WARNING: AMEX Exch Rate Errors

[JohnK]

Is it any coincedence that the majority of exchange rate issues reported in this thread involve the ZAR? Hasn't the ZAR been more volatile than the AUD recently? No point using the mid-market rate in any dispute as this is clearly not the rate used by Amex but can be used as an indication when determining the commission charged.

I do not have many Amex foreign currency transactions but I have suspected for a while that Amex uses whatever exchange rate they like but the worst foreign exchange commission that I can remember is ~5% using the mid-market rate on xe.com or oanda.com. I am assuming that Amex charges 2.5% foreign currency commission fee.

                                            Amex A$     XE A$  XE Calc
-Date-           For Cur Amt   Rate on XE    Amount    Amount   Comm %
Aug 17   SGD        1,402.00    0.8121890  1,170.76  1,138.69   2.816%
Sep 02   USD            8.87    1.1965800     10.95     10.61   3.169%
Sep 16   THB        2,615.29    0.0368247     96.38     96.31   0.076%
Sep 17   THB       17,304.00    0.0371234    659.02    643.94   2.342%
Sep 18   NZD           40.79    0.8398060     35.48     34.26   3.574% 
Sep 19   NZD           72.75    0.8278630     63.47     60.23   5.385%
Sep 19   NZD          113.00    0.8278630     98.59     93.55   5.389%
Sep 22   NZD           41.80    0.8213910     35.74     34.33   4.095%
Sep 29   SGD           20.40    0.8613880     18.01     17.57   2.491%
Oct 09   THB          636.66    0.0415612     27.45     26.46   3.740%

Amex does not appear to be very consistent when you look at the XE calculation commission % but overall I think it is quite good. Now Citibank is another story as I feel they are charging at least 5% foreign currency commission on every transaction....

 

[ethernet]

Above is correct, customary source(s) indeed ! The key is YESTERDAYS rate, so that if there is a drop of >2.5%, so do an online cash advance from an AMEX branch or ATM the next day. The graph above indicates, surprise surprise, average takings in excess of 2.5% - and iterbank rank is usually better than retail!

Against stable currencies, say Yen, 2.5% is offensive, and more than a YEARS interest rate. What a glorious business to be in.

When Mastercard and Visa struck a deal with US authorities for collusion and price fixing - triggered by Walmart, the Australian ACCC did not seem to notice it, despite lots of incriminating documents. Walmart was aware it COULD increase its gross profit by 1.5% by risk free, doing nothing, other than by screwing the credit card companies. The terms of the settlements are not known by me, but you would think the top Australain retailers would have some brains. Woolworths recent re-entry is less than stellar deal - they lost the chance to lower costs.

Mastercard spun all its backend processing, so now all it has to so is sit back and wait for the cash to roll in.

I believe many contries banking acts require consistancy, not sitting back at midnight and saying whether morning, afternoon, or next days exchange rate is most favorable.

If that was Amex's response, it is so broad to to useless, but if I get a chance, will test yesterdays theory.

 

[Danger]

I have now received a response (actually two, identical and both dated the same) from AMEX on my foreign transaction dispute. As predicted by some the letter refers to the terms and conditions:

". . . if you make a charge in a currency other than Australian dollars, that charge will be converted into Australian dollars. The conversion will take place on the date the charge is processed by American Express, which may not be the same date on which you made your charge as it depends on when the charge was submitted to American Express. If the charge is not in US dolalrs, the conversion will be made through US dollars and then by converting the US dollar amount into Australian dollars . . ."
​

Interestingly, the letter states that their conversion commission is 2%, not 2.5% as I believed. This 0.5% is the $40.71 they credited me last week (referred to in post 61 above).

The letter also includes a little table showing the details of this transaction in dispute (52526 ZAR). Again of interest is the "date of charge" which they say is 6/11/08. Two points here: first, the online statement shows the transaction as occuring on 4/11/08 and, second, it definitely did occur on the 4th as I checked my statement online and within an hour of AA South Africa processing it, the money was taken from my account and reflected on my balance.

Finally, the letter has this little gem:

"Our aim is to keep our rates generally competitive. However, because of the volatile nature of foreign exchange markets, our rates may at times be better and at times worse than other major card issuers."
​

Competitive? What a joke. The following table shows a comparison of various different rates on 4/11:

4/11/2008                Rate         52526 ZAR =       2.00%            Charge        Difference
Amex statement (adjusted)  6.45          8143.34            162.8668         8306.2068   0
IMF                                  6.5576      8009.94             160.1988        8170.1388    -136.068
Amex forex (sell rate)          6.3255      8303.849498       166.07699       8511.44      205.2332
Sam @ Amex Melbourne       6.744165   7788.362236      155.7672447    7983.07      -323.1368
Sam @ Amex Melbourne       6.59         7970.5614          159.411228      8169.25     -136.9568
Toby @ Amex Melbourne      6.6473      7901.85             158.037           8099.4      -206.8068
xe.com                             6.7439      7788.66             155.7732         7983.38     -322.8268
Amex website (travel tools)  6.5899      7970.68             162.6             8130.09      -176.1168
oanda.com                        6.5899      7970.68             162.6             8130.09       -40.0488
exchangerate.com              6.744165   7788.362236       155.7672447   7983.07       -116.33
South African Reserve Bank  6.72         7816.369048       156.327381    7972.696    -333.51037
Average                           6.6147144 7940.781184       158.81562   8099.59680  -206.609992

First, these sources are either those provided to me by AMEX or sources suggested here. Second, I acknowledge that these are the rates for 4/11, not 3/11; I'm waiting on figures from two sources before posting. Regardless, there was no significant change (either way) in exchange rate between the AUD and ZAR from 3/11 to 4/11.

I believe this information serves as a pretty good indication that AMEX are certainly not competitive. I'll be writing back to them with this information.

 

[Danger]

My computer knowledge is limited - some assistance with posting an Excel spreadsheet would be appreciated.

 

[serfty]

My computer knowledge is limited - some assistance with posting an Excel spreadsheet would be appreciated.

• First, edit your table on a character basis using a text editor such as NOTEPAD,
• copy and past the table into your post between [noparse]

   ..

  [/noparse] tags.
  (Or copy, paste, highlight the text and then click
  
  )

 

[Danger]

Thanks, serfty. It's better but still not the best. I've asked a computer guru in our office to do it for me!

 

[serfty]

... Competitive? What a joke. The following table shows a comparison of various different rates on 4/11:

4/11/2008                     Rate      52526 ZAR =         2.00%        Charge      Difference

Amex statement (adjusted)     6.45        8143.34           162.8668     8306.2068      0
IMF                           6.5576      8009.94           160.1988     8170.1388   -136.068
Amex forex (sell rate)        6.3255      8303.849498       166.07699    8511.44      205.2332
Sam @ Amex Melbourne          6.744165    7788.362236       155.7672447  7983.07     -323.1368
Sam @ Amex Melbourne          6.59        7970.5614         159.411228   8169.25     -136.9568
Toby @ Amex Melbourne         6.6473      7901.85           158.037      8099.4      -206.8068
xe.com                        6.7439      7788.66           155.7732     7983.38     -322.8268
Amex website (travel tools)   6.5899      7970.68           162.6        8130.09     -176.1168
oanda.com                     6.5899      7970.68           162.6        8130.09     -40.0488
exchangerate.com              6.744165    7788.362236       155.7672447  7983.07     -116.33
South African Reserve Bank    6.72        7816.369048       156.327381   7972.696    -333.51037

Average                       6.6147144   7940.781184       158.81562    8099.59680  -206.609992

...

Cheers

 

[medhead]

First, these sources are either those provided to me by AMEX or sources suggested here. Second, I acknowledge that these are the rates for 4/11, not 3/11; I'm waiting on figures from two sources before posting. Regardless, there was no significant change (either way) in exchange rate between the AUD and ZAR from 3/11 to 4/11.

I believe this information serves as a pretty good indication that AMEX are certainly not competitive. I'll be writing back to them with this information.

Considering that they state they use the highest rate of the day and the transaction involves 2 conversions, which is going to push them to the high side of average, that looks pretty competitive to me.

Have you found the highest rate of the day from customary sources. I didn't see any rates there from the Bank of England for example, or ANZ or NAB. (edit: e.g. xe.com publishes mid market rates, the average of the buy and sell and the historic price they provide is the noon price, there is going to be a much wider spread of currency trades that goes to provide that number. AMEX use the spread over the whole day to determine the rate - not the average at noon)

edit2: Looking at Oanda for 4 Nov 08 I get ZAR52526 = USD5494.35 = AUD 8267.90 Using the highest rate to the USD.
So USD-ZAR Low:9.5600 (highest to USD) average 9.8208, high 9.9795
USD to AUD low 1.4568, Av 1.4788, high 1.5048 (highest to USD)


I wish you the best of luck with AMEX and all. But I reckon you're pushing nasty stuff uphill. I'd suggest taking the glass half full approach and think of the thousands that you saved on the Oz price, rather than +$200 on the average currency conversion.

 

[Diesellife]

Yes its true, Amex uses a cross-qoute reference rate to jack up the margin.

ZAR-USD (Margin Spread)
USD-AUD (Margin Spread)

Also keep in mind, amex doesn't need to clear @ the spot rate. They use a day rate (More margin!!!)

Furthermore, it doesn't clear on the date of transaction either... it depends on the merchant's batching etc, so it could be in a day or two...

hope this helps! But to be honest, I will still use Amex over MC and Visa given that your transaction is incurred in ZAR.

 

[ethernet]

Put the direct question to them "What is the date of charge, and can or WHY can it differ from online statements?". And why does mine vary?

is is a bonus if you get them to admit something like the online statement is an estimate, and not accurate - or something to that effect. How can it purport to be converted?

If these are not the same, then the revenue service of the respective countries should be alerted to a price transfer arrangement, and the tax people should get very excited, because most believe and accept online/electronic statements - but if the other side of the ledger is not the same - well it does not need much imagination ..

The bit about highest is a distraction. If the aussie is trading at 64.5 cents, and at 23.59.57 I put through $1000 at 50 cents, because I know my Bank can charge everyone at at the unfavorable rate of 50 cents for the day. Easy to contrive and manipulate- just like shareoptions at maturity.

The South African Revenue Service - Hope you are listening.

 

[JohnK]

I don't think Amex has a general issue with exchange rates. Maybe they do with ZAR but as mentioned this is a very volatile currency and some people have probably has the worse of it.

I have been complaining about Amex exchange rates for a while now but there does not appeat much substance to my complaining. I had 2 USD transactions from Hotel Club the other day and the exchange rate used before taking the 2.5% commission into consideraton was ~US$0.65 so I cannot complain. It would be interesting to see what my US$628 US Expedia transaction converts to in AUD in the next few days....

 

[dajop]

Sorry to revive old thread, but now have my own issue with forex rates from Amex, but after reading this I assume Amex will hide behind the "date the transaction is processed by Amex" rather than the "date of transaction"

I made two transactions on my AUD Amex card on the same day. 1 in MYR and 1 in SGD.

After the forex transaction fee, The MYR exchange rate used was within 0.1% of those listed on three forex websites for the day. No complaints there. The SGD ER was 4% worse than the exchange rates listed on those same three sites, which cost me $34 more than I was expecting (on a transaction of around $800AUD). Worth complaining about or would they hid behind "processing date"?

 

[Keith009]

First experience using my AMEX card on a recent trip (where we slammed everything humanly possible on the AMEX except for very small transactions or dodgy looking places), and the rates were what I expected. Conversion fee lower than using my VI.

I think most credit card companies will use the forex on the 'processing date' rather than the date of the actual transaction, no? That has certainly been my experience with HSBC and ANZ.

Annoyingly though, the AMEX system tends to experience "glitches" in the pre authorisation amounts which didn't tally with information given by the hotel or receipts. Had me worried that I'd spent much more than I'd anticipated. AMEX admitted that sometimes their systems had "duplicated" the charges. :shock: But assured that when the transactions actually do post they will be the correct amount. Well that doesn't help me in using my credit card in the meantime. I had to call them a few times to fix it. I think i might try using 2 different cards at hotels in future - VI for the pre-auth and AX for the actual charge.

 

[paul4471]

Update - I submitted a formal complaint to the banking ombudsman on the rates they used for ZAR in my case.

The customer service department called me from Amex and showed me an area on the oanda.com webiste (which is apparently the site they use for forex rates) for the day in question which showed a high and low for the ZAR to AUD that had a nealry 15% variance in it within the day. So they can legitimately choose whatever rate they like within that range. I suspect these wild swings are akin to the opening of the stockmarket each day when stock prices can fluctuate wildly till things settle down in the first minute or so.

Nonetheless, they agreed to refund about half of the amount I wanted if I dropped the complain - about $200 I believe from memory. I agreed since there was clearly no "legally based" argument for me to continue with the complaint.

I now no longer use my Amex for any currency outside the major EUR, GBP, USD currencies.

Lesson learnt!!

 

[2muchplastic]

.....Nonetheless, they agreed to refund about half of the amount I wanted if I dropped the complain - about $200 I believe from memory. I agreed since there was clearly no "legally based" argument for me to continue with the complaint.

I now no longer use my Amex for any currency outside the major EUR, GBP, USD currencies.

Lesson learnt!!

That's pretty interesting to know. I've been using my Amex here in Vietnam a fair bit, and there has been some interesting discussions when I present my expenses about the variance in the exchange rates.

10000=1AUD on one claim, 12000=1AUD on the next....

Still, first they have to stop laughing when I have a hotel bill for 25,000,000 for 2 weeks stay!

 

[anat0l]

Still, first they have to stop laughing when I have a hotel bill for 25,000,000 for 2 weeks stay!

Is it the 25 million part that gets them laughing or is the name of the Vietnamese unit of currency - or a combination of both? (Perhaps it is the latter esp. if they are female... )

If it's the latter, just thank your lucky stars you're weren't trying to justify a visit to Zimbabwe (well, that is, if it so happened about six+ months ago)...

 

[2muchplastic]

Is it the 25 million part that gets them laughing or is the name of the Vietnamese unit of currency - or a combination of both? (Perhaps it is the latter esp. if they are female... )

If it's the latter, just thank your lucky stars you're weren't trying to justify a visit to Zimbabwe (well, that is, if it so happened about six+ months ago)...

The good, Puritanical girls of our accounts dept aren't familiar with the other uses of the word Dong (talk about sheltered), and none of them have actually been outside of Australia, so they struggle a bit with these "funny" currencies.

And justifying a visit to Zimbabwe? That's definitely NOT on the list of places to visit!