International (Overseas) Transaction Fee

[aasz1978]

Hi everyone,

Haven't been posting into this forum for ages so great to be back.

I am very concerned of one particular "enhancement" on the 18th of January 2016, that is the application of the increased 3.4% International Transaction Fee into online local purchases by vendors which may have international presence.

In another forum, I have listed the following:
Ebay Australia
Paypal (including paying your phone bill using Paypal)
Book Depository
Itunes Australia
Google Play Australia
Uber Australia
Groupon Australia
Sony Entertainment Network Australia
Microsoft Australia
Spotify
Weight Watchers
Uniqlo Australia
and probably you can mention many more.

My concern is since there is no thread about this specific change, it may have been hidden from many users in this forum and I am hoping this thread serves as an alert.

Basically, the main issue is how to distinguish if a transaction will attract International Transaction Fee even though the vendor has local presence and charges in AUD after 18th of January 2016? And any suggestion on a better way to avoid it other than don't use them?

Regards

Zz

 

[moa999]

It's a bunch of companies.. I don't think it's necessarily an international presence but more whether the charging entity of Australian of not.
Eg. Uber originally was but I believe is now Australian.

Being and to tell beforehand however is near impossible

 

[froggerADL]

I suggest that you apply for a 28 Degrees MasterCard with a 0% International Transaction Fee. The increase is only 0.1%. It was the 3.3% that put me off!

 

[Cynicor]

I suggest that you apply for a 28 Degrees MasterCard with a 0% International Transaction Fee. The increase is only 0.1%. It was the 3.3% that put me off!

What the OP is getting at, and what I highlighted in the other thread, is that they will now charge even AUD transactions an FX fee. This means you will get hit twice on DCC and once on certain companies that use an oseas merchant account.

 

[trippin_the_rift]

If there is no way to tell at the point of sale of its going to sting you for the intl fee , shouldn't this represent a charge you did not agree to because you had no reasonable way of knowing such a fee may apply? Therefore disputing the Entire charge is okay?

What do our resident legal minds think?

 

[Isochronous]

If there is no way to tell at the point of sale of its going to sting you for the intl fee , shouldn't this represent a charge you did not agree to because you had no reasonable way of knowing such a fee may apply? Therefore disputing the Entire charge is okay?

What do our resident legal minds think?

Not to mention that its misleading to call it an "international transaction fee", which clearly implies it only applies to foreign purchases.

 

[froggerADL]

What the OP is getting at, and what I highlighted in the other thread, is that they will now charge even AUD transactions an FX fee. This means you will get hit twice on DCC and once on certain companies that use an oseas merchant account.

But if the fee is 0% there will not be not be any FX charge. I still recommend 28 Degrees.

As for DCC, always insist on local currency. Also, I was only responding to this thread.

 

[legroom]

My simple rule of thumb is that if the products come from overseas (Book Depository, eBay, Amazon etc ...) then probably this fee will apply even if you accept AUD on check out.

I'd argue otherwise if the 'products' come from local sources.

 

[aasz1978]

Here is an article by Choice about the complexity surrounding the International Transaction Fee.

https://www.choice.com.au/shopping/...foreign-transaction-fees-when-shopping-online

As you can see, the list includes Weight Watcher which is Australian (products come from Australia) but yet the fees apply. I appreciate this is probably about 6 mths old but do highlight the the issue that what legroom is saying above may not necessarily be conclusive.

 

[Cynicor]

But if the fee is 0% there will not be not be any FX charge. I still recommend 28 Degrees.

As for DCC, always insist on local currency. Also, I was only responding to this thread.

I think you are still missing the point, which was raised in the OP of his thread. There may be a fee for LOCAL, AUD denominated, transactions. Say your corner deli (unlikely example, but possible) has an overseas merchant but bills you in AUD. Suddenly you find an FX charge when least expecting it. This happened with UBER and Sydney Aquarium in the recent past.

Using the 28 degrees for every local transaction is not a reasonable alternative for a points forum, hence the OP trying to bring it to people's attention.

 

[froggerADL]

I think you are still missing the point, which was raised in the OP of his thread. There may be a fee for LOCAL, AUD denominated, transactions.

You are correct. I was missing the point. Thank you for explaining. I blame the alcohol

 

[basso]

If there is no way to tell at the point of sale of its going to sting you for the intl fee , shouldn't this represent a charge you did not agree to because you had no reasonable way of knowing such a fee may apply? Therefore disputing the Entire charge is okay?

The problem is that your dispute is not with the merchant.....

 

[legroom]

Here is an article by Choice about the complexity surrounding the International Transaction Fee.

https://www.choice.com.au/shopping/...foreign-transaction-fees-when-shopping-online

As you can see, the list includes Weight Watcher which is Australian (products come from Australia) but yet the fees apply. I appreciate this is probably about 6 mths old but do highlight the the issue that what legroom is saying above may not necessarily be conclusive.

Good source

"... Trying to find out where your payment will be processed and if you'll subsequently be charged an international transaction fee is hard work ...."

Like some others mentioned in that article, I'd probably make a complain if the sum is large and the website / product look like it is based in Australia.

Google Play: everyone probably should know it is an international company but Sydney Aquarium ?!?!

That's a hard one for the average punter to know I would argue unless they have a clear disclaimer at the point of transactions.

 

[aasz1978]

I got a feedback from the other forum of this:

"Just logged in to Citibank to view my transaction so far and noticed the country code at the end of each transaction. I wonder if this is a reliable indication of what I need to move to an international transaction fee-free credit card, and what I can keep on the current card?"

I can't quite see as yet. Will check tonight but do check and let us know if this is true.

 

[Jeffrey O'Neill]

i posted this in another thread, but prob more likley to be picked up here

Does anyone know if there is any cost to CB where an overseas merchant offers to bill you in AUD?

If not, then I think the ACCC / RBA could be involved as they are pushing for surchages to only be about recovering actual costs, not as a money earner eg forcing the airlines from their inflated fixed price surcharges.

From 18 January 2016, you will be charged an International Transaction Fee on transactions made with an overseas merchant in AUD. We currently charge this fee only on transactions made with overseas merchants in their local currency.

I believe NAB already charge in this way as when I paid for a Kaligo booking earlier in the year NAB added a forex fee even though I was billed in AUD.

To me it's like charging for a service they haven't provided, making things worse as the merchant would have already inflated the price to cover the conversion into AUD.

 

[aasz1978]

I have received an official reply from Citibank.

Firstly, if you are a Citigold customer, the Relationship Manager would have to contact you about these changes and somehow, they have more information about this than if you were not a Citigold Customer (in which case, a customer service officer may contact you or reply to your email).

Secondly, this all appears to stem from what they call "Dynamic Currency Conversion" (DCC), which is a term I first heard in hospitality. Simply put, if say you are an American tourist travelling in Melbourne. At a hotel, when this tourist pays, he/she may be offered to be charged in local (AUD) currency or in their native currency (USD). If he/she then chooses USD (native), then the DCC will trigger resulting in a known charge in USD dollar that is MORE expensive than he/she would have been charged had he/she declined to be charged in USD (native) currency. The key word is he/she MUST opt to be billed in USD (that is, he/she chose to be billed in USD, thus triggering DCC). In short, DCC actually costs customer more but this fact is not disclosed at the time of transaction.

More example is shown here... Dynamic currency conversion - robbery by choice

In this context, when you purchase from say, Strawberry Net (which is HK domiciled), they always bill in AUD. So an AUD$50 purchase will be billed AUD$50 in your bank statement. Unknown to you however, Strawberry Net has exercised DCC on your behalf and so while you are being billed AUD$50, the amount of say, HK dollars needed to satisfy that equivalent AUD$50 worth of purchases could end up actually being AUD$55.50. The AUD$5.50 I believe currently being paid by the banks so you won't be charged AUD$55.50 for a AUD$50 purchases.

That will change on 18th of January 2016. A flat 3.4% will be applied. The logic is since you cannot OPT-IN, then buying from Strawberry Net (even though in AUD) is actually buying in HK dollar so triggering the 3.4% International Transaction Fee (for an AUD Transaction). The key word here is DCC.

The problem is nobody will know in advance if you are going to be charged 3.4% until its too late. CHOICE gave example of Weight Watcher and Sydney Aquarium and Uber as examples of Australian purchases but attracted 3.4%. No one in their wildest dream would expect Sydney Aquarium would charge 3.4% International Transaction Fee.

In other words, the banks (Citibank in this case) are asking customers to do an impossible task.

Citibank official position is customers should find out themselves if the merchant will utilize local payment processing facility or overseas. I said to them try do that with GooglePlay or Apple Itunes.

In addition, the following vendors are now at risk of charging 3.4% (previously free of DCC):

Paypal/Ebay (this is probably the most dangerous situation - even to pay phone bill may attract 3.4%)
Google (GooglePlay Credits)
Apple (Itunes Credits)
NetFlix (NetFlix Credits)
Strawberry Net
Think Social
Uber
Sydney Aquarium
Sony Entertainment Network
Xbox Credits
ASOS
Book Depository
and many more.

We should fight this. There is no way to know for sure other than not to use them (not to use Paypal.. really???)

 

[Cynicor]

Mostly accurate but the part about DCC costing the banks more is complete cough.

They just want their piece, from transactions that cost them nothing and used to earn them $.

 

[basso]

iDoes anyone know if there is any cost to CB where an overseas merchant offers to bill you in AUD?

Yes, there is a scheme charge for all cross border transactions.

 

[TheRealTMA]

DCC is an outrage from the banks to add extra fees. They already make 1-3% from the merchant, then shave the exchange rate, then hit you for another 3.5% for DCC. A booking on EK for 2 F fares for $26K booked directly through EK Australian web site, quoted and charged in AUD 'attracted' a $955 foreign transaction fee from Westpac Earth Black. Cancelled the charge, booked same through flight centre for no DCC fee.

The ACCC and the reserve bank should look into this rip off because as notes above the customer can NEVER be aware if this fee is to be charged, as shown by Sydney aquarium above.

Complete out and out theft.

 

[snabbu]

Anyone have a link to these proposed changes on the 18th January?