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How to avoid DCC and a foreign currency surcharge?

I just arrived in Budapest and had dinner at Vörös Postakocsi Restaurant​. I paid with my card and was charged in USD with DCC and a 3.5% foreign currency surcharge. I did ask the waiter to let me pay in HUF, but he said the currency conversion was "automatic."

How I can I avoid this next time? I find that this practice is simply unethical. Also, other than a financial loss, it's a matter of principle.

What was your experience? What's your advice?

Thanks.

Posted by
4684 posts

Presumably you used a chip and signature card? That means you had to sign a receipt. I would have told the waiter that you wouldn't sign it unless it was in HUF. He either didn't now how to disable DCC or lied about it because he didn't feel like dealing with it.

Next time, when paying, insist you want to pay in HUF, not USD.

Posted by
15566 posts

When they bring the receipt and they pull this, don't sign it and pay with cash. That means you will have to some HUF from a bank ATM that also does not try to rip you off. I had good experience at OTP Bank.

Posted by
4684 posts

The bill was in HUF, correct?

No - the bill was in USD. That was the problem. It was charged with Dynamic Currency Conversion (DCC) and a 3.5% currency conversion fee from HUF was added on. That's what the OP is rightly complaining about.

Posted by
255 posts

Thanks. I was naive and thought most restaurants were honest. The 3.5% was applied by the restaurant. I guess it's an arbitrary surcharge for ripping off tourists.

Posted by
5235 posts

Have you seen the charge on your credit card account ? I have seen cases where the vendor puts the charge through in USD (taking advantage of DCC) and then the card-issuing bank charges a foreign currency fee because it comes from a foreign location even though the charge comes through in USD. Hope there's not going to be another fee on this meal!

Posted by
16581 posts

Laura is right; getting hit with DCC doesn't mean you avoid any fee your credit card charges on foreign transactions.

There are some crooked hotels, restaurants and shops in Europe. I have had problems with all three at some point.

DCC absolutely means extra money in the pocket of the enterprise, so some owners/managers tell their employees to push it hard. Some employees will choose dollars for you. Specifying the local currency up-front will not necessarily stop them. When you notice what they have done and refuse to sign the receipt, some hotel/resraurant/shop employees will claim not to know how to void a transaction--almost certainly a lie.

I think it's risky to switch to cash payment after your card has been run. That means the card transaction has to be voided (which is sometimes an issue, per above), and what proof are you going to have that you made the cash payment?

Posted by
255 posts

Yes, Lauren and acraven...I have heard that there may be another 7% or 5% by my cc companies!!

Wow, this is just a cash cow to these crooks!

Posted by
8889 posts

No - the bill was in USD.

Well then reject it. I take it the menu was in HUF. Then that is what you pay, the prices listed on the menu. If they try and charge you more, just refuse to pay.

The "3.5% foreign currency surcharge" was probably a foreign use surcharge applied by you bank for using your card in a different country, whatever currency it was in. You do not save any bank charges from your bank by paying in the currency of your bank.

Posted by
16581 posts

3.5% is a very common DCC surcharge shown on credit-card devices/receipts in former Iron Curtain countries. In my experience the surcharge tends to be higher in western Europe. Any extra amount is unacceptable if the customer wants to pay in the local currency.

My advice on this subject:

  • Keep your credit card in your own hand and your eyes on the terminal screen. Read everything carefully so you make the right selection if DCC is offered. (I can only wish you good luck in Poland, where the screen text is usually in Polish.) ATM screens are equally critical.

  • Always pay your hotel bill the night before departure so the desk staff can't charge you in dollars the next morning and stonewall you until you absolutely must leave for the train station or airport.

Posted by
255 posts

Thanks for all the advice. I was looking at the little screen on the credit card machine--no surprise, it was just in Hungarian.

I guess the lesson learned is that I will have to withdraw some cash just in case. It seems that the newer restaurants don't do this dirty trick. The one I just visited is not a new one, though I don't know how old it is. At least, some of the waiters are past middle age.

Posted by
16581 posts

It can happen anywhere. Do not assume you are safe anywhere.

Posted by
15566 posts

I think it's risky to switch to cash payment after your card has been run. That means the card transaction has to be voided (which is sometimes an issue, per above), and what proof are you going to have that you made the cash payment?

Get a cash receipt. Otherwise what is the point of credit cards requiring a signature or PIN? Definitely disputable.

Posted by
3114 posts

I am not certain that the restaurant profits

Yes, the restaurant, or whoever charges you using DCC, profits. They profit a lot. It is the only reason they insist on doing it and claim ignorance in how to not do it. I personally believe that DCC was the worst "convenience" ever dreamed up by credit card companies and allowed to be implemented the way it was.

Posted by
4855 posts

I agree that it is a rip-off. Nevertheless, having explained DCC to many people, I know that many people will still agree to paying for the convenience of dealing in dollars. Some people just don't want to think in foreign "funny money" numbers, so prefer to know what they've paid in good ol' American dollars, and are willing to ignore the extra cost.

I'd be interested in knowing the experience of foreign visitors to the US in this regard. I understand that they are offered DCC routinely as well, although maybe not by restaurants since cards are handled differently here?

Posted by
4465 posts

DCC wasn't created by credit card companies. It was the creation of vendors of financial services and hardware in competition. The credit card networks almost certainly would rather it didn't exist, as they earn substantial revenue from forex etc, but Visa for one was successfully sued for anti-competitive conduct when it blocked new DCC terminals for a period.

Posted by
12084 posts

Another reason to have the cash handy for such a contingency. It's not automatic, that waiter pulled a fast one.

I've never had a bill (say from a restaurant) with the final amount appearing in US $,..unheard of, it was always in the local currency.

Next time, should this reoccur, insist on the bill in the local currency.

Posted by
255 posts

Thanks again. The bill was not presented in USD. It wasn't until I surrendered my card to the waiter that the little machine turned it into USD using DCC.

Posted by
3114 posts

While the credit card companies themselves did not create DCC, they have allowed it and have placed huge amount of regulation into their operating rules covering it. One of the main arguments that caused Visa to lose the lawsuit over DCC is that they had allowed it for some models of credit card terminals but were against specific ones.

One thing Visa and MasterCard have done to somewhat protect the cardholder is allowing a chargeback if you get charged through DCC and were not presented with an option to refuse it at the time of the transaction. This hurts the merchant in that they lose the entire amount of the transaction, plus penalty fees, when the cardholder claims this. Several of the merchants who were the worst offenders of this no longer do DCC because they were losing too much in chargebacks. Only you can decide if you want to pursue this option. If you were overall happy with what the merchant provided to you, maybe you can let the small amount extra you paid slide. If you are extremely upset about their trickery, you can initiate the chargeback.

Posted by
4465 posts

The important concession that Visa and Mastercard were able to get from the processors was that the costs need to be explained upfront to the consumer, who can then make the judgment as to which route to take (and it is therefore clear that in nearly all circumstances declining DCC will be in the purchaser's favour). In the early days of DCC there was no indication of this cost.

Posted by
4669 posts

During our current trip to Poland, I have confronted DCC at every single credit card transaction, from tiny local store to national rail ticket windows. In some cases, the term DCC appears. In other cases, there is a dialog for choosing $US or *ZL (Polish zloty.) At the airport ATM, the dialog attempted to scare me in English by offering a “guaranteed” $USD exchange rate, or a scary “bank rate NOT guaranteed ZL.” Of course, I chose the scary bank rate!

Because most European restaurants put the POS terminal in your hand, you have to READ the two line screen and respond appropriately. And as is often pointed out on this board, be ready for misleading prompts!

Posted by
255 posts

I had the opposite experience in Poland. I didn't encounter DCC at all except at one small cafe. I believe what you described is the Euronet ATMs, which should be avoided as a plague anywhere in the world.

Posted by
16581 posts

My 2018 experience was pretty much like Tim's (pervasive DCC offers, including at the WWII Museum in Gdansk). However, I was often confronted with all-Polish text that made it very difficult to determine which button to select for zlotys. It sounds as if that aspect of the situation is improving.

Posted by
4669 posts

Thank you acraven. I was usually able to decipher the two-line POS device displays, but it takes a leap of faith to press a button labelled (for example) “F4” simply because it is simply located directly beneath the part of the glowing display saying “Zly?”. In some other cases, the prompt required selecting a scary choice like “Refuse”, which was never as explicit as “Refuse DCC.” When in doubt, refuse!

I had a different problem today when checking out of the excellent Metropolitan Boutique Hotel in Krakow. When they gave me my 35-day old charge slip (for a fully prepaid room rate, which was what I chose) it said in thermal printed English that I had declined the Mastercard rate and had agreed on a 3.5% conversion fee!! My web interface confirmation page from that day says only that I paid 2450 Zloty, which I had assumed meant that I had successfully opted to pay for the room in Zloty.

Posted by
16581 posts

Somewhere (definitely not in Poland; I think in Spain) I had a major-league argument with a hotel clerk in a somewhat-similar situation. I hadn't chosen a prepaid rate, but the charge was submited, in dollars, as soon as the free-cancellation deadline passed. The clerk insisted she had to charge me in dollars because I wasn't there, credit card in hand, when the charge was put through. A great deal of stubbornness was required to get that fixed.