Paying by Debit/Credit Card - fixed exchange loading

[meltingpot2015]

Whats the deal when paying for something using a debit/credit card in Thailand. Does the retailer offer fixed exchange loading if your card allows it.

If you are offered, can you check the rate you are offered before saying "yes" or "no".

Heard that paying in the local currency is best, unless, you need to know in advance what the actual cost is is going to be in your home currency, for preparing business expenses etc. Your home bank conversion always takes a couple of days but more often than not offers a good rate.

Edited February 25, 2015 by meltingpot2015

[Langsuan Man]

Exchange rate is fixed by the card issuer based upon the prevailing Master Card or Visa published rate

. Does the retailer offer fixed exchange loading if your card allows it.

You can request that the merchant charge the "on shore" exchange rate, commonly referred to as "Dynamic" conversion which will give you the bill in your home currency but unless you have some over riding reason for wanting it done this way is not to your advantage since the exchange rate will be lower than the "off shore" rate

If you are offered, can you check the rate you are offered before saying "yes" or "no".

You always have the option to decline a sale by not signing the slip

Your home bank conversion always takes a couple of days but more often than not offers a good rate.

How long it takes for the charge to be shown on your card statement is pretty much dependent upon your card issuer. Usually you will see as "pending charge" which will be followed by the actual charge a day or two later.

Edited February 26, 2015 by Langsuan Man

[Pib]

Don't accept a Dynamic Currency Conversion (DCC) transaction (i.e., charge made in your home country currency vs local currency) as the merchant's exchange rate will be around 3 to 4% lower than the Visa/Mastercard exchange rate. When you accept a DCC transaction the profit from that lower exchange rate goes into the merchant's and his local processing bank's pocket and comes out of your pocket.

And then your home country card-issuing bank will probably still charge a foreign transaction fee (several percent is common unless your card is a no foreign transaction fee card) not because they had to get involved in converting the money but simply because it was a foreign transaction. So you got hit with the indirect fee of a lower exchange rate and then your home country card-issuing bank's foreign transaction fee....can easily add up to around 6 to 8% in fees. Whether you do a DCC transaction or not, your home country bank will use the Visa/Mastercard/AmEx exchange rate as the transaction is processed through their network and then your bank may apply a foreign transaction fee of several percent which effectively lowers the exchange rate although card networks prefer the bank reflect that fee as a separate fee because it makes customers think the card network is charging the fee when in fact its your card-issuing bank. Not uncommon for card-issuing bank to charge around a 3% foreign transaction fee which is basically the approx 1% card network foreign fee plus 2% additional added on by your card-issuing bank for profit.

Always say no to DCC...always accomplish the charge transaction in local currency, not your home country currency. DCC bad, very bad for the customer; DCC good, very good for the merchant/his bank.

[Suradit69]

A couple of times I used a credit card for bills at Bangkok Hospital Pattaya. After swiping the card they showed me the about I would be charged in US dollars before they completed the transaction and I could accept or reject it. The exchange rate was certainly not favorable, but since I was being reimbursed by a US base insurer, I just showed them the US$ amount that appeared on my credit card bill.

Usually when I have just used the card to pay in baht at a hotel or Central, etc. the dollar amount that appears on my credit card statement has been at a far better rate of exchange.

[nidieunimaitre]

The scam does not stop at the shops or restaurants.

The last 2 times I withdrew money from an ATM, the machine asked me if I agreed to "direct conversion" - and to wave my right to the MasterCard exchange rate.

The first time I accepted, as I was in a hurry (and I had already given my code), the second time I refused and guess what!!! The ATM gave me my money at the official rate!!!

>>>>>>Helllo can we scam you? No? Okay no problem<<<<<

[meltingpot2015]

The scam does not stop at the shops or restaurants.

The last 2 times I withdrew money from an ATM, the machine asked me if I agreed to "direct conversion" - and to wave my right to the MasterCard exchange rate.

The first time I accepted, as I was in a hurry (and I had already given my code), the second time I refused and guess what!!! The ATM gave me my money at the official rate!!!

>>>>>>Helllo can we scam you? No? Okay no problem<<<<<

Dosen't the ATM also give a warning about credit card cash withdrawals (also called Cash advances) attracting interest from the date of the withdrawal, usually really high. Sometimes over 20%. And only if you acknowledge the warning, you can make the cash withdrawal.

Cash advances from Credit cards are meant to be done only in emergencies. Some banks (the good ones) actually advise their customers to pay the money as soon as you can, to avoid the interest charges.

[nidieunimaitre]

Meltingpot,

I never encountered that warning, but I will always make sure I have enough money in my current account in my home country.

I would never use my "credit"card to take out a credit (loan), I only use it to transfer money.

[meltingpot2015]

nidieunimaitre,

Didn't know that there were Mastercard "debit" cards. All the debit cards I have encountered are visa. So I assumed yours was a "credit" card. I've only seen the "interest charged from the date of cash withdrawal" warning with "Credit" cards, when withdrawing cash from an ATM.

When you use a "credit" card to transfer money, does it count as a purchase.

Edited February 26, 2015 by meltingpot2015

[Pib]

The scam does not stop at the shops or restaurants.

The last 2 times I withdrew money from an ATM, the machine asked me if I agreed to "direct conversion" - and to wave my right to the MasterCard exchange rate.

The first time I accepted, as I was in a hurry (and I had already given my code), the second time I refused and guess what!!! The ATM gave me my money at the official rate!!!

>>>>>>Helllo can we scam you? No? Okay no problem<<<<<

Dosen't the ATM also give a warning about credit card cash withdrawals (also called Cash advances) attracting interest from the date of the withdrawal, usually really high. Sometimes over 20%. And only if you acknowledge the warning, you can make the cash withdrawal.

Cash advances from Credit cards are meant to be done only in emergencies. Some banks (the good ones) actually advise their customers to pay the money as soon as you can, to avoid the interest charges.

I seriously doubt and would bet they do not give a warning about interest you may incur or the cash advance fee when using a credit card. Why would the ATM care or know about that as credit cards from thousands of different banks have different terms & conditions, fees, etc. The ATM is there to give you cash usually at a fee and possibly offer a DCC transaction which makes them even more money through a lower exchange rate. Up to the individual to know the fees associated with his card issued by bank XYZ somewhere in the world.

When using an ATM to withdraw cash with a debit or credit card the authorization that comes back is only an approval or rejection by your card-issuing bank, and not a bunch of fee/interest info related to your particular card.

I wouldn't say credit cards are to be used in "emergency" situations only because basically all it is is a loan with an initial issue fee and at a certain interest rate...pretty much like a regular loan although I will admit credit card interest rates for cash advances are higher than regular loans (excluding what a Thai loan shark would charge which is usually at least 30% "a month" compared to a year). People use cash advances all the time as a short term loan and they need the money fast...almost like going to a pawn shop. And if you are lucky and have a no cash advance fee and no foreign transaction fee credit card (I have two such credit cards from the Pentagon Federal Credit Union), you can use the card to get up to $2,000 cash advance per day at a bank/counter withdrawal...come back home after getting the advance, logon the credit account account, and then pay the advance in full to avoid any interest charge....an absolutely free way to get cash with absolutely no Thai bank fees or card-issuing bank fees...but I admit few credit cards exist that don't have cash advance fees. And I will also admit that getting any type of loan, especially a high interest loan, should be carefully though about and understood as a high interest rate loan can sure make it hard/expensive to payoff sometimes....and for some people getting money quickly & easily via credit card cash advance is like a child playing with matches.

[Pib]

Here's how Visa describes DCC....a quote from their website. Even Visa tries to give it an alternate, warm & fuzzy name of Cardholder Preferred Currency. I can see how they came up with such a warm & fuzzy name because if you knowingly or unknowingly accept a DCC transaction then I guess you "preferred" to select a certain currency for the transaction.

What is dynamic currency conversion?

Dynamic Currency Conversion (DCC), also referred to as Cardholder Preferred Currency (CPC), is a service offered by merchants – not Visa - in some countries when you are traveling abroad. If you choose to use the DCC service, the merchant will convert the purchase price of goods or services at the point of sale from the currency in which the price (i.e., the merchant's local currency) is displayed into another currency (i.e. your home currency) using an exchange rate that typically includes a service fee.

Here's an example of a DCC transaction:
A U.S. Visa cardholder is in Singapore and decides to purchase a box of chocolates priced at SGD 20. At checkout, the merchant offers the cardholder the option to pay in USD using a DCC service.

The merchant dynamically converts the SGD transaction amount to USD 15.80. The DCC transaction amount and transaction currency (in USD) are disclosed to the cardholder. An exchange rate of 0.79 (1 SGD = .79 USD), which includes a 2.5% mark up (over a wholesale exchange rate) and the 2.5% commission/fee/mark up are also disclosed to the cardholder.

The cardholder actively chooses DCC by checking a box on a printed receipt or pushing a button on an electronic screen and agrees to pay USD 15.80 for the box of chocolates using the exchange rate provided by the merchant that includes a 2.5% fee for the DCC service.

If you do not want to use DCC when making a purchase, then you have the right to refuse the offer and have your transaction billed in the merchant's local currency, which will then use Visa's conversion rate. If you did not agree to DCC, but see it on your bill, then you should ask your issuing bank to contest the charge.

[nidieunimaitre]

Conclusion:

NEVER accept to be billed in your own currency outside your own country.

MasterCard and Visa may not be philanthropists, but at least they do not try to scam you - however they do nothing to stop this scam, since they value scamming merchants higher than simple consumers.

Direct conversion = dynamic conversion = preferred currency = whatever other newspeak = SCAM.

[jagfx]

As another thread that was linked to this regarding over the counter withdrawal using overseas credit/debit cards was closed due to nastiness, I thought I'd update my experience today.

Went into Bangkok Bank Hua Hin branch adjacent to Market Village with my passport and both my Australian Westpac Visa credit card and my Australian Westpac Mastercard debit card. Also had my passport. Basically I wanted to withdraw 20,000 baht out and then pay 9,000 of that directly in my future landlord's Bangkok Bank bank account. This was my first time doing this, so I was just testing the waters. The girl behind the desk saw my credit card first up and went for that, where I then showed her my debit card and asked her if I could use that card instead. No worries, she took it, put it through her machine and I put my PIN in. All good, where she then confirmed the account number I was depositing into, and made me sign a couple of forms and also a copy of my passport. Left and returned with the outstanding 11,000 baht cash. I then enquired what the max limit was to withdraw like this and she said it was what ever I had available in my account. In and out of the bank in less than 10 mins. Very helpful and polite all round.

4hrs later I check my Westpac online accounts and I can confirm the cash was taken from savings account that is linked to the debit card and showed up as 'Debit Card Auth' for about AU$802.16. Not sure of the exact exchange rate at the time as I always just work on 25 baht = AU$1. But it was a painless process and works out well for me considering I'm having a little difficulty in opening a Thai bank account due to the recent rule changes where they have tightened it up somewhat. Cheers.

[Swiss1960]

nidieunimaitre,

Didn't know that there were Mastercard "debit" cards. All the debit cards I have encountered are visa. So I assumed yours was a "credit" card. I've only seen the "interest charged from the date of cash withdrawal" warning with "Credit" cards, when withdrawing cash from an ATM.

When you use a "credit" card to transfer money, does it count as a purchase.

MasterCard debit cards are called either Cirrus or Maestro, at least in Europe. Alternatives are pre-paid Credit Cards.

with regards to the warnings: The only warning I see in Thailand is "your home bank might charge you additional fees"... and that is really the only warning a Thai ATM can give you, since they know NOTHING about the charges your home bank might apply. "interest charged from the date of cash withdrawal" is something that does NOT apply within Europe, if you pay your credit card invoice in full within 10-20 days of receiving it (10-20 depending on your home bank).

[Swiss1960]

Conclusion:

NEVER accept to be billed in your own currency outside your own country.

MasterCard and Visa may not be philanthropists, but at least they do not try to scam you - however they do nothing to stop this scam, since they value scamming merchants higher than simple consumers.

Direct conversion = dynamic conversion = preferred currency = whatever other newspeak = SCAM.

your conclusion is right in most cases, but not all. There can be situations when your home bank will charge you additional fees like..

- foreign currency mark-up on the transaction: Swiss banks add 0.75-2.5% on top of the VISA / MasterCard exchange rate

- currency fluctuation between purchase day and clearning day to your card account.. 2-3 day may have an impact on exchange rates..

- any fees your home bank might come up with for cash advance in foreign currency (banks are pretty ingenious with fees...)

the only way you can be sure about accepting DDC or not is to know the charges of your home bank, know the current VISA / MC exchange rate and anticipate currency fluctuation for the next 2-3 days till you get billed for the transaction.