How to avoid double conversion and not overpay - read the material.
Payment by card abroad: currency exchange and conversion.
The idea of card payments abroad has become overgrown with a lot of myths. Given that the card is the most convenient and safest way to pay when traveling abroad. Banks generally do not advise Ukrainians to take cash on travel, which must be declared, it is easy to lose and even more difficult to exchange at an adequate rate.
Actually, currency exchange is most frightening when making payments abroad. When paying by card, in this case, there are also many nuances. Especially frightening is the so-called double or even triple conversion.
Intermediate currency and double commission
To understand the process, first of all, it is important to understand the main principle: when paying with a card abroad, three currencies are involved in the operation: account currency (in which funds are stored), transaction currency (it contains the cost of a product or service) and billing currency (in which the buyer's bank pays with Mastercard or Visa payment systems).
When the currency of the buyer's card and the merchant's account do not match, there is a need for conversion. The number of such transactions depends on the presence of one of the international currencies in the scheme.
For example, when paying for a taxi in euros from a hryvnia card, one conversion will take place, as well as when withdrawing hryvnia from an account in euros. Double conversion will occur when a third currency is included in the agreement.
In any country with its own currency, the traveler pays double commission. For example, in Hong Kong, where prices are set in local dollars, when paying with a hryvnia card, a Ukrainian pays twice : the Hong Kong currency is converted into US dollars or euros, which are then converted into hryvnia so that the bank can check if there are enough funds.
It is not difficult to identify the intermediate currency, it depends on the payment system to which the card belongs. Visa conducts transactions exclusively through the US dollar. Mastercard is more flexible - payments are available both in dollars and euros.
Another nuance when paying with a card abroad - the blocking and debiting of funds occurs with a gap of several days. During this time, the course may, of course, change. If on the day of debiting the interbank rate is lower than it was when blocking, the amount will remain the same. If the value of the currency has increased, more money will be debited from the account.
DCC pitfalls
There is also DCC - the so-called Dynamic Currency Conversion. We are already talking about a targeted service for fast conversion. In this case, the seller determines the country of origin by the card identifier (BIN) and offers to immediately convert the purchase amount into the desired currency.
But there is often a catch in such a tempting offer - the commission can be 4-5%, and sometimes even 7%. You can burn yourself at high commissions when withdrawing funds abroad - some foreign banks will take 2-5% of the amount for conversion.
In fact, there are many options to avoid both conversion and commissions. There are banks offering multicurrency products at once. In this case, up to five accounts can be linked to one card at the same time. Then, when traveling to, for example, Switzerland, Great Britain and Germany, you do not need to take three cards in different currencies with you to avoid conversion.
Or, in some banks, they can issue special tourist cards, the list of possibilities of which includes the very absence of a conversion commission, and even additional travel insurance, discounts and bonuses.
Payment by card abroad: currency exchange and conversion.
The idea of card payments abroad has become overgrown with a lot of myths. Given that the card is the most convenient and safest way to pay when traveling abroad. Banks generally do not advise Ukrainians to take cash on travel, which must be declared, it is easy to lose and even more difficult to exchange at an adequate rate.
Actually, currency exchange is most frightening when making payments abroad. When paying by card, in this case, there are also many nuances. Especially frightening is the so-called double or even triple conversion.
Intermediate currency and double commission
To understand the process, first of all, it is important to understand the main principle: when paying with a card abroad, three currencies are involved in the operation: account currency (in which funds are stored), transaction currency (it contains the cost of a product or service) and billing currency (in which the buyer's bank pays with Mastercard or Visa payment systems).
When the currency of the buyer's card and the merchant's account do not match, there is a need for conversion. The number of such transactions depends on the presence of one of the international currencies in the scheme.
For example, when paying for a taxi in euros from a hryvnia card, one conversion will take place, as well as when withdrawing hryvnia from an account in euros. Double conversion will occur when a third currency is included in the agreement.
In any country with its own currency, the traveler pays double commission. For example, in Hong Kong, where prices are set in local dollars, when paying with a hryvnia card, a Ukrainian pays twice : the Hong Kong currency is converted into US dollars or euros, which are then converted into hryvnia so that the bank can check if there are enough funds.
It is not difficult to identify the intermediate currency, it depends on the payment system to which the card belongs. Visa conducts transactions exclusively through the US dollar. Mastercard is more flexible - payments are available both in dollars and euros.
Another nuance when paying with a card abroad - the blocking and debiting of funds occurs with a gap of several days. During this time, the course may, of course, change. If on the day of debiting the interbank rate is lower than it was when blocking, the amount will remain the same. If the value of the currency has increased, more money will be debited from the account.
DCC pitfalls
There is also DCC - the so-called Dynamic Currency Conversion. We are already talking about a targeted service for fast conversion. In this case, the seller determines the country of origin by the card identifier (BIN) and offers to immediately convert the purchase amount into the desired currency.
But there is often a catch in such a tempting offer - the commission can be 4-5%, and sometimes even 7%. You can burn yourself at high commissions when withdrawing funds abroad - some foreign banks will take 2-5% of the amount for conversion.
In fact, there are many options to avoid both conversion and commissions. There are banks offering multicurrency products at once. In this case, up to five accounts can be linked to one card at the same time. Then, when traveling to, for example, Switzerland, Great Britain and Germany, you do not need to take three cards in different currencies with you to avoid conversion.
Or, in some banks, they can issue special tourist cards, the list of possibilities of which includes the very absence of a conversion commission, and even additional travel insurance, discounts and bonuses.
