Travellers: don’t get ripped off on your currency conversion


When travelling, and offered the opportunity to pay in your own currency, think twice, it’s a big bank scam. The scam is Dynamic Currency Conversion (DCC).

With all the bank advertising, you will not see this story in mainstream media. The beauty of this international bank scam is that our banks rip off foreign tourists and the banks of overseas tourists rip off our tourists. Just ask your bank! It is the perfect crime. And when we say “crime” we mean fraud. “Fraud” means gaining a financial advantage by deception … exactly what this scam is.

At a hotel, a shop or a restaurant, when they put the machine in front of you and offer you the choice of paying in foreign currency or your own currency, which option do you select?

If you take the intuitive decision and pay in your own currency – the idea being that you won’t get charged a currency conversion fee – you will get pinged with a DCC charge or 3 per cent to 8 per cent on the transaction. The fee depends on the deal done with the merchant, that is the hotel or the restaurant.

When offered the choice, it is counter-intuitive to choose the option to pay in foreign currency. Card industry insiders say up to 90 per cent of people choose to pay in the currency of their country of origin, the idea being that if they are Australian and choose to pay in, for instance, Thai Baht, US dollars or euros, they may well be stung for another currency conversion fee on top of the normal forex fee.

For the banks, the beauty of DCC is that the fee is not adequately disclosed, arguably not disclosed at all, and so they make billions worldwide from unsuspecting travellers. Further, it is our banks that prey on foreigners and foreign banks that prey on Aussies abroad. Each therefore can place hand on heart and claim they are not ripping off their own customers.

Here is a story in the UK, run off the back of our coverage of DCC and here is our original coverage:


Banks ‘plunder’ travellers with forex fees on credit card transactions

And here is another one:

Dynamic currency conversion – robbery by choice

  • Chris

    Another example of the parasitic nature of the banking system. What to do? Reclaim democratic processes and regulate parasites out of existence. I know.. easier said than done.

  • Alpo

    Yet another item for the Banking Royal Commission to be put together by the coming ALP Shorten Government….

  • Rhys Daniell

    Hey Michael perhaps you could look at this from another angle and tell those of us who travel how to skin the banks?

    I love to travel but the experience is marred by the idea that every time I spend a dollar I’m generating a margin for my bank that is way in excess of their cost of delivering the service (ie of converting currency).

    In the days of quill pens and paper ledgers the cost of converting $1000 was no doubt a lot more than the cost of converting $1m. But these days a digital transaction does the job at negligible direct cost.

    Surely capitalist efficiency is providing a competitive (if less widely promoted) alternative?