Hi all,

Yesterday I was reading an article in K-tipp about Swiss card holders who found that they were having the local purchases charged to their cards in CHF in foreign countries. Of course this is always offerred as a "service" to the card holder, but it usually means that the local card processing company is simply converting the amount at a very unfavourable rate, and pocketing extra profit at your expense (as if they don't many enough profits from their high fees anyway!!)

Basically, according to k-tipp this practice is illegal, and you MUST be given the chance to pay in local currency if you wish.

Today I had a very average lunch at an "asian" restaurant in Zurich and paid the bill by credit card. My visa card is denominated in EUR, and low and behold the amount was billed to my account in EUR - at an exchange rate of 1.50 - pretty poor!

I questioned it and was told that this was just for "information purposes" - clearly the staff had no idea what they were talking about. I pointed out to them that what they were doing was illegal, and that they had better give me the option to have it processed in local currency. They argued with me that it wasn't illegal, because if it were, their company (which is very big) wouldn't allow it. Yeah right...

Anyway, i've attached the slip to this message, you can read for yourself the text: So I am expected to accept a choice that I wasn't given, and sign a statement that is false? Pretty shocking if you ask me. I requested the transaction to be canceled and paid cash instead. I took the details of the responsible person in the management company, and also wrote to the author of the k-tipp article I read.

So if you have a credit card that is denominated in something other than CHF, watch carefully when you are using in Switzerland, and if you have a Swiss credit card, make sure you are being charged in local currency when you are travelling.

To be honest this is the first time this has happened to me in Switzerland, but it could be a move by Telekurs in their new terminals.

Mark

Hello Mark...

Interesting situation with the credit card. I'm not sure, however, I understand how you can make payments in the local currency (i.e. Euro), if the card is set-up in CHF. For instance, I have a credit card that I use and pay in CHF. I recently made a purchase at amazon.de for EUR 37.38. When the bill arrived, the amount was converted to CHF on the date of my purchase (rate was 1.572), with an additional 1.5% added to the CHF total (Bearbeitungszuschlag). I agree that this is simply another way of getting a higher conversion rate and pocketing the balance. It is, in my opinion, unethical. But...I am wondering what can be done to prevent this?

Jack

Maybe it's a screwup on the part of the restaurant staff and not the credit card prcessing agency.

I assume that someone at the restaurant made the choice whether to bill in Euros or CHF before it was even presented to you: Could it be that they benefit to some extent from the exchange rate, too....?


For what it's worth, I always found the actual exchange rate when doing foreign currency purchases on my UK Visa to be pretty reasonable. The transaction fee can sting a bit though. Since I hardly ever use it to purchase in CHF that's not a big problem for me. I guess I should get a Swiss card too but so few businesses over here accept credit cards that I can't be bothered.


Gav

Hi Gav,

Actually no it is caused by our good friends from Corner Bank et al imposing a local currency only transaction on the retailer who needs to pay additionally for multi-currency transactions and then only in Euro and US$ .That is unless the situation has changed in the last three years. I looked into this for CC processing where I wanted not to pass the charge to the customer and have a global service. It was not possible to have a Swiss transaction house that could offer this service.

There is also another point which is really VERY interesting. Have you noticed how you pay for Credit cards here and in Germany? You can actually have one for nothing in most other countries! This is purely a rocking the boat situation. When for example an Easybank offers a Swiss based free credit card they would clean up and force the rest to offer it for nothing - although there would surely be plenty of press why you should stick to UBS, CS and so on.

As you say your exchange rate is quite good. Over here it is generally mid - market less 2% but this can and does vary(currency dependent) but the transaction fee is not normally to be seen...

Actually unless you get a card free as is the case with UBS but they don't publicise this, or have a good bonus system then you are better off with store cards. Now could you imagine saying that in the UK...

Richard

Hi Jack, what I meant was this:

If you have a card that is denominated in CHF, then you are right, all amounts will eventually be converted to CHF by your bank, and hopefully they won't rip you off in the process. So let's say I have a shop in Germany and you come to buy something for EUR100. What SHOULD happen is that I bill your credit card for EUR100, and it appears on your statement as EUR100, converted by your bank to something probably like CHF153.

Now imagine that I say "Hey Mr. Swiss resident, I'll do you a favour and bill your credit card for you in CHF instead of EUR, aren't I doing you a nice favour?" Of course if I then tell you that I am using an exchange rate of 2.00 instead of 1.55 and I'll be billing your card CHF200, you'll probably realise that you are being fleeced. I'm using an extreme example here, but generally when you get this kind of scam you are getting a much worse rate than you would with your bank.

Mark

Well the staff didn't do anything special, they just processed the card, and this seemed to be the default choice. They didn't know how to do it any differently. This story seems to match with others I read about in k-tipp, though these stories were about it happening in other countries.

Harrods has been also doing this scam for years - I've heard them trying to sell this to idea to American tourists as much as 10 years ago. But the key thing here is that the customers were given a choice - in this case customers are not given a choice, and are being asked to sign a statement that they have been given a choice!!

I got an answer back from the k-tipp guy - this is what he said (in german)

It's nice to know that someone cares :-)

Mark

I guess you will find out if he cares if and when he replies...

Update on this situation. My girlfriend called the manager of the restaurant. He was supposed to call us, but surprise surprise, he didn't. So she called him and he gave..... wait for it.... you aren't going to believe this...

an apology

Yes, you read that correctly. But I'll repeat it again because you might not have believed your eyes:

an apology

Anyway, that surprised my girlfriend so much she could really say anything else. His excuse was that the terminal was setup like that, and the staff didn't know how to change it (which begs the question - why not? Have they not been trained, is there no relevant documentation on this operation). His line was that most of their foreign customers were hotel guests and they preferred to be billed in euros. This part I find a bit hard to believe - why would everyone willingly want to be ripped off? But anyway, he did apologise, so I know it's not a big conspiricy by telekurs.

Mark