Refund from Euro transaction

MagicBoy_2

I bought something from a website in Germany last week. They were unable to supply as they ran out of stock so have refunded the order. My credit card company (Cahoot) have processed the refund using a different exchange rate so I've lost about £4 (on a £68 transaction) in the process.

Are they allowed to do this?

NickX

This happened to me once - it was Barclaycard, and a hotel in Dubai charged me twice. They then refunded one of the charges but because of the Sterling\UAE Dirham exchange rate difference I was about £15 down.

I spoke to Barclaycard and they kindly refunded the difference.

jamalfatty

Yes they are allowed to do this - the credit card companies dont set the exchange rates and money is being changed at POS and when refunded at prevailing rate at the time.

Most companies however will refund the difference if a relatively small amount, just give them a ring and see what they say

Viks

Does that mean you could profit from the refund if it was vice versa?

NickX

Viks wrote: »

Does that mean you could profit from the refund if it was vice versa?

No, I don't think this is the case.

The difference in the exchange rates is because the BUY rate for foreign currency is different to the SELL rate, so when the refund is made the conversion is from Foreign Currency to Sterling, so effectively SELLING the foreign currency which returns less Sterling than that is required to actually BUY that amount of foreign currency in the first place.

If the refund is not the fault of the customer, then it does seem only fair that the Credit Card company should equalise any difference.

JohalaReewi

You also get hit by the commission charged by the CC company (typically 2.75%). They will charge for each conversion so you will always lose out in this situation. The only thing you can do is ring the CC company and ask nicely if they can refund the difference.

You can minimise this effect in future by using a commission free credit card like the Nationwide or Post Office.