, via account details or debit card details and credit card account via credit card details.

    I will recheck with the bank.

    Do you have any experience of this sort of transaction?
  • At the end of the day, what you seem to be talking about is a simple foreign currency transaction that gets converted into sterling and then billed to your CC account or deducted from your current account via your debit card. The only twist is that it will happen monthly and the amount you have to pay in sterling will vary as the US$ exchange rate moves about.

    Whether your card issuer asks for a loading to be applied to the transaction after conversion by Visa/MasterCard is another matter and you need to clarify this with NatWest because it seems from eDicky's post that NatWest does load foreign currency transactions.

    Having said all that, you very curiously mentioned the fact that the supplier doesn't make a charge. Now that makes me think you might be talking about something rather fancifully called Dynamic Currency Conversion (DCC), whereby the retailer does the conversion at the point of sale and puts the charge through in Sterling.

    If that is what you are alluding to, then you will be exposing yourself to a currency conversion rate chosen by the retailer which will almost certainly not be as good as that offered by Visa or MasterCard. Whether it would be comparable to a 'loaded' conversion done by Visa or MasterCard is unknown.
  • tfc
    tfc Posts: 43
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    Thanks for that. Dynamic Currency Conversion (DCC) sounds as though it could be what the software company means. I will ask them to clarify the process. I was speaking to a sales person. If I ask to speak to someone in their accounts department, I should be able to clarify the charges and rates calculation.

    If they are using DCC, bearing in mind that I am only talking about $10 payments, unless there is some truly extortionate extra percentage, or a 'minimum' fee, I probably? can't lose out too much.
  • gt94sss2
    gt94sss2 Posts: 5,614
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    edited 30 October 2018 at 8:53PM
    It doesn't sound like DCC to me but that the retailer are saying that they will charge the chosen card in USD and left the bank/credit cards convert this to GBP.

    There are some bank accounts or credit cards which are good for this sort of transaction including one from Natwest (https://personal.natwest.com/personal/credit-cards/the-natwest-credit-card.html) as well as Monzo, Starling, Tandem or the Halifax Clarity Credit Card depending on if you want to use a debit or credit card.

    With other bank accounts or credit cards you're unlikely to get as good an exchange rate
  • The suggestion that it might be DCC was based on the retailers rather curious statement that they wouldn't make a charge for processing the transactions.

    There is also little doubt that a retailer would not use a wholesale rate like Visa or MasterCard and it does seem a rather curious service to offer for a Recurring Transaction.

    Still, best to verify it first and, if it is DCC, to see exactly where they will source their conversion rate and be aware that the only incentive for a retailer to offer DCC is because they are making something out of it.

    Also, just to clarify, the exchange rates used by Visa and MasterCard are the same for all cards on any given processing day - it is the currency conversion fee added on behalf of certain issuers that makes the difference.
  • tfc
    tfc Posts: 43
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    Thank you gt94sss2 for that information about 'The Natwest Credit Card'.

    I didn't realise it existed. I thought that facility was only available on other banks.

    This is another piece in the jigsaw. I am looking forward to solving it!

    Thanks Terry for your further clarification.
  • eDicky
    eDicky Posts: 6,547
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    edited 31 October 2018 at 6:21PM
    tfc wrote: »
    Thank you, I appreciate what you say, but I am not talking about paying by debit card or credit card used overseas.

    I am talking about a US company directly debiting my account (bank, debit card, or credit card) in the UK.

    I described it to the bank exactly as that, a direct debit. The bank mentioned direct debit from an account, via account details or debit card details and credit card account via credit card details.

    I will recheck with the bank.

    Do you have any experience of this sort of transaction?
    Using a debit or credit card overseas, and paying an overseas company in foreign currency while being in the UK, are both effectively the same thing. That's why I pointed you towards fee-free cards for overseas (as gt94sss2 also mentions).

    Although not as a monthly subscription, I am doing this sort of thing all the time. For example on Sunday I bought an air ticket from Singapore to Indonesia priced in S'pore dollars while i was still in the UK, using my Starling Bank debit card. The transaction was settled yesterday at the straight MasterCard rate with no fees.

    I would never let a company debit my UK bank account directly in a foreign currency, even if it were possible. Either the bank will impose a lousy rate and probably charge a fee, or the company will convert at the rate of their choice (DCC).

    Just get a suitable card and let the software company debit it. But make sure they bill you in dollars, not pounds, so that you card does the conversion.
    Evolution, not revolution
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