Dynamic Currency Conversion: Still A Scam

I got nailed with a dynamic currency conversion charge at Schiphol Airport in Amsterdam last weekend, although I had sworn I wouldn’t let that happen.

I’m talking about the practice of converting a transaction in a foreign currency to the customer’s native currency for a fee – usually 2 or 3 percent of the transaction amount. Unless you’re getting spectacularly ripped off by a bad credit card, this is always a raw deal. Your credit card will give you a better rate, and some cards have no surcharge at all.

Paying for dynamic currency conversion gets you absolutely nothing except the illusory comfort of paying in a familiar currency. In other words, it’s a rip-off.

Unfortunately, the practice seems to be growing in the European Union. Tourists from the United States and Great Britain, which has not adopted the euro, are paying the price.

Here’s what happened to me in Amsterdam.

When I got the credit card charge slip for some chocolates I bought at a duty-free shop, the charge had been converted to dollars. When I objected, and told the clerk that I would prefer to pay in euros, she insisted that it made no difference.

"It’s the same. It’s the same," she said, obviously confused.

It’s not the same. As I’ve pointed out before. The slip clearly said:

Cardholder has chosen to pay in USD. This transaction is based on SEB Bank Wholesale exchange rate plus 3,0000% international conversion margin. My choice is final. Transactions can also be conducted in EUR. 

As Visa explains on its Web site about dynamic currency conversion:

Visa requires that you be provided a meaningful choice at the point of sale and you have the right to buy your purchase in the local currency to avoid any additional fees the merchant may assess.

I tried to explain to the clerk that she was supposed to give me a choice, and that by converting to U.S. dollars she had subjected me to a 3 percent charge. (I really do believe that she didn’t understand that.)

Given the language barrier and a line of increasingly impatient customers behind me, I calculated the charge in my head, realized that it came out to about 75 cents, and gave up. I signed the slip and left, frustrated and annoyed.

I had just made a credit card purchase in another duty-free shop and had been charged in euros without question. But I can see that, increasingly, clerks are not trained to offer the choice or to understand the implications.

So from now on, whenever charging something on a credit card outside the United States, I will specify in advance that I want the charge made in the local currency.


5 thoughts on “Dynamic Currency Conversion: Still A Scam

  1. Jeff Birnberg

    To penalize a process that benefits travelers both tourist and business because of unwarrented abuse is unfair and unprofessional. There are DCC programs that exist within a framework of full disclosure and transparency and additionally protect the traveler from exorbitant fees; such a program is called FX Assured that guarentees that the conversion rate will be better then that offered by the card issuing bank; I suggest you take a look and then write another report.

  2. daniel lavecky

    As CEO of one of the worlds largest DCC service providers – Pure Commerce (http://www.pure-commerce) I disagree with your analysis. We always give a fair deal and more often than not a better exchange rate than the issuer.
    Our service was recently audited by Visa and received the highest possible result.
    Our DCC service provides a valuable service to the customer who doesn’t know the final price as with a normal transaction. Issuers set a rate that is no where near the actual rate and use it to their advantage.
    We give a simple option that lets the card holder decide – no one else. If they don’t like it, they are free to choose the local currency.
    Like with most service providers in any industry there are good and bad. I believe its unprofessional to put us all in the same basket.
    Perhaps you could visit one of the many airports we operate from and see the difference.

  3. Jeanne Leblanc

    So how are you going to beat my credit card’s rate of 0 percent? I have a Capital One Visa that not only charges no fee, but eats Visa’s standard 1 percent fee. Even my AmEx card is charging only 2 percent.
    Sorry. This is a service for the merchant, not the consumer.

  4. J.H. Philip

    As one of the four concessionaires selling chocolate at Schiphol Airport, I have read your article about our DCC service. We have started this service almost a year ago and up till now we have seen that our customers appreciate this service. For it gives them complete certainty about the amount charged on their credit card.
    The key issue, with most services offered, is the correct execution of procedures by staff members. Our staff is trained to give every customer a clear choice when offering the DCC service. That this wasn’t executed correctly in your case is incorrect. But I personally would never use words like ‘a scam’ in a situation like this. A scam indicates purposely misleading behavior, which clearly isn’t the case.
    We have used your article to show our staff members what the impact is of not executing the DCC service correctly. For this free education and to compensate your loss of 75 cents, the concessionaires at Schiphol Airport would like to offer you a small but typical Dutch gift. Please forward me your personal details and I will send it to you.
    And off course we hope to see you again at Schiphol Airport in the near future, with or without DCC!

  5. Jeanne Leblanc

    Dear J.H. Philip,
    That is a very kind and fair offer, but I’m not going to take you up on it. First, I’ve lost track of the receipt and I don’t remember which shop this happened at. It might not have been yours. Second, I accepted the charge, however reluctantly, and so I ought to pay it. Third, I’m a journalist and I can’t take gifts.
    I do respect and appreciate your desire to offer DCC correctly. But I still don’t see how it conceivably benefits the consumer. And from the correspondence I’ve received from travelers, it’s clear that most don’t understand that this conversion comes with a fee.
    I’ve been reading warnings about DCC in the European and American press for a couple of years now. It’s simply a bad deal.
    And as honorable as your intentions may be, I still believe DCC is a scam. It’s deceptively offered as a service to the consumer. In fact, it’s a fee, and an unnecessary one at that.
    How about I just call it a rip-off from now on?


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