Outreageous DCC fee for Emirates flights

[TheRealTMA]

A heads up about (apparently) new practices for Westpac and Emirates fares.

Westpac are adding what to us seems illegal charges for foreign exchange charges if the company has a head office outside Australia, despite receiving an invoice in Australian dollars from the local company office.

We booked directly online with Emirates Australia for a BNE-BOS XXY-BNE in F and received an invoice from Emirates in Australian dollars stating that there were no credit card surcharges especially for Amex cards. We charged this using Westpac Earth Platinum. Despite receiving an invoice with an Australian ABN in Australian dollars, Westpac deemed fit to charge $945 in foreign exchange charges.

Just had to cancel the original direct booking on Emirates for a refund (apparently 15 days...) and rebook using through a travel agent who do not charge Amex fees and who are not subject to this outrageous Westpac fee.

Westpac claim this now the norm for companies whose head office is outside Australia. Presumably this applies to Microsoft, Google, Apple and any other international corporation.

We have filed complains with Westpac and Financial transaction Banking ombudsman for all the good that will do.

Emirates deny it's their problem and Amex say it's not there issue. At least Westpac admit they are making the charge.

 

[TomVexille]

When you make an overseas purchase or Cash Advance or a purchase with a merchant or financial institution located
overseas, your purchase may be converted from a foreign
currency amount into Australian dollars at the time the
transaction occurs. If this occurs the Westpac Foreign
Transaction Fee will be calculated on the Australian dollar
amount posted to your Card Account and will be included
as part of that entry on your statement.
Details of the Westpac Foreign Transaction Fee are set
out in the Financial Table which advises your credit limit,
interest rate(s) and other important details about your card
or in any notice we give you notifying you of a change in
these fees.

(Bolding mine)

I'd suggest you're right

 

[cambriamarsh]

That is very poor. I've not before seen a currency charge when the charge and the cards home currency are the same, regardless of where the store / head office / branch is located. An AUD charge on an AUD card has no currency translation.

Was the charge actually in AED but converted by Emirates to AUD for "convenience"?

 

[sydks]

This outrageous practice has indeed been eagerly embraced by a number of Australian banks with Westpac and NAB being the worst offenders I believe. If you look closely at the TCs of your cards you will actually find a new clause that was added to allow the bank to create this new revenue stream. In addition to the standard Foreign Exchange Fee the new clause will be an 'International Transaction Fee' that specifically covers 'AUD transactions that are processed outside of Australia'. I won't touch any card with such a clause and luckily Commbank hasn't introduced this yet on Diamond cards. You are also safe with all the non bank issued Amex cards!

 

[BigKahunaBurger]

Had the same thing happen on altitude card for a purchase from Next online store. Even the statement from Westpac had the trxn listed as AUD for the source currency, but they still applies a forex fee. Much smaller $ in my case, but it was the principle that annoyed me. Called up Westpac and they were adamant it was foreign to AUD. I confirmed with Next that this was not the case.

I waited long enough for an actual statement to be prepared for the account so I could show them how a real foreign transaction shows up (source non-AUD; final amount in AUD), versus the trxn in question (source and final amount in AUD- just one larger than the other!).

I called the Premium line with this info. They went away and called me back within the hour and said they agreed it seemed odd, but they'd happily apply a credit to cover the cost.

Not sure if they'd be as willing for $900+. Regardless, it's the principle though.

 

[dajop]

One may anticipate such charges buying from bobsonlinestore.com based in Wichita, Kansas (fictional) when using DCC. But not if booking via the Emirates Australia website, for a flight booking originating in Australia denominated in AUD.

 

[cambriamarsh]

One may anticipate such charges buying from bobsonlinestore.com based in Wichita, Kansas (fictional) when using DCC. But not if booking via the Emirates Australia website, for a flight booking originating in Australia denominated in AUD.

I absolutely agree this a ********rip off!

 

[Mark3000]

this really is outrageous! Poor form Westpac
Booking on an Australian website in AUD for a flight originating in Australia, that is very poor form Westpac. If they did that to me I would cancel my card.
I just checked my statement, they didn't do it for recent purchases I made from Apple.com.au or from an Apple store.
They did charge me for a booking I made on Qantas.com.au for a one way J award flight from LAX-BNE. Even though Qantas billed me in AUD, westpac charged me the forex fee.

 

[travelislife]

This is now very common with a lot of card issuers. They state that if the merchant is based OS they will charge the international transaction fees. The trouble is as the consumer even shopping online at .com.au website for a company who you know is Australian transacting in Australian dollars but they might us a US based merchant as they charge the companies less fees. The problem is most companies don't tell you this so as a consumer it is impossible to know. Don't blame the merchant they are just doing what is best for their business, blame the banks!

i had this and complained and lodged with the financial ombudsman but they said they couldn't do anything as it was in the Ts&Cs. Credit card issuer refunded the fees and I cancelled the card but was only about $15 in fees.

 

[jlien]

I noted this when reading the the T&C of my new ANZ cards.

I do think it's a disgusting tactic to profiteer off the growth of ecommerce.

I would like to know how this rule applies to payment portals such as PAYPAL, who clearly are a foreign company.

 

[equus]

I would like to know how this rule applies to payment portals such as PAYPAL, who clearly are a foreign company.

Not so, Paypal skirted the rules for a while, but

PayPal Australia Pty Limited (ABN 93 111 195 389) which holds Australian Financial Services Licence number 304962

is very much an Australian company.

 

[jlien]

Not so, Paypal skirted the rules for a while, but




is very much an Australian company.

That's interesting because when I log into paypal, it says in the top corner:


How would I know whether i'd be charged DCC when paying an online merchant, say:

visa checkout, google wallet, itunes, agoda, hotelclub, etc (all in AUD) I don't find it to be clear at all


Assuming agoda is classified as an overseas merchant, i'll pay the DCC if i pay them directly, but not if I pay with paypal?

 

[NM]

It is my understanding the location of the company head office, whether they have an ABN or not, or the company being a foreign company or the currency in which the charge is processed has nothing to do with the determination of a transaction being foreign or not. It is based on the location of the merchant account used to process the payment. So if the merchant had a local account with an Australian bank, then it would be an Australian transaction. If they process it through a merchant account based outside Australia, then its a foreign transaction.

So the company may have an Australian address, an ABN, a *.com.au web address, an Australian phone number and charge in A$ etc. But if they process the transaction through a merchant account then its a foreign transaction as far as your local credit card provider is concerned.

And in many cases, like the one that triggered this thread, you don't know until its been processed.

 

[TheRealTMA]

Not so, Paypal skirted the rules for a while, but




is very much an Australian company.

Well, for this discussion, so is Emirates as far as I know. A search shows EMIRATES (ABN# 81 073 569 696 / ACN# 073 569 696) is an Active ABN.

And that may be irrelevant since as PayPal head office is outside Australia, in the eyes of Westpac, who's actually policy is known only to the depths of the bank, they seem to have declared that they can decide if the transaction is from a foreign company without reference to Australian financial laws and add a charge to the user's account as they deem fit. Unlike other merchants, PayPal do not charge GST on their fees which would indicate that they regard themselves outside of the Australia financial system for this purpose.

Every major corporation these days (to the political shame) including Apple, Google, Amazon, presumably News Corporation etc. has head offices in foreign places such as Lichtenstein and so on to process transactions in a low or no tax state. From this when one buys a product from Microsoft, the invoice in Australian dollars actually comes from Singapore office so will Westpac now start deciding unilaterally that they can apply forex fees to such transactions as well?

Westpac may 'choose' to treat a transaction in Australian dollars by anyone as requiring a foreign exchange fee as Westpac deem fit. It's impossible to know before you look at your credit card statement. Seems illegal to me since they are not actually providing a service to the end user for which they charge the user 3.5%

 

[eastwest101]

..... If you look closely at the TCs of your cards you will actually find a new clause that was added to allow the bank to create this new revenue stream. In addition to the standard Foreign Exchange Fee the new clause will be an 'International Transaction Fee' that specifically covers 'AUD transactions that are processed outside of Australia'. I won't touch any card with such a clause and luckily Commbank hasn't introduced this yet on Diamond cards. You are also safe with all the non bank issued Amex cards!

Indeed - just found this article back in May.

Westpac last of big four banks to introduce fee for online purchases from overseas

While it is true that it is in the t&cs you would imagine that the total non-disclosure at the point of sale would mean that eventually someone will "come a cropper" or fall foul of failing to disclose a fee. It may take years so I expect the banks will all enjoy the revenue stream for a few years until the ACCC finds some way to stamp it out.

This is another reason why I am happy to be a credit union customer.

 

[jlien]

It is my understanding the location of the company head office, whether they have an ABN or not, or the company being a foreign company or the currency in which the charge is processed has nothing to do with the determination of a transaction being foreign or not. It is based on the location of the merchant account used to process the payment. So if the merchant had a local account with an Australian bank, then it would be an Australian transaction. If they process it through a merchant account based outside Australia, then its a foreign transaction.

So the company may have an Australian address, an ABN, a *.com.au web address, an Australian phone number and charge in A$ etc. But if they process the transaction through a merchant account then its a foreign transaction as far as your local credit card provider is concerned.

And in many cases, like the one that triggered this thread, you don't know until its been processed.

I understand your point.
Though I don't quite understand why paypal gets away with it however, I have my doubts that paypal choose to hold a merchant account within australia because it's cheaper than having a merchant abroad.

My takeaway from this is that payments to any non-Australian airline, booking hotels through aggregators (agoda/hotelclub/booking.com) will attract a DCC charge.

Incidentally if I pay via paypal i'll be fine. Though I am unsure of how credit card travel insurance works if I pay through paypal.

 

[dk4]

So the company may have an Australian address, an ABN, a *.com.au web address, an Australian phone number and charge in A$ etc. But if they process the transaction through a merchant account then its a foreign transaction as far as your local credit card provider is concerned.

Which makes sense, because it is possibly a way of Australian Financial Institutions saying to multinational (and even local companies who choose to process offshore) "use our AU merchant facilities to process your AUD transactions, because if you use a foreign merchant account we will charge your customers directly instead."

Of course this comes about because, IMO, Australian Financial Institutions charge way too higher fees for merchant accounts (and gateway processing) compared to overseas providers. And if they don't take this approach, they would either have to lower their outrageous fees (to competitive international levels) or go out of business!

 

[TheRealTMA]

This whole issue raised several matters of principle and fiduciary liability.

Consider this case:-

An Australian company sells products worldwide via a web site under an Australian ABN. The web site is located in Australia but the credit card processing is actually done in USA via someone like WorldPay. The merchant agreement with the USA processing house allows orders to be processed in the currency of the originating order (USD, EUD, AUD GBP etc) and funds are remitted to the Australian company bank account at a Westpac branch in Sydney.

An Australian customer purchases a product and receives an invoice in Australian dollars which now includes GST plus adds a credit card service recovery fee (2-4%) to cover credit card charges

Westpac seems to deem to itself the ability define that this actually a foreign transaction and add an extra 3.5% to the end user charge.

Seems not fair nor legal for Westpac to be the unilateral authority in such matters.

 

[jlien]

Which makes sense, because it is possibly a way of Australian Financial Institutions saying to multinational (and even local companies who choose to process offshore) "use our AU merchant facilities to process your AUD transactions, because if you use a foreign merchant account we will charge your customers directly instead."

Of course this comes about because, IMO, Australian Financial Institutions charge way too higher fees for merchant accounts (and gateway processing) compared to overseas providers. And if they don't take this approach, they would either have to lower their outrageous fees (to competitive international levels) or go out of business!

That logic doesn't work.
Penalising the consumer in no way encourages a merchant to use Australian merchant facilities.
The reality is for many of these multinationals, the consumer has no choice. I can't elect to use a different itunes store, or a different emirates airline :S

 

[cambriamarsh]

I said it earlier, this is an absolute rort.

I'm based in NZ and get charged a flat $25 when my bank receives a offshore remittance, and their bank charges them about the same. This is for converting, transmitting and clearing the funds in and out of different currencies.

A transaction in the same currency and the same country as the card should not attract FX conversion fees nor should it attract a foreign transaction fee of any kind.

Can anyone see any justification or rationale for these fees apart from "because we can"?

Next it will be out of state fees between NSW and WA.