When you travel outside of the Eurozone, beware of pickpockets that have a well-oiled system to get you!
This is not some back-alley outfit that slips in and out of the shadows. Rather, it is the clerk at the front-desk of that nice hotel you stayed at. Or the waiter or their manager that smile politely as you pay for you meal.
A few months ago, I got a question from one of the seminar attendees at a global brand based in the Docklands in Dublin. They had been travelling to Asia and realised that they may have been overcharged for their meal at an upmarket restaurant. On paying their bill, they realised a 5 percent surcharge was added to their bill and the bill was presented in Euro, not the local currency where they had viewed the prices. And although the total charge in comparison for a similar one on Euro was a fraction, it was the practice of it happening automatically that bothered the individual. It was a surcharge that seemed to have been added in collusion with the restaurant and Visa who provided the credit card terminal.
This is where dynamic currency conversion comes it. While it sounds sophisticated, it is anything but. In fact, it is a lot more like a two-card trick than a fintech service that provides real benefit to the travelling public. How it operates is fairly simple: foreign merchants add a hefty mark-up to people’s bills, convert it to your home currency (Euro) and then claim it benefits you. Plus, to make matters worse, while merchants are generally required to seek the customers permission on whether or not they want their bills presented in their home currency, this can often be ignored and a 2we thought it would make it easier for you to understand” argument is slyly presented to the customer.
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Relying on lack of knowledge
Customers often may not fully understand fully how this all works. It’s what the merchants, restaurants and hotels rely on; ignorance, especially when it comes to dynamic currency conversion really is bliss! Business operators that employ such tactics can include major hotel chains to small restaurants, souvenir shops, pharmacies. With the growing number of merchant devices available to take credit card payments, the practice keeps growing accordingly.
How to protect yourself
The best way to protect yourself when travelling outside of the Euro area is to insist the charge is applied to your card in the local currency. This way, you know that the cost is the cost and when you get your monthly bill, you should only be seeing it in Euro once converted. There will be some charges for that but that means that additional charges in association with dynamic currency conversion is stopped in their tracks… it means more money in your pocket!
So if you charge a hotel room for 780 Chinese Yuan, or about €100 at current rates, it should show up on your statement as €100 or €102.
However, and this is where you need to have your wits about you, if your hotel checkout clerk asks if you want to pay in local currency or Euro, go for the local option, what is rarely disclosed is you might be paying an additional percentage fee of between 3 percent to 8 percent, sometimes more, bringing the cost of that Beijing hotel room to €105 or €110. Of course, you can also avoid this whole set of shenanigans by paying for the hotel before you leave using one of the many booking websites. However, if you are going to restaurants and other merchants, be aware of the DCC rip-off! Avoid the fancy “would you like to pay in your own currency” argument and pay local always!
Stick to the basics… check your receipts for unauthorised activity
In some situations, despite a general rule that merchants are supposed to be required to get your permission to convert to ‘home’ currency (Euro in your case), some don’t. In fact, it can sometimes be the case merchants will claim their merchant card devices are pre-programmed and the conversion to home currency cannot t be fully trained on how to bypass some of the pre-programming. It could also be a case that point-of-sale staff are encouraged to push the DCC option and simply claim ignorance, there is a financial incentive to do so!
Notify your bank
If you are charged a foreign currency fee without your consent and the merchant won’t reverse it, you should first notify your bank or card issuing company.
Also, as a final step, don’t be shy of using of using online review websites of you feel that the extra fees was deliberately malicious and the merchant or hotel were dogmatic in their refusal to provide you with a payment option.