Travellers abroad could lose out to Dynamic Currency Conversion
7 August 2018
For paraplanners planning on jetting abroad this summer, they should be careful to pay bills in local currency or risk paying more than they bargained for.
Foreign exchange expert Caxton has warned that Dynamic Currency Conversion (DCC), a service provided by banks, shops, restaurants and hotels all over the world allowing foreign visitors to pay a bill in their own currency as well as the local currency, could come at a cost for users.
DCC allows local businesses to use their own currency rate to exchange sterling, which is almost always worse than the one the user would be charged if they had paid in local currency, the firm said.
Several studies have suggested markups of around 5-10%, but there have also been examples of merchants charging as much as 30% on top of the standard rate.
Caxton said that while travellers may think that by paying in pounds they’ll avoid the fees charged by their bank and credit companies for using their cards abroad, those fees are for foreign purchases not currency exchanges so will only add to the cost of the transaction.
Caxton has advised travellers to always check the payment terminal to make sure it hasn’t been set to “pay in GBP” and make sure they select to pay in local currency.
Its warning to travellers followed a recent proposal by the European Commission for full disclosure on DCC, which would mean merchants would need to clearly show the total cost of paying with each currency in a bid to help consumers make an informed decision.
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