FINBRIDGEFIELD NOTES
One question at the till.A plain card terminal and a receipt on a café counter abroad.Q.05

Paying by card abroad — what happens if you pay in your own currency?

One question at the till.

At a till or cash machine abroad, the card screen asks: “Pay in the local currency, or in your own?” What that question really means, and how the price changes with your answer.

In 30 seconds

One question on the screen.

Pay in the local currency, or in your own? The choice is yours.

Which currency would you like to pay in?

If you choose the local currency

Your card issuer converts it later.

If you choose your own currency

The merchant’s side converts on the spot. The rate usually carries a mark-up.

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Conversion by the merchant’s side

If you choose your own currency, the merchant or cash machine operator converts on the spot. This is called dynamic currency conversion.

The card scheme’s rules

Visa says that merchants and cash machines must let you choose whether to accept or decline the conversion, must not choose for you, and must not steer the choice with type size or colour. It also requires the amount in both currencies, the exchange rate used and the mark-up to be shown.[1]

The price changes with your answer.

Conversion by the merchant’s side usually carries a mark-up.

7.6%

Average mark-up on merchant-side conversion, checked by a Norwegian bank (1,500 cases, 2016)

Up to 12.4%. An old European study; it may not apply to today’s countries or shops.

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The study’s figures

According to material compiled in 2017 by the European consumer organisation BEUC, a Norwegian bank checked 1,500 cash withdrawals in 2016: choosing the home currency cost 7.6% more on average and up to 12.4% more. In only 4 of the 1,500 cases was it cheaper than the local currency.[2]

A German consumer organisation’s study found the home currency cost 2.6–12% more at cash machines and 2–5% more when paying in shops.[2]

Europe requires the mark-up to be shown.

In the EU, the conversion mark-up must be shown as a percentage over the European Central Bank’s reference rate.

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The EU rule

EU Regulation 2021/1230 requires the cost of currency conversion in card payments to be shown as a percentage mark-up over the latest ECB reference rate. Before payment, the amount must be shown in the payee’s currency and in the currency of your account, and you must be told that you can pay in the payee’s currency and let your own bank convert later. After payment, an electronic message discloses the mark-up.[3]

Elsewhere, the card scheme’s rules do the work.

Where there is no law like the EU’s, card scheme rules support what is shown on screen.

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What we checked

This edition checked the EU regulation and the published rules of one card scheme (Visa). Laws in other countries and regions were not checked this time.[1][3]

If you feel pressured

Visa advises that if the required information is not shown, or you feel pressured to choose, you should decline the conversion and tell your card issuer.[1]

Three numbers to read at the till.

The three numbers that should appear on the screen, set out as a scale.

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The amount in both currencies

Whether the amount is shown both in the local currency and in your own.[1][3]

The rate

Whether the exchange rate used is shown.[1]

The mark-up

Whether the mark-up (the charge) is shown. In the EU it is shown as a percentage over the reference rate.[3]

This is not advice

This edition explains how conversion and its rules work. It does not advise which option you personally should choose.

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What this edition cannot tell you

Sources