Credit Card Purchase - Exchange Rate

[Monkorn]

Today I made a purchase at Power Buy and was surprised to see they converted my purchase into USD. This was buried in the middle of the 10 inch receipt. The subsequent line showed an exchange rate of 30.6411. The next line said commission: 0.00% and the line after said conversion fee: %.

I questioned the cashier why she converted my purchase into USD without my permission and she claimed it was done automatically. When I asked for a refund to pay with cash instead, she was quick to point out the "no refund" clause on the receipt. As a result I ended up paying 191 THB ($5.91) more than I should have. I asked to speak to the manager, who stood there with a blank stare and only said there's nothing he could do. Realizing this is an insignificant amount, I just walked away with my purchase but refused to sign the receipt. The manager asked me to sign as I was leaving and I asked for a new transaction, neither of us got our demand. In deciding to walk away I accepted that they pulled one over on me. However, if this happens regularly, these small charges can add up quickly.

This is the first time the conversion took place automatically without asking me first if I want to pay in THB or USD. When I make purchases at Villa Supermarket they always ask me if I want to pay in THB or USD, which I always choose THB to get the best rate. Other than Villa, I've never been asked which currency I want to use but also never had the conversion into USD take place at the point of sale.

For those of you who use non-Thai CC's, does this happen to you regularly? How do you get around the situation? Do I have to ask every time to use THB?

[KittenKong]

The Dynamic Currency Conversion warning should always appear on the payment terminal screen and has to be accepted to be implemented.

Trouble is, in shops that dont use chip and pin systems you probably never see the screen and so the acceptance is done by the person swiping your card.

Depending on your issuing bank you may not actually have lost very much. You may even have gained. Many EU/UK banks impose an exchange weighting of up to 2.95% on FX transactions made using their cards and DCC can reduce this. US banks seem to generally not apply this high weighting.

[Monkorn]

Depending on your issuing bank you may not actually have lost very much. You may even have gained. Many EU/UK banks impose an exchange weighting of up to 2.95% on FX transactions made using their cards and DCC can reduce this. US banks seem to generally not apply this high weighting.

I lost on the conversion because they only gave me a rate of 30.6411 whereas the rest of my purchases today showed up as 32.28 when I checked my account. I had the cash to pay, but elected to use the CC instead. If I had a warning, especially with the terrible rate, I would have declined.

[Pib]

Whenever a DCC transaction occurs the receipt for signature will reflect the local currency/baht “and” your home country currency/USD on two separate lines just above where you sign. Two currencies will be reflected. Or at least the half dozen or so times a DCC transaction has been attempted on me here in Thailand that’s how the receipt looked…very easy to see both currencies being shown.

At that point stop, don’t sign the receipt, tell the clerk to cancel the transaction and rerun the transaction in Thai baht and “not” your home country currency/USD (or whatever your home country currency is….EURO…GBP…YEN…etc). It is easy for them to do…takes one or two minutes…or at least the half dozen or so times it has happened to me it was easy/quick for them. But I’ve read posts where some merchants seemed very, very reluctant to do so…had all kinds of reasons why they couldn't….a sure sign the merchant is only concerned about making a little more profit off you and could care less if you are ever a repeat customer.

Now be sure to hang onto the cancellation receipt in case the cancelled transaction don’t fall off your card account in a week or so because initially both charges will probably appear…seems charges appear almost immediately but a cancellation takes a few extra days to post to your account. But it has always fallen off for me within a week.

Whenever I’m sure or unsure a store defaults to the DCC transaction for a foreign card, as I’m handing the clerk my card I make sure I have eye contact with them and say “Charge Thai baht, not U.S. Dollars.” But in some cases they still mess-up and do a DCC transaction…then I don’t sign, tell them to cancel the transaction, rerun the transaction in baht, and they have always done it…takes them just a couple of minutes…one clerk did it all in around 30 seconds.

Yeap, DCC bad, very bad for the customer; DCC good, very good for the merchant.

[Monkorn]

Whenever a DCC transaction occurs the receipt for signature will reflect the local currency/baht “and” your home country currency/USD on two separate lines just above where you sign. Two currencies will be reflected. Or at least the half dozen or so times a DCC transaction has been attempted on me here in Thailand that’s how the receipt looked…very easy to see both currencies being shown.

At that point stop, don’t sign the receipt, tell the clerk to cancel the transaction and rerun the transaction in Thai baht and “not” your home country currency/USD (or whatever your home country currency is….EURO…GBP…YEN…etc). It is easy for them to do…takes one or two minutes…or at least the half dozen or so times it has happened to me it was easy/quick for them. But I’ve read posts where some merchants seemed very, very reluctant to do so…had all kinds of reasons why they couldn't….a sure sign the merchant is only concerned about making a little more profit off you and could care less if you are ever a repeat customer.

Now be sure to hang onto the cancellation receipt in case the cancelled transaction don’t fall off your card account in a week or so because initially both charges will probably appear…seems charges appear almost immediately but a cancellation takes a few extra days to post to your account. But it has always fallen off for me within a week.

Whenever I’m sure or unsure a store defaults to the DCC transaction for a foreign card, as I’m handing the clerk my card I make sure I have eye contact with them and say “Charge Thai baht, not U.S. Dollars.” But in some cases they still mess-up and do a DCC transaction…then I don’t sign, tell them to cancel the transaction, rerun the transaction in baht, and they have always done it…takes them just a couple of minutes…one clerk did it all in around 30 seconds.

Yeap, DCC bad, very bad for the customer; DCC good, very good for the merchant.

You make perfect sense, at least according to me. I refused to sign the receipt and asked them to rerun the transaction in THB. The cashier refused pointing to the no refund policy even though I never officially agreed to the terms of the purchase. The manager also refused to take any action other than attempting to get me to sign the receipt. At that moment I realized I would have to contact the CC company to try and mediate the issue. That route would mean a few phone calls and even more of my time dealing with the issue. Based on 191THB ($5.91), I made an instant decision not to be bothered based on how I value the worth of my time. I did leave with the product I intended to purchase, so I'm on the hook for the charge. Had I left the product behind, then I would have to go elsewhere and still deal with the CC company since they had it stuck in their minds that my situation constituted a refund. I'm sure the lack of signature probably means nothing on their end. Maybe they signed my name, who knows?

What I find most disappointing is that this occurred at Power Buy at Central World and not some mom & pop shop. I'm considering sending a quick inquiry to the CC company, but I don't want my account flagged in any way that might hinder future purchases. I'm undecided at this point and don't want to dwell too much but do want others to know what happened at Power Buy. I also want to know how to handle this in the future. Your advice is well taken but wouldn't have mattered, at least immediately, in this case.

[DogNo1]

I get around this problem by getting large cash advances on my no-foreign-transaction-fee US bank credit card at the Bangkok Bank foreign exchange window where there is no service charge for the cash advances. I keep most of that money in the safe and only carry as much cash as I will need for my intended purchases. I get the optimal Visa card exchange rate that way and avoid any hassles by making all of my purchases with cash.

[garyk]

I get around this problem by getting large cash advances on my no-foreign-transaction-fee US bank credit card at the Bangkok Bank foreign exchange window where there is no service charge for the cash advances. I keep most of that money in the safe and only carry as much cash as I will need for my intended purchases. I get the optimal Visa card exchange rate that way and avoid any hassles by making all of my purchases with cash.

+1

[Pib]

I get around this problem by getting large cash advances on my no-foreign-transaction-fee US bank credit card at the Bangkok Bank foreign exchange window where there is no service charge for the cash advances. I keep most of that money in the safe and only carry as much cash as I will need for my intended purchases. I get the optimal Visa card exchange rate that way and avoid any hassles by making all of my purchases with cash.

Hopefully that card also has "no cash advance fee" and you pay it off same day to avoid any interest charge. I do the same thing as you nowdays...that's the primary way I get my money. I use a U.S. PenFed Visa credit card that is a no foreign transaction fee and no cash advance fee card which I can get up to $2,000 per transaction, I immediately deposit it in my Bangkok Bank account at the same time, no fee charged by the bank. And then I come home, log onto my PenFed credit card account and pay the cash advance off immediately to avoid any interest charge. Been doing this for around 6 months now...absolutely no fees anywhere...get the full Visa exchange rate...money immediately in-hand. But the key is being able to get a no cash advance and no foreign transaction fee credit card...they are definitely in the minority of cards.

Of course a debit card would work also, but usually most debit cards are limited to a smaller transaction amount per day...like maybe around $1,000 max, and some Thai bank branches won't do counter withdrawal for a debit card but gladly do it for a credit card...my branch is like that...for a debit card they just point you to their ATM...for a credit card they will do a counter withdrawal....depends on the branch....no standardization here.

[Langsuan Man]

I get around the problem by not having it happen.

Whenever I use my US based credit card the first words out of my mouth are " Thai Baht " as I start to hand them my card. If they look at me quizzically or don't respond, I don't let loose of the card until there is someone there that understands

[55Jay]

At places we don't normally patronize and big stores with many employees (like a Tesco), wife and I always say "Thai Baht" before they swipe the card.

Some employees still get it wrong, not paying attention, don't know any better, maybe boss told them otherwise, dunno, but in new venues, I watch the credit card swipe machine. If I see one of those "10 inch" signature receipts come out, I know it's gone wrong and settle in for phase 2.

Always been successful at getting it cancelled and re-run in Baht. Some places take longer than others, require more persistence and on one occasion, had to refer to off-site, higher management as the in-store manager was pretty useless.

Your PowerBuy account was interesting, hadn't seen the instant "no returns / no refund" response before.

[WhizBang]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

[Pib]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

Assuming it's not a DCC transaction you get the Visa/Mastercard exchange rate (that is pretty good..plus or minus a few stang of the Thai bank TT Buying Rate used for incoming wire transfers) minus any foreign transaction fee your card-issuing bank "may" apply. If you have a no foreign transaction fee card it's the way to go...A good exchange rate with no fees.

[Monkorn]

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

Yes, I know for a fact the exchange rate would have been better using THB rather than USD.

As I explained previously, all other purchases yesterday were given a rate of 32.28 whereas Power Buy gave me 30.6411. I only use CC's that don't charge foreign transaction fees, so that's a non-issue here. While the CC issuer may not give me the best rate out there, it's generally better than the rate I get for exchanging USD into THB unless it's through a wire transfer.

I use the CC mainly for reward points and protection from unauthorized use. While I have no doubt I could have just walked away, I had a need for what I purchased so I would've ended up getting it elsewhere anyway. Power Buy had the same product for 220 THB cheaper than a competitor so I still came out ahead, although I'm not happy about the way they treated my transaction.

[55Jay]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

Can't go wrong with cash. Certainly is a more stress free way to live.

Some of us, however, just love to punish ourselves and gnash teeth over this.

Quit being such a killjoy.

[Monkorn]

Some places take longer than others, require more persistence and on one occasion, had to refer to off-site, higher management as the in-store manager was pretty useless.

Your PowerBuy account was interesting, hadn't seen the instant "no returns / no refund" response before.

In this case, the manager was useless and sided with the cashier that insisted I was seeking a refund. I wasn't, I wanted the transaction voided and ran in THB.

The receipt only says ***NO REFUND*** so they probably do accept returns, albeit most likely for an exchange or store credit. Either of which wouldn't have helped me because I still would've received the lower exchange rate.

Edited October 22, 2014 by Monkorn

[55Jay]

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

Yes, I know for a fact the exchange rate would have been better using THB rather than USD.

As I explained previously, all other purchases yesterday were given a rate of 32.28 whereas Power Buy gave me 30.6411. I only use CC's that don't charge foreign transaction fees, so that's a non-issue here. While the CC issuer may not give me the best rate out there, it's generally better than the rate I get for exchanging USD into THB unless it's through a wire transfer.

I use the CC mainly for reward points and protection from unauthorized use. While I have no doubt I could have just walked away, I had a need for what I purchased so I would've ended up getting it elsewhere anyway. Power Buy had the same product for 220 THB cheaper than a competitor so I still came out ahead, although I'm not happy about the way they treated my transaction.

Indeed. I have cash back vs. points and that bends the forex curve a bit more in my favor.

[Pib]

Indeed. I have cash back vs. points and that bends the forex curve a bit more in my favor.

Amen Brother...same for me...1.5% cash back on every purchase. It's kinda like getting the TT Buying Rate for an incoming wire transfer minus all the fees and then getting a 1.5% bonus. Paying in cash actually costs me money.

[ravip]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

I agree on this.

Finally when a foreign CC balance is settled in the 'home' country, the bank always converts the foreign transactions at a lower rate. I guess this is sort of a 'commission' for the bank?

[Pib]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

I agree on this.

Finally when a foreign CC balance is settled in the 'home' country, the bank always converts the foreign transactions at a lower rate. I guess this is sort of a 'commission' for the bank?

You say the "...bank always converts the foreign transaction at a lower rate." Well, "all banks" do not do that...most do, but some don't. You apparently have a card that does charge a foreign transaction fee probably in the 1 to 3% ballpark. The ones which charge a foreign transaction fee which effectively reduces the exchange rate--but it's your card-issuing bank imposing that fee. Well, actually, Visa/Mastercard does charge a 0.15 to 1.0% currency conversion fee depending on their contract with your card-issuing bank which is passed to your bank....it's then up to your bank whether they absorb that fee, pass it along to you, or add onto it.

Most of my U.S. credit and debit cards "do not" charge a foreign transaction fee...they absorb the currency conversion fee and don't add anything onto the fee...I get the full Visa/Mastercard exchange rate. Just couple of examples: Schwab debit card...Capital One credit card.

The cards that do charge a foreign transaction now live in the darkness of my safe....they would have been cancelled long ago except some of the cards are issued by banks I still have checking/savings accounts with and which I still utilize.

You apparently have a card that charges a foreign transaction...you might want to see if you can get a card that doesn't charge a fee...which usually means getting an account at another bank/credit card company....how numerous such cards are varies from country to country.

[Monkorn]

Tempest in a tea cup.

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

I use my foreign credit card only when I do not have sufficient thai baht on hand or in my Bangkok Bank account. It is for emergencies only. I sumetimes use it when I travel, as the BB debit/ATM card is not always accepted. Otherwise I prefer to wire US$ into my BB account as they always give a fair exchange rate.

I agree on this.

Finally when a foreign CC balance is settled in the 'home' country, the bank always converts the foreign transactions at a lower rate. I guess this is sort of a 'commission' for the bank?

Let's agree to disagree on the following statement: "in the 'home' country, the bank always converts the foreign transactions at a lower rate."

You and WhizBang use the words "definitely" and "always" too loosely, especially in this case.

My home bank gave me 32.28 yesterday and Power Buy gave me 30.6411. My home bank doesn't charge foreign transaction fees either. Please explain how I'm getting a lesser rate from the foreign CC when charging THB than when allowing Power Buy to convert into USD?

On top of that, factor in cash back/reward points with the CC usage. Which is the better deal, cash or foreign CC with no transaction fees?

Tempest in a tea cup? Okay, if you say so, then it must definitely be the case. I guess trying to find out how to avoid this scenario again is certainly blowing things out of proportion.

[DiDiChok]

I agree with the 'disagreer's' too. Being from the UK, I always tell the cashier I want to pay in the local currency wherever I am so that Visa does the conversion and not the shop or local merchant's Bank. The rate is better and most UK cards do not charge a fee for purchases, only for cash withdrawals.

I've found that sometimes traders do make an extra sneaky charge in Thailand for using a foreign credit card. Maybe not in the OP's case, but it's another way of scraping a few more ฿ out of people.

To 'Win' properly it's best to have a Thai Bank account, and that's not really difficult to get. Just hawk yourself around loads of branches until someone gives in. There's so many made up rules in Thailand that people tell you are gospel, it's fun and I love it.

[el jefe]

Indeed. I have cash back vs. points and that bends the forex curve a bit more in my favor.

Amen Brother...same for me...1.5% cash back on every purchase. It's kinda like getting the TT Buying Rate for an incoming wire transfer minus all the fees and then getting a 1.5% bonus. Paying in cash actually costs me money.

Pib, you're 100% correct but you're losing the debate here because too many people don't understand or just don't care about the 1-5% fees.

Most of us know not to pay DCC (the most recent transaction that I demanded to be reversed was in Europe where the difference was 5%) or foreign transaction fees. I have credit cards that pay cash back from 1.5-2.2%. Paying in cash solves the problem of merchants using DCC but, like you, that certainly costs me money. I earn over $1,000 a year in cash back bonuses. Why should we give that up?

This thread has probably reached the same end as this one:

http://www.thaivisa.com/forum/topic/770015-cheapest-ways-to-send-money-usa-to-thailand/

I'll leave it to you to debate the merits of Western Union!

[Pib]

Yeap some people don't seem to mind foriegn transaction fees. Merits of Western Union (or PayPal)

to move foriegn money to certain countries like Thailand? Nope you won't see me debating that...their low exchange rate and/or fees makes that nothing to talk about...but for some folks I guess that is the cheapest method they have access to.

[JimGant]

Do you really think you would have done any better had the charge gone through in thai baht? Your foreign credit card would have done the exchange (definately not at a favorable rate) plus probably added a foreign transaction fee on too.

Of course you would have. Whether or not your issuing bank passes on the card network's 1% foreign transaction fee -- and maybe even adds another 2% of their own -- you'll always get a less favorable exchange rate with DCC than by allowing the credit card network to do the exchange. How do you think the merchant and his transaction bank make any money off of DCC? In Monkorn's example, this spread is the difference between the network's 32.28 FX rate -- and the DCC rate of 30.6411 -- for a no fee card. However, under DCC your issuing bank still uses (in most situations) the same fee, 3% in this example, as he would in a non DCC transaction. Do you think they'll forgo this fee so that the foreign merchant and his bank can make money -- at their expense? In fact, what used to be called a "foreign exchange fee" was retitled to "foreign transaction fee," since under DCC, the card networks were no longer doing the foreign exchange.

In the above example, a 10,000 baht purchase would cost you $309.79, with Visa doing the FX. But under DCC, the cost would be $326.36 (using a no fee card for either situation). Of course, when the $326.36 is repatriated to Thailand, it's at the network rate, not the artificial DCC rate. Thus, the $326.36 becomes 10,535baht on the Thai end -- with that 535 'profit' to be divided up between the merchant and his transaction bank (I've seen both Bangkok bank and Kasikorn on DCC slips, but I imagine most Thai banks are in the game).

What if your issuing bank has a 3% foreign transaction fee? This has no affect on the Thai side -- only on the US side. But even just on the US side, DCC costs you -- since 3% of $326.36 (what you'd pay under DCC) is $.50 more than 3% of $309.79. So, even your issuing bank, and the card network, get a piece of this action. Only one loser -- you.

I love the Bank of America ad for DCC, where they say something like 'why wait for the monthly statement to learn what you actually paid.?' Hello. Online banking, the Internet ring any bells? What a crock.

The only plus I can see with DCC is, for my Capital One 1.5% cash back card -- I'd come out a quarter ahead in the above scenario. Not exactly any compensation for the overall gouge.

[JimGant]

I guess trying to find out how to avoid this scenario again is certainly blowing things out of proportion.

I really think most of the clerks here are clueless about DCC, and have been told it's a good deal for the farang. I've had to reverse DCC charges at my dentist, Sizzler, and Home Pro -- all with discussion involved before any action. Home Pro got a lesson about Thai women, who have lived in the States for 35 years, and who are comfortable with confrontation, when needed. After holding up the line, the wife went to get the manager, who reversed the situation, and even gave us a lesson on the DCC button, under the counter (button 2). Now, at Home Pro, I just say "button one, please." Elsewhere, as many here have said, it's "Thai baht" as you hand over the card.

Hospitals are notorious for DCC -- less complaints from folks in a coma, I guess.