
10 tips to help you save money on your shopping trips
• 5 years agoAs inflation and import costs have risen, shoppers have been hit with bigger bills when… Read more »
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These pay-in-sterling options are known as dynamic currency conversion and many holidaymakers are unaware of the dangers and potential costs of this practice. Although tourists are much savvier than they used to be with regards to high charges, they do not assume that payment systems are something to be vigilant of.
This service is sold to holidaymakers as an extra convenience but many tourists have said that they are confused by the choice and are not usually made aware of the vast exchange rate differences. The Netherlands is one hot spot for this scheme at the moment with Consumentenbond, the Dutch consumer organisation, taking action to ensure visitors take extra care when paying by card.
Speaking for the group, Sandra de Jong, said; “Let me warn those that are being offered to pay by card and the shop owner says: ‘Would you like me to give you the exchange rate of what it will be in pounds’ – don’t do it”
Dynamic currency conversion works when you put your card in a payment machine or ATM, you will be given a choice to pay in euros or pounds. If you choose euros, your transaction will go through the standard route and the exchange rate set by Visa or Mastercard will be applied although your bank may charge an additional fee.
If you opt to pay in pounds then money will be changed there and then by the shop’s bank or payment processor and they decide on the rate to charge based on their interest rates. As the exchange rate differs hugely from one bank and payment provider to the next, it is better to pay in local currency and take the standard fee of Mastercard or Visa.
As one in five transactions abroad are affected by this, people have been asked to be vigilant especially in places such as the Netherlands, Hungary, Thailand, Spain, Turkey and Sweden where this practice is becoming more and more common.
Although, dynamic currency conversions are legal in Europe and the UK, traders need to display the price and the exchange rate before payment is made. However, it has been found that in most cases the rate is not shown in a way tourists are used to and therefore they find it difficult to assess the rate and any potential charges on the spot.
As traders and their bank or payment processor benefit by recouping banking costs and potentially making a profit, holidaymakers are being charged for simply not understanding what the best option for them is. As a result, you will need to be able to protect yourself from these charges, here’s how you can do that:
If dynamic currency conversion has affected your purchase(s) whilst abroad, particularly when you have not been made aware of the situation, you should get in touch with your card issuer to explain the situation and in some cases, you could reclaim the extra money paid.