"Yes please, I'd like to have my purchase go through 4 exchange rate conversions of around 3-4% each please! That's the kind of service I really want and need". On my last trip to good ole US of A, that's what happened.
The new "feature" that credit card companies offer is conversion at the purchase point and on the bill. Well that's all fine and good, but why do they assume that a credit card issued in Canada must be a Canadian $ credit card? And why can't I decline the conversion? For years, I have used a US$ credit card from TD Visa for my purchases. Then I pay the credit card with US $ that I have from US $ transactions such as ESPP and stock sales. I get reimbursed for my expenses by BEA in C$. I choose the exchange rate that I get from TD, which is WAY better than Visa's rate. Typically Visa is 3-4% and TD is about 1%. In the simplest case, I have a US $ expense that is reimbursed in C$ and then paid in US$, so 2 exchange rate conversions totaling 2%.
The new feature first invited itself to dinner. I was paying a bill with my US $ visa card and it showed up in CA$. Ack! That's the last thing I want. The restaurant does the 3% exchange rate to C$, then visa does a conversion to US$ on the card, then I pay that with a US$ to C$ and a C$ to US$ conversion for a total of 4 conversions. Yuck! There was no option to turn "off" the conversion so I paid with my C$ Visa. That's back to 2 conversions with one at an exorbitant Visa rate.
It got worse. Avis rental car did the exact same thing with my US$ credit card on file, but they didn't give me the option of turning it down. The really galling part is that they have a line item on the receipt that says that I was given the option of turning down the billing in C$ but declined. Back to 4 conversions.
I can see how Visa is benefiting by the gauging they do. I think the benefit that I get is that I can see the exchange rate on the bill, rather than having to wait for the Visa statement. Now I'm not sure if the merchant gets a benefit because the exchange rate that Visa charges on the card is the same they charged at the restaurant and at Avis. Maybe the merchant gets that conversion and Visa charges them less, so they get a percent or two of vig.
In my case, the real "customer", that is BEA that pays these bills, is getting hosed because they've gone from a great exchange rate conversion to an awful exchange rate conversion. Because I can't decline the conversion, I'll have to use my C$ credit card and I just became about 3% per trip more expensive. Now that's not what an employee wants and it certainly isn't a net benefit.
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