Banking For Americans In Thailand 101

[TallGuyJohninBKK]

Thanks for the comment, Captain...

Who do you like for no foreign currency fee credit cards?

We use Penfed Promise Visa (no annual charge, late charge!, or foreign currency charge) and the US HSBC MasterCard. PenFed, in particular, is a good organization.

Ditto on that, Captain... The PedFed Promise Card is a great deal for a credit card, and probably a lot of people don't know that anyone from the U.S. can join PenFed Credit Union -- you don't have to have a specific military affiliation. 7.9% APR on revolving balances right now, apart from the other benefits you mention.

Re HSBC, I'm somewhat familiar with their cards, but I didn't think HSBC USA offered any credit card products that were free of foreign currency charges.... Do you know something different about that?

[CaptHaddock]

Thanks for the comment, Captain...

Who do you like for no foreign currency fee credit cards?

We use Penfed Promise Visa (no annual charge, late charge!, or foreign currency charge) and the US HSBC MasterCard. PenFed, in particular, is a good organization.

Ditto on that, Captain... The PedFed Promise Card is a great deal for a credit card, and probably a lot of people don't know that anyone from the U.S. can join PenFed Credit Union -- you don't have to have a specific military affiliation. 7.9% APR on revolving balances right now, apart from the other benefits you mention.

Re HSBC, I'm somewhat familiar with their cards, but I didn't think HSBC USA offered any credit card products that were free of foreign currency charges.... Do you know something different about that?

If you have a US HSBC Premier account, the mastercard does not charge a foreign exchange fee or an annual fee.

Edited December 16, 2011 by CaptHaddock

[TallGuyJohninBKK]

Yup, but the last time I checked, the entry ticket to HSBC Premier for Americans was having $100,000+ in combined deposits or other kinds of value relationship with the bank, including a mortgage as one qualifying option, as best I recall.

HSBC Premier also supposedly has its own online international funds transfer system from HSBC accounts in one country to HSBC accounts in another country, like USA to Thailand. But I've seen few if any reports from Americans here on actually using that.

I know in the past when I tried using my HSBC USA ATM card at the HSBC main office in the Silom area, I seemed to get a poor exchange rate and some variety of ATM fees... But, to be clear, I didn't have Premier status on my account, just regular schlub status...

[CaptHaddock]

Yup, but the last time I checked, the entry ticket to HSBC Premier for Americans was having $100,000+ in combined deposits or other kinds of value relationship with the bank, including a mortgage as one qualifying option, as best I recall.

HSBC Premier also supposedly has its own online international funds transfer system from HSBC accounts in one country to HSBC accounts in another country, like USA to Thailand. But I've seen few if any reports from Americans here on actually using that.

I know in the past when I tried using my HSBC USA ATM card at the HSBC main office in the Silom area, I seemed to get a poor exchange rate and some variety of ATM fees... But, to be clear, I didn't have Premier status on my account, just regular schlub status...

You're correct on the requirements, but it can include securities held in an HSBC brokerage account. No trading is required. Fortunately enough, since their commission rates are unconscionable. There are no additional requirements to open an HSBC Premier account in Thailand if you have a Premier account in another country already.

They refund ATM charges on using the US HSBC ATM card witdrawals in Thailand, or anywhere. But the ATM bank sets the exchange rate. TMB clipped me for 1 baht or ~3% once until I realized. We don't use the US ATM card here any more.

i regularly transfer from the HSBC US account to my HSBC Thailand account. Transfer takes from one to two days, probably depending on the time of day. I checked the rate a few times and it was close to the BOT average for the day, but not better. We then withdraw baht from the HSBC Thai account at any atm machine using the ATM card for the Premier Thailand account with no atm charges.

HSBC Premier is convenient, but with a significant opportunity cost. I decided to use it nevertheless because I wanted to have one bank to whom our relocation to Thailand was fully disclosed. We use a US address with our other US banks. I find the service with HSBC is a little better than other commercial banks, about as good as a good credit union.

Edited December 16, 2011 by CaptHaddock

[TallGuyJohninBKK]

Thanks for elaborating on the HSBC details, Captain...

Indeed, I found the staff at the HSBC Silom area hq branch to be quite friendly, helpful and efficient -- far moreso than most of the regular Thai commercial banks I deal with... Unfortunately, as it turned out, they didn't have anything to offer me that made any economic sense, particularly because my significant finances were held elsewhere, and I wasn't inclined to move them to HSBC in order to obtain their Premier status.

For someone who's already got a significant financial stake in the HSBC domain, I can see how it would have various advantages. But as you put it, for me, the "lost opportunity" costs of doing significant banking with them were going to be a bit more than I wanted to give away.

[fletchsmile]

if I use different VISA cards from any number of different banks, as long as the banks aren't charging a foreign currency fee or passing along the card network fee, I get identical exchange rates for ATM withdrawals and purchases done at the same time.

Amen. And even if there's a difference between each card's fee structure (e.g., one passes on the network fee, the other doesn't), when you strip-out all these fees, the core exchange rate will be the same for all VISA cards (or for all MC cards, but at a lesser rate than VISA -- see later discussion).

Your assertion that you can see and check actual rates on the website is also wrong. They are indicative only. That's why you see the same rate...

No, you're wrong, fletch. You may have to look at the next day's posted rate, for POS transactions that take a day or so to process. But, it will be amazingly right-on to the rate you receive (before, of course, any add-on fees from your issuing bank). I did this for several months last summer, using Visa and MC. The only difference I noted between the Visa and MC postings were that Visa's rate-for-the-day was posted at the very beginning of the New York working day (0001), while MC was about 12 hours later. Thus, if the merchant was tardy, you might need to look at the following day's Visa rate -- while MC's rate might match, since it is a half-day behind Visa. Nevertheless, once you figured out on which day your transaction posted, it was right on the number per the Visa or MC website -- right to the second decimal point.

....

It's not a real time FX scenario. It's a 24-hour window. ATM/PIN transactions don't have posting lags, as do POS transactions. But, they do adhere to the 24-hour window they occur in.

I was giving a simple one paragraph comment, designed for an end user to see they will get different rates using different cards.

Only if each card has its own fee structure. As John said, if no network fee (read: International Service Fee -- ISA)is passed on, whence it becomes a Foreign Transaction Fee (either on its own, or added to by the issuing bank);and there are no flat fees, then all Visa cards -- and all MC cards -- will have the same rates per logo. Period.

From the VISA link from fletch, above:

"If financial institutions or merchants decide to assess a foreign transaction fee to their customers, they are required to provide details to their cardholders and consumers."

Since the class action on hidden FX fees, such fees will now show up on your statement. You might not know how much of the 3% foreign transaction fee is the ISA from the network -- nor would you probably care -- but your statement will certainly give you a breakdown of the fees you are paying. At least with US financial institutions -- don't know about GB. But hopefully you know the fee structure ahead of time before signing up for an ATM/Debit or credit card.

But fees aside -- and just looking at no-fee/no passed-on-fee Visa and MC cards, here's some data I gleaned this summer. I used the MC and Visa rate-of-the-day (for US$) sites, and verified with my own Visa and MC transactions. (I posted this in another thread several months ago, so I apologize to those having to read it twice.)

Average rates:

X-Rates:.....30.00

Visa:........29.92

Buying TT:...29.84

MC:..........29.76

Note the 8 satang gaps between each category. And the 16 satang gap between Visa and MC! Having a Visa credit or debit/atm card could really add up over the years, in comparison to MC.

And the gap between X-rates and Visa? Well, the X-rates figure reflects wholesale/interbank exchange rates -- the rate that Visa and MC -- with their clout -- surely get. So, the difference is the "spread" that fletch alluded to: 24 satang for gluttinous MC, 8 satang for Visa. Do the networks share with the issuing banks? Dunno. But there's nothing you can do about that spread. Besides, you're only interested in the advertised network rate you're getting from either Visa or MC. Plus, of course, the add-on fees your issuing bank assesses (where the real nature of how expensive your plastic is materializes).

One other thing interesting, at least to Yanks. If you ACH money via Bangkok Bank NY to Thailand, you receive the Buying TT rate, less the front and back end fees. Well, for me (whose USAA account has no ACH fee), I get exactly 8 satang less than the TT rate when I send $10,000 (4 for $20,000, 18 for $2000). Thus, if I had a MC ATM/Debit card, that had no fees, nor passed on the network's ISA fee, I would be in the same boat using ACH, with $10k transactions (assuming my MC reimbursed the 150bt ATM fee, or I used Aeon). I'd be better off, however, using a fee free Visa card (which I do, with my Schwab Visa ATM/Debit card).

But few MC ATM/Debit cards are fee free (to my knowledge), nor do many reimburse ATM fees. So the ACH route for Yanks would seem superior, even for amounts below $10k.

Anyway, it pays to shop around for how to get your money to Thailand. Many of us have explored the alternatives. John has the best track record, and the best information -- at least for Yanks.

Fletch, I note you're a Brit. What's in your wallet? (Years ago Nationwide seemed to be the best deal -- right up there with Schwab. But they added fees. What's the best Brit deal today in plastic?)

Jim

Thanks for trying to clear that up. What I would add is the points made in the posts above. Not all financial institution cardholders disclose the fees separately on their statement so it "effectively becomes part of the rate", at least in the eyes of the end user.

As above I believe it was splitting hairs on moot points and semantics, and wasn't going to bother wasting any more time on it. To an end user though, they simply see an all in rate or implied rate. As you've taken the time, I'll add it once more

So for a US credit cardholder where the card issuer does not separately disclose the fee, they will simply see the US amount, and probably foreign currency amount which will lead to an implied rate. This will differ to Visa, Mastercard published rate etc. As far as I'm aware Regulation Z and the Truth in savings Act don't require it split out on the actual statement, so the best most transparent banks do which is why you see it split out on yours. Others don't. It can be disclosed elsewhere. There are hundreds/ thousands of issuers in the US and I'm sure you've picked one of the better ones, just bear in mind not all cards make it as easy for you. Example as below:

http://www.creditcards.com/credit-card-news/foreign-exchange-fees-going-up-1267.php

Hence I agree with you for the cards you have you will tie them back to Visa and have obviously done so. However, not all cards in the US are as transparent. So not all cards will show the nice same picture as your own, and be as easily tied back.

The key is obviously pick one of the best providers with zero fees all round, avoid pricing in USD at point of sale by the merchant etc etc. Then you can tie back. Pick one of the others though, and the rates will (appear to) differ. Otherwise somebody simply finds different cards (appear to) have different rates.

Edited December 16, 2011 by fletchsmile

[fletchsmile]

Fletch, I note you're a Brit. What's in your wallet? (Years ago Nationwide seemed to be the best deal -- right up there with Schwab. But they added fees. What's the best Brit deal today in plastic?)

Knowing the many pitfalls, as well as managing my money in a more hollistic way, I tend to use credit cards of the country I'm in if possible, so avoid the FX issue altogether, and just get the cashback rebates. That covers most credit card transactions for personal use. I think the banks earn enough and no point paying fees if you don't have to. Better they pay me

After that, I have various currency bank accounts so simply use the currency that matches the country I'm in, and again avoid the FX.

The number of transactions remaining for me are usually small in value, and not worth bothering about, once I've eliminated USD, EUR, AUD, NZD, GBP, SGD, IDR, THB etc

Main Bank cards: Citibank, Smile , Standard Chartered (Thailand, Singapore etc), Manhattan Card, are the main ones

Edited December 16, 2011 by fletchsmile

[JimGant]

So for a US credit cardholder where the card issuer does not separately disclose the fee, they will simply see the US amount, and probably foreign currency amount which will lead to an implied rate.

I would have thought that after the Currency Conversion Fee lawsuit that US financial institutions wouldn't risk undisclosed fees related to foreign transactions.... But, yeah, they could all be lumped together.

However, even if lumped together, the lump can still be broken out, then the "pure" rate you got can be compared to the Visa or MC rate-of-the-day. And if the "pure" rate is less than the rate-of-the-day, then you've got hidden fees.

Where I see folks going wrong is when they compare the rate they got to the X-Rate or Oanda published rate -- and then feel cheated by the ATM owner or merchant. These published rates approximate the wholesale/Interbank Exchange Rates. Visa and MC enjoy these wholesale rates, but they don't pass them on to you, the consumer. Instead, they pocket the spread. Example:

For international transactions, MasterCard’s currency conversion procedure includes use of either a government mandated exchange rate, or a wholesale exchange rate selected by MasterCard for the processing cycle in which the transaction is processed, increased by an adjustment factor established from time to time by MasterCard

That "adjustment factor" is what buys their yachts.

Of course, if cardholders don't account for the issuing bank's fees, the situation looks even worse re the cheating ATM owner or merchant. And we see a lot of this on this forum.

Anyway, to get a clear idea of what a great card (or crappy card) you have requires knowing the fees before you do the math -- and what baseline you then compare the result to.

And, of course, in a DCC situation, even a great card can't overcome the crappy exchange rate.

I guess we've sufficiently beaten to death this subject.....

[TallGuyJohninBKK]

I'll add briefly on this subject, every time I have applied for and received a U.S. credit card from any number of U.S. banks in recent years, the foreign currency fee -- if any -- has been specifically disclosed along with the APR and the usual variety of other (non expat-related) fees.

There appears to be a set reporting format, because all of the different disclosures I've seen and received are pretty much mirror images in format, although of course the actual percentages and dollar amounts vary card by card.

Also, I've yet to encounter any credit card that DIDN'T specifically disclose a foreign currency fee and then (by actual testing as I do with every card I use) find out in its transactions that I was getting anything less than the standard VISA or MC network rates on Thailand-based transactions.

As Jim alluded to above, the legal settlement and resolution of the credit cards litigation in the U.S. seems to have done a pretty good job of remedying the past disclosure problems for credit cards...at least for anyone who's paying attention to the info they receive from their card issuing bank.

BTW, just to be clear on this: I do have credit cards that charge a foreign currency fee, but I don't ever use them in Thailand. Those are reserved for transactions back in the U.S.A. where the foreign currency fee doesn't apply, and those same cards offer other benefits that make them attractive. Wouldn't want anyone to think (wrongly) that I'm giving the banks an extra 3% or 4% of FCF on my transactions. I'm NOT.

Meanwhile, in other news:

Posted 2011-12-15 20:16:24

BANKING

Foreign banks given greater presence in Thailand

Seetalavajit Sabayjai

The Nation

The Bank of Thailand announced a historic move Thursday, allowing foreign bank branches to upgrade themselves and operate up to 20 branches nationwide.

It marked the first time that foreign banks can set up subsidiaries in Thailand. So far, they have been allowed to operate as branches and their presence is limited to one branch per bank.

Such move is a part of the second phase in the Financial Sector Master Plan, jointly drawn by the Ministry of Finance and the central bank, according to Thongurai Limpiti, an assistant governor.

Under the new rule, foreign banks can operate upto 20 branches and 20 off-premise ATMs.

The MOF has approved the move which takes effect today, Thongurai said.

Foreign banks have long sought for the permission, which came when banks in Europe are concentrating operations at home in light of debt crisis.

-- The Nation 2011-12-15

http://www.thaivisa....ce-in-thailand/

Edited December 17, 2011 by TallGuyJohninBKK

[TallGuyJohninBKK]

And a bit more detail from a follow-up post in the same thread on what criteria will be used to decide what foreign banks will be allowed to expand in the Thailand market.

Based on the guideline, the applicant must be a foreign bank that already has a branch in Thailand, has a strong financial standing with good operating performance and has expertise in international finance, Tongurai said.

The branch must maintain capital adequacy ratio of no less than 12 per cent and non-performing loans must not exceed 3.5 per cent. It must also have a good rating under the BOT's rating assessment and have a good risk-management system.

Upon commencement of the operation, the subsidiary must have paid-up capital of no less than Bt10 billion.

The applicant must be a foreign bank that is licensed in a country that already has, or has the potential to have, good relations with Thailand in the areas of finance, trade and investment.

It is expected to take no more than five months for the central bank to complete the review process of the application, which can be submitted between January 4, 2012 and December 28, 2012, Tongurai said. Operations can commence within one year after approval.

Here's the current foreign players in the Thai banking market, based on this Bank of Thailand roster, who'd have the potential to apply:

BANK OF AMERICA, NATIONAL ASSOCIATION

BANK OF CHINA LIMITED

BNP PARIBAS

CITIBANK, N.A.

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

DEUTSCHE BANK AG.

INDIAN OVERSEA BANK

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

MIZUHO CORPORATE BANK, LTD.

OVER SEA-CHINESE BANKING CORPORATION LIMITED

RHB BANK BERHAD

SUMITOMO MITSUI BANKING CORPORATION

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD.

THE ROYAL BANK OF SCOTLAND N.V.

Be interesting to see what if anything comes from this. You'd presume HSBC and Citi at least would be likely applicants....

[TallGuyJohninBKK]

Interestingly, I'd been reading here in some other posts on HSBC's opening of a second branch in Bangkok, apart from their main Silom area HQ, in the Thong Lor area... Not sure how that happened under the current banking rules... But I see the Thong Lor branch is now listed on the HSBC Thailand web site...

http://www.hsbc.co.t...ct/contactus-en

สำนักงานใหญ่ | Headquarters

อาคาร เอชเอสบีซี, เลขที่ 968 ถนนพระราม 4 แขวงสีลม เขต บางรัก, กรุงเทพ 10500

HSBC Building, 968 Rama IV Road, Silom, Bangrak, Bangkok 10500

สำนักงานทองหล่อ | Thonglor Branch

เลขที่ 110 อาคาร วสุ เดอะเรสซิเดนซ์ ห้องเลขที่ 101 ซอยสุขุมวิท 55 (ทองหล่อ) ถนนสุขุมวิท แขวงคลองตันเหนือ เขตวัฒนา กรุงเทพฯ 10110

110 Vasu The Residence Building, unit 101, Soi Sukhumvit 55 (Thonglor), Klongton Nua, Wattana, Bangkok 10110

Edited December 17, 2011 by TallGuyJohninBKK

[fletchsmile]

I'll add briefly on this subject, every time I have applied for and received a U.S. credit card from any number of U.S. banks in recent years, the foreign currency fee -- if any -- has been specifically disclosed along with the APR and the usual variety of other (non expat-related) fees.

There appears to be a set reporting format, because all of the different disclosures I've seen and received are pretty much mirror images in format, although of course the actual percentages and dollar amounts vary card by card.

...

That will be under Regulation Z. This regulation refers largely to account opening and application procedures, and what needs to be disclosed at that point in time. It's also easier to standardise the account opening T&A and disclosures, as they are simple documents full of words.

The printing of monthly statements come after the a/a opening procedures have been completed. Procedures then differ because of systems, data field capture, not to mention rebates, cashbacks, promotions etc etc and bank format of statements vary.

Edited December 17, 2011 by fletchsmile

[misterdowntown]

Hello TallguyJohninBKK,

This is just a follow up on your advice from 3 weeks ago. Did as you said, and all worked out. Used Schwab card till I got Thai account. Then transfered funds from BofA to Bangkok bank in NYC to Bangkok bank in Thailand, was worried that it would get lost somewhere, but that is not the case, just go an SMS from Bangkok bank funds posted. Took less then 2 days, cost was $5 us and 200baht on the other end. Really the best way to go, easy, tho was worried at first, now all sorted out.

Now if I can only get myself some better internet, working on it...

John thank you....

[TallGuyJohninBKK]

Welcome, glad to hear it.... and thanks for following up here with the outcome...so others can know of your experience.

Just in straight dollars and cents, the absolute best way to pull funds from the U.S. is to use a U.S. visa debit card like Schwab's that doesn't charge any foreign currency fees and reimburses Thai ATM fees when you incur them.

The exchange rate on that kind of transaction is almost always going to be somewhat better than the buying TT rate that BKK Bank uses for its international funds transfers. Plus the ATM approach has none of the fees of the BKK Bank approach.

But, the ATM approach has limits as to how much funds you can pull in each withdrawal, based either on the physical limit of the Thai ATM machine you're using and/or the daily ATM withdrawal limit of your bank card and account.

So for people who need to pull larger amounts than 25,000 or 35,000 baht per transaction (different Thai banks have different limits on how many 1000 baht bills their ATMs will dispense per transaction), I don't know of any more economical USA to Thailand approach than the BKK Bank New York route.

[CaptHaddock]

Just in straight dollars and cents, the absolute best way to pull funds from the U.S. is to use a U.S. visa debit card like Schwab's that doesn't charge any foreign currency fees and reimburses Thai ATM fees when you incur them.

I don't think this is correct. The bank whose ATM you are using sets the exchange rate for the transaction, not the bank that issued the debit/ATM card. I noticed this when I did a withdrawal from a US account using a TMB atm. TMB clipped me for one baht, about 3% of the transaction. When I have done bank to bank transfers, admittedly from my US HSBC account to my HSBC Thailand account, the rate was usually only about 10 satang worse than the BOT rate for the day.

[Pib]

Just in straight dollars and cents, the absolute best way to pull funds from the U.S. is to use a U.S. visa debit card like Schwab's that doesn't charge any foreign currency fees and reimburses Thai ATM fees when you incur them.

I don't think this is correct. The bank whose ATM you are using sets the exchange rate for the transaction, not the bank that issued the debit/ATM card. I noticed this when I did a withdrawal from a US account using a TMB atm. TMB clipped me for one baht, about 3% of the transaction. When I have done bank to bank transfers, admittedly from my US HSBC account to my HSBC Thailand account, the rate was usually only about 10 satang worse than the BOT rate for the day.

I have Schwab and State Farm Visa debit cards, both of which do not charge an foreign transaction fee and the exchange rate given has always been the Visa exchange rate which is usually just a hair better or worst than Thai bank TT Buying Rate which is about the best rate a common man can get. I do all my withdrawals from AEON ATMs in order to also avoid the 150 baht fee that Thai banks charge on foreign cards, although Schwab or State Farm would reimburse that fee.

Sounds like you have a debit card which charges approx a 3% foreign transaction fee (charged by the bank that issued the card) or you unknowingly accepted/chose the Thai bank "Direct Currency Conversion (DCC)" rate which is usually in the 3 to 4% reduced rate ballpark. The bank may have called it something other than DCC.

[TallGuyJohninBKK]

I don't think this is correct. The bank whose ATM you are using sets the exchange rate for the transaction, not the bank that issued the debit/ATM card. I noticed this when I did a withdrawal from a US account using a TMB atm. TMB clipped me for one baht, about 3% of the transaction. When I have done bank to bank transfers, admittedly from my US HSBC account to my HSBC Thailand account, the rate was usually only about 10 satang worse than the BOT rate for the day.

Captain, no. you're not correct about that. When you make an ATM withdrawal in Thailand, the basic exchange rate is NOT set either by the Thai bank that owns the ATM or the U.S. bank that issued your card. Rather, the basic exchange rate that's used is the VISA or MC card network international rate, which usually at least for VISA cards is a bit better than Thai banks' buying TT rate.

Then, at the Thai end, you could get the 150 baht foreign card withdrawal added in, if you don't use a fee-free AEON ATM. Or, as Pib noted, there are some Thai banks' ATMs that try to get you to accept DCC, which does involve the bank using its own lower rate. But under the card networks rules, the bank's ATMs have to specifically ask you and you have to agree in order for that to occur. And it's usually some kind of language about agreeing to have the withdrawal be expressed in U.S. dollars (vs. Thai baht). Anytime you see that kind of language, you want to say NO!!!!

Then at the U.S. end, the home country bank may be charging a several percent foreign currency fee on all international withdrawals (3% is common)...and some also charge a flat $ amount fee as well. But they're not setting the exchange rate. They're just loading you down with fee add-ons... if you're using the wrong kind of card.

Edited December 24, 2011 by TallGuyJohninBKK

[TallGuyJohninBKK]

Sounds like you have a debit card which charges approx a 3% foreign transaction fee (charged by the bank that issued the card) or you unknowingly accepted/chose the Thai bank "Direct Currency Conversion (DCC)" rate which is usually in the 3 to 4% reduced rate ballpark. The bank may have called it something other than DCC.

Interesting you mention that Pib. The other day, I had a particularly nasty experience at the Pullman King Power Hotel's Wine Pub restaurant where they rang up our anniversary dinner using DCC, then after I objected, claimed they couldn't do it any other way, then the WP's farang manager came and was totally clueless on the subject telling me there really wasn't any difference between the two.

In the end, finally, I insisted the WP manager get someone from the hotel's finance office to come up, which he did... He and the manager and the cashier talked and talked and talked by themselves... And I got tired of waiting, so I went over and talked to the Thai guy in English, and once he realized all I wanted was the transaction rung up in Thai baht, he replied, "Oh ya, we can do that, no problem." And I had my Thai baht check bin about two minutes later.

I must say...apart from King Power's other well-publicized scams...the eateries at the hotel there have been among the worst places I've encountered in Bangkok in a) regularly trying to charge bills via DCC and then b] arguing that it's the same price either way and/or that they don't know any other way to ring up the bill. Both notions, of course, are absolutely false.

Later when I got home, I compared the original DCC bill they had given me with the revised bill that they charged in straight Thai baht. It worked out pretty much exactly to a 4% differential, meaning the DCC bill was $2+ higher on a $50+ tab.

BTW, the easy way to recognize DCC on any credit or debit card POS slip in Thailand is if the bill amount is shown in U.S. dollars. If it's listed in U.S. dollars, then you know it's POS. If it's listed ONLY in Thai baht, they you know the regular, better rates will apply.

I was at BNH Hospital the other day for a doctor visit, and at least the cashier had the courtesy to ask me, BEFORE ringing up the card, whether I wanted it charged in U.S. $ or Thai baht. Of course, I only and always would answer Thai baht.... But most places won't ask beforehand. Those that use DCC tend to just do it automatically and hope the customer (sucker) doesn't know the difference...and even will often claim there is not difference, which is blatantly false.

Edited December 24, 2011 by TallGuyJohninBKK

[Pib]

Yea, there have been four times a Thai store "almost" rung-up a point of sale transaction as a DCC transaction, which had an exchange rate approx 3.75% lower than the Visa rate/TT Buying rate. By "almost" I mean when they handed me the receipt for signature which reflected the charge "in U.S. dollars and Thai baht" with the small print at the bottom of the receipt showing the exchange rate I knew they were trying to hit me with the DCC rate. I told them to cancel/redo the charge in Thai baht...I wasn't signing that receipt. Normally, it took the sales clerk about 2 minutes to cancel/void and redo the charge; except one time where it took the checkout clerk about 5 minutes because she had to call for help in doing it.

Whenever I'm unsure if a store defaults to ringing up the charge in DCC for a foreign card, I tell them to "Charge Baht, Not U.S. Dollars" as I'm handing them my credit card (a U.S. Cap One Mastercard zero percent foreign transaction fee, 2%/1% cash back card).

Yeap, just so "No to DCC"....DCC is bad, very bad. Preaching to the choir I know.

[TallGuyJohninBKK]

The Wine Pub at the Pullman Hotel was REALLY bad on this...

The WP originally tried to tell me they couldn't void the original DCC slip, which I had never signed. The farang manager claimed the funds would come out of my account regardless, and tried to use that as a reason to not re-ring the transaction.

As it turned out, the DCC slip that I never sign did indeed post to my bank account as a "pending" transaction. Even though I finally got a "VOID" transaction slip that night from the Thai finance guy who finally got involved. The subsequent Thai baht slip that I did sign did also post to my account, and cleared/went to final transaction the next day.

The last time I checked, the DCC slip was still showing as pending, but hadn't been deducted from my account balance. My home bank advised that the DCC charge probably would drop off by itself in a few days, especially since the WP finally had done a "VOID" on the transaction.

BTW, the 4% differential I got was with the Wine Pub using Siam Commercial (and presumably their local rates) for the DCC transaction.

Edited December 24, 2011 by TallGuyJohninBKK

[Pib]

That's a good point about the Void action even if never signing the receipt for signature. When the sales clerk redoes/voids the charge they will give you a receipt showing that Void action...be sure to staple that Void receipt to the receipt you never signed just in case the charge don't drop off after a few days. In my four cases, if I remember right the charges didn't even show up as temporarily charges or disappeared after a few days in pending status....I can't really remember now since the last one was about a year ago. But I did double check my monthly credit card bill to ensure only one charge was on the bill--that is, the non-DCC charge.

[TallGuyJohninBKK]

Yes, absolutely good advice, Pib, anytime you're in the unfortunate situation of having to have a merchant void and re-ring a charge. Keep that void receipt.

When I checked online banking again today, I was pleased to see the original voided DCC charge had finally dropped off my pending charges list for my debit card.... And so the funds from that wrong charge were never actually deducted from my checking account.

Here's a short list of my favorite DCC lies you'll likely hear:

--There's no amount difference between the U.S. $ DCC version and the Thai baht version. LIE!

--You're using a foreign card, so that's the only way (DCC) we and/or our machine can ring up the charge. LIE!

--The charge slip is just showing the U.S. $ amount for reference, but it's really being rung up in Thai baht just as you asked. LIE!

--You're using a debit card, so we can't reverse/void the charges. If we try to ring the charge again in Thai baht, you'll be charged double. LIE!

Edited December 25, 2011 by TallGuyJohninBKK

[TallGuyJohninBKK]

BTW, the discussion of DCC brings up an interesting issue. I suspect there are some folks who believe that if they have a charge in Thailand rung up in U.S. $ (i.e. DCC), then, despite paying 3 or 4 percent extra here, they'll then avoid what might be their home bank's foreign currency conversion fees that might be 3% or more....

While I don't have any direct experience with this, since I always avoid DCC charges, I don't believe it's true. And the reason for that is, U.S. banks' policy language on assessing foreign currency fees typically isn't just limited to charges in a foreign country where a currency conversion occurs.

Although it may vary by bank, the policies I've read include language that would allow any purchase made in a foreign country to be FCC charged, and even purchases made physically in the U.S. where the merchant/vendor is a foreign entity. I've also seen fee language that talks about "cross border transactions," which avoids the currency conversion concept entirely.

So I really doubt accepting a DCC charge here is going to help anyone avoid a foreign currency conversion fee from their home country bank. But then again, I don't use any U.S. bank cards in Thailand that have any foreign currency conversion fee. Zero FCC fee is a requisite for me...

But if anyone has more direct experience with this, it would be interesting to hear.

[Pib]

I agree. From what I've read on foreign transaction fees charged by banks, even if the transaction is a DCC transaction in USD/your home country currency your bank still hits you with the foreign transaction fee. Why? Because it's still a foreign transaction (i.e., transaction occurred outside the U.S./your home country or zone) and the bank wants to make a fee. I've read a few bank foreign transaction fee policies in the past regarding their foreign transaction fees in order to get smarter on the subject and above is pretty much how it works.. DCC or not, the "foreign transaction" fee still applies...and the bank executives appreciate your business. Remember the unwritten motto of most banks: Fees-R-Us.

[Langsuan Man]

To show how pervasive this "foreign transaction fee" is, I used to get charged the fee even when I purchased my annual Thai International Airlines airfare on their US web site, quoted in US dollars, in the US, which can amount to quite a bit of change when you purchase a $1,500 ticket @1%

Getting a Capital One credit card eliminated this problem

[Pib]

Here's how Bank of America describes the Foreign Transaction Fee. Link.

And since we were talking DCC, please note where the link says: "You should also be aware that even if a transaction is in U.S. dollars we apply a foreign transaction fee if it is processed outside the U.S."

[TallGuyJohninBKK]

Thanks Pib... That's exactly the kind of policy language I was thinking of... when I suggested above that there likely was no possible advantage in accepting DCC in Thailand.

The only conceivable reason would have been if it would have helped people avoid the 3% foreign currency conversion fee from their home bank... But as your and LSM's posts here reinforce, it doesn't work that way.

[JimGant]

Yeah, the DCC scam is amazing. And sold with false advertising, as in: "avoid foreign conversion fees by using DCC." Well, Visa and Mc (and their issuing banks) changed the term to "foreign transaction fee" just to be honest that, yes, they were no longer charging for "converting" in DCC situations -- but they certainly were still charging for foreign activity.

And of course they are -- why would they give up fees because a merchant has the option to do the foreign exchange conversion outside the Visa and MC networks. Besides, they too get to share in the DCC ripoff, as their fees, as percentages, reap a larger number when applied to the increased dollars you now pay with a DCC transaction.

The last time I got snookered with DCC was with King Duty Free at the airport -- being too tired to catch the DCC transaction -- and of course not being asked if I wanted it. The monthly bank statement is below. Note that the King line item has no second line showing baht, and the related exchange rate -- as do the other non-DCC foreign transactions. This is logical, since neither MC nor my issuing bank participated in the foreign currency conversion -- it was all transmitted to them in dollars.

Now, without having saved my credit card slip, I don't know exactly what the cost was in baht. But, it would have been somewhere around $116 at the MC exchange rate. So I paid nearly $6 more for the "convenience" of using DCC.

And look at the "foreign transaction chg" section. I was charged the 1% MC network fee -- as a percentage of the inflated DCC rate, i.e., $1.22. However, if this hadn't been a DCC transaction, I would only have been charged $1.16. (And if this had been Bank of America, not USAA -- and thus another 2% off of the inflated DCC rate -- well, you get the drift.)

Yeah, literally only pennies. But these pennies add up for the card networks and their issuing banks when the DCC trigger is pulled. Thus, the merchant gets fat off DCC, as does his acquiring bank -- and so too the networks and issuing banks. Gee, where's all this added profit come from? Duhhhhhhh.

And this also points out why Visa and MC are entirely content to underwrite this scam.

[lopburi3]

--You're using a debit card, so we can't reverse/void the charges. If we try to ring the charge again in Thai baht, you'll be charged double. LIE!

But it can be a serious short term issue as your account will be charged and you have lost that from available credit so for many uses it could result in the second charge being denied (and if not less available cash/credit until removed).

Agree it was designed to get the terminal bank/merchant a piece of the pie that foreign banks were getting with there conversion fee. The foreign banks then put the language in that it was not a currency conversion fee but a foreign transaction fee to allow them to keep charging (at least when they know about it). I believe merchant is supposed to ask customer to opt in to use DCC, just as it is always flashed on ATM screen. But obviously this is not a priority for some and suspect there is financial grain for them as well as bank.

[TallGuyJohninBKK]

Fortunately, I don't encounter ripoff DCC in Bangkok too often except when I make the big mistake of trying to enjoy an evening at the Pullman Bangkok King Power Hotel....

On that night where my wife and I were celebrating our anniversary, at the close of our meal when we asked for our check and they delivered the wrong one via DCC without ever asking us on choice of currency for the charge, it probably then took me another good half hour to finally get them to do things right... first debating with the waitress and cashier, then the clueless farang manager who I asked to speak with, then waiting for him to go find the hotel finance department guy, and that guy arriving at the restaurant to straighten things out.... YEESH!!!!

But, interestingly re Jim's comments above about VISA, the DCC charge slip I got from the Wine Pub that was rung using SCB as their local bank had the following disclaimer on it in itsy-bitsy type...

"Dynamic Currency Conversion is conducted by the Merchant and is not associated with or endorsed by VISA. Cardholder's Selected transaction currency is final. Cardholder has been offered a choice of currencies for payment, including the Merchant's local currency. Cardholder expressly agrees to the transaction receipt information by marking the accept box below." [which accompanies the customer signature line]

And then underneath the signature line, the slip info concluded:

"Please debit my account with the total amount in USD.

*Mark-Up on the Exchange Rate Over's [sic] SCB DCC Rate"

After that night, I also contacted VISA Intl. to lodge a complaint against the hotel and regarding the transaction. In particular, contrary to the printed statement on the DCC charge slip that I've quoted above, I was NOT offered a choice of currencies for payment by the hotel. And in fact, they went to great lengths to falsely convince me that the DCC transaction was no different to a THB transaction. And then, when that failed, the hotel staff continued to claim they didn't know how to do anything but a DCC charge.

Some people might say, Hey, it was just a $2 difference on a $50 bill, let it go... But for me... I resent being lied to. I resent being deceived. And when I pay a bill for something, I expect to pay the bill for the actual amount of the bill... Not the amount of the bill plus a gratuitous 4% add-on that does nothing for me and instead simply lines the pockets of the hotel and perhaps SCB.

And keep in mind, they're not just doing that to me...who ultimately rejected it. You can pretty much assume, they're doing the same thing to every foreign bank card user who passes their way...and likely 99% of those folks won't go through the hassle I went through with hotel to end up paying the correct bill... So figure an extra 4% over and over and over again... And the DCC money starts piling up...

If they gave me a choice and I was dumb enough to want to pay 4% extra so I could see USD listed on my charge slip instead of THB, then I'd have no problem. But the problem is, they're not giving customers the choice they're supposed to be giving. And that just wrong... and worse than wrong.

And BTW, this was not an isolated, exception type incident there, since I've eaten at other venues within the hotel on two other times, and had the same kind of problem both other times... although those prior ones I was able to resolve considerably more quickly by engaging the manager of those eateries... But the line cashier staff were clueless, as with the Wine Pub.

Edited December 28, 2011 by TallGuyJohninBKK