Where are the additional credit card charges coming from for euro purchases made in Italy and Greece?

[OnTheJourney]

Pertaining to the same recent cruise - the Cities of Antiquities- at various merchants, including restaurants, I used my Bank of America VISA card and, despite the exchange rate being basically 1 for 1 all the time we were over there, I'm seeing about an 8% mark-up to arrive at the total USD charge. Why is this? The credit card slips I have don't reflect any VAT or any other additional charges, so where is the extra coming from? I just contacted the credit card company and nothing is coming on their end. I actually expected the USD amount to be about the same. Is it VAT by any chance? I'm seeing a current VAT amount for Italy as being around 5% (fluctuates I suppose) so if you add that on plus whatever the individual merchants might be assessing for using a credit card, that could account for it all I suppose. Doesn't VAT typically reflect on a credit card slip? The only thing I see on one of the slips (Vatican gift shop) is "3.5% exchange rate mark-up" which would only account for an additional $1.75 though. I've emailed them to find out more since they have a convenient website to contact them. 

 

Thanks for any helpful thoughts. 

Edited February 25, 2023 by OnTheJourney

[Vineyard View]

Might be foreign transaction fees. Some cards/banks  do that. 

[OnTheJourney]

10 minutes ago, Vineyard View said:

Might be foreign transaction fees. Some cards/banks  do that. 

If it is, it's coming from other than Bank of America since they have no further info and said they don't assess anything. If a merchant is charging anything additional, it should either reflect on the slip or be verbally told the customer. Not sure it's worth disputing these transactions however since I'm not sure how much the credit card company would even be able to find out. I'll see what I hear back from the Vatican gift shop. Some of the other smaller merchants don't even have websites. I'm surely not going to waste additional money on a long distance phone call. Makes me think that it's best to always just pay local currency (unless a larger purchase) over there. 

Edited February 25, 2023 by OnTheJourney

[1985rz1]

29 minutes ago, OnTheJourney said:

If it is, it's coming from other than Bank of America since they have no further info and said they don't assess anything. If a merchant is charging anything additional, it should either reflect on the slip or be verbally told the customer. Not sure it's worth disputing these transactions however since I'm not sure how much the credit card company would even be able to find out. I'll see what I hear back from the Vatican gift shop. Some of the other smaller merchants don't even have websites. I'm surely not going to waste additional money on a long distance phone call. Makes me think that it's best to always just pay local currency (unless a larger purchase) over there. 

Did you ask for the charges to be posted in US $, rather than the local currency.  When converted to dollars in a foreign country, you pay a premium on the exchange rate.  

 

Sometimes local companies add their own fee for using a card.

 

If your card was charged in local currency, your statement should show the exchange rate the US bank or card used.

Edited February 25, 2023 by 1985rz1

[OnTheJourney]

12 minutes ago, 1985rz1 said:

Did you ask for the charges to be posted in US $, rather than the local currency.

No...charges on all the slips are in euros. I didn't see any $ conversions till receiving my credit card statement.  I don't recall being asked if I wanted charges billed in USD, nor did I request such. 

Edited February 25, 2023 by OnTheJourney

[OnTheJourney]

13 minutes ago, 1985rz1 said:

your statement should show the exchange rate the US bank or card used.

No..nothing like that on my statement or slips. 

[OnTheJourney]

13 minutes ago, 1985rz1 said:

Sometimes local companies add their own fee for using a card.

Yeah...and probably whatever they see fit to tack on at the time 🤔 I don't recall ever running into this before. 

[OneSixtyToOne]

1 minute ago, OnTheJourney said:

No..nothing like that on my statement or slips. 

So you were charged in Euros and it shows in US$ on your statement with no exchange rate listed? You might need a new bank.

[Heidi13]

13 minutes ago, OnTheJourney said:

No..nothing like that on my statement or slips. 

 

On our Visa statements, we receive notification of the charges in the foreign currency, so I can verify the amount. It then shows the exchange rate used to convert it to CAN$.

 

If all you are seeing is charges in US $, I'll suggest the vendors have converted the costs from local currency to US $, and charged you a fee. Unfortunately, unless you specifically request billing in the local currency, a number of vendors will automatically do the currency conversion, as they make more money.

[burnabyjean]

I did a quick check on the Bank of America website and some of their cards do, in fact, charge a 3% foreign transaction fee. You should check which card you have and if it charges this fee.

[OnTheJourney]

34 minutes ago, Heidi13 said:

If all you are seeing is charges in US $,

No...my statement, under "purchases and adjustments" is in euros for all the foreign transactions. Then, the far right column (total amount per transactions), is in $

 

7 minutes ago, burnabyjean said:

You should check which card you have and if it charges this fee.

No charges. I (allegedly anyway) verified this. I wound up talking to 3 different agents. They kept passing me along to 'someone who could help in that area' (??)  

 

52 minutes ago, OneSixtyToOne said:

no exchange rate listed?

correct...no conversion info whatsoever

 

53 minutes ago, OneSixtyToOne said:

You might need a new bank.

I don't think so. Been dealing with the same bank for decades; however, it changed from a longtime AMEX card to Visa a few years ago. Unfortunately this involved a new card number. Hate when that happens. So many people to notify. 

[OnTheJourney]

Just read through my account info - under the list of "transaction fees" there is nothing referring to any sort of "foreign" fees. I also confirmed this on the BOA website for my specific card. The agent confirmed that they didn't assess anything - so it must have come from the individual vendors. Perhaps a combination of VAT and whatever they typically charge for credit card purchases in general. 

Edited February 25, 2023 by OnTheJourney

[OnTheJourney]

1 hour ago, Heidi13 said:

Unfortunately, unless you specifically request billing in the local currency, a number of vendors will automatically do the currency conversion, as they make more money.

Had this been done, wouldn't the individual transaction listings on my statement be in all USD rather than any mention of the initial amount in euros? 

Edited February 25, 2023 by OnTheJourney

[Vagabond51]

I have learned over the years to never never never use Bank of A for ANYTHING outside of the US. These people are natorious robber barons. Once spent you can be assured you will NEVER be able to talk to a human being on the phone.

 

The cheapest most convienient hassle free card I have ever used abroad was my Schwab One card. The best rate (I trade currencies, I watch) the best usage and the best customer service should I need it.

 

No... I don't work for Chuck. 🙂

[dd57]

Visa adds a foreign transaction fee on top of whatever the bank charges.  This doesn't explain all of what you are seeing, but it is part.

 

https://www.valuepenguin.com/credit-card-foreign-transaction-fees#:~:text=Visa and Mastercard both charge,fee%2C usually around 2%.

[LindaS272]

No foreign transaction fees associated with our travel card which is a BofA Visa (it’s an Alaska Airlines card).

[dd57]

So what I am saying is buried in the conversion rate is Visa's fee.  So if your bank says there are no foreign transaction fees, they mean that the bank does not add any on top of Visa's. 

[LindaS272]

No foreign transaction fee on my travel card from BofA OR Visa. No line item on my statement for charges in a foreign currency. 
 

A foreign conversion fee “buried” in Visa’s conversion rate is a different kettle of fish. Not the same as a foreign transaction fee—which is waived by our card issuer.

[Cienfuegos]

The foreign merchant may be using an interchange service (like Clover, Presto etc in Greece or Italy) which processes the US credit card transaction and does the back office work to "present" the charge to Bank of America, the issuing bank for the credit card. So, with an exchange rate exactly equal ($100 equals 100 Euro), the intermediary might mark up a 100 Euro purchase to $105 with a very skewed exchange rate in their favor plus a service charge.

 

Many times the device in the store into which you insert your credit card is owned by an interchange service. They process the transaction, run the transaction through their own FX wholesaler (Euro into dollars, etc), remit 96% or 97% to the local merchant, and pocket the 4% or 3% plus whatever they take off the wholesaler.  Think of the different rates when "buying" or "selling" currency in the foreign exchange kiosk.  The spread is part of the risk and profit premium to the intermediary.

 

By the time the transaction is presented to Bank of America (the card issuer), the original amount charged has grown noticeably. 

 

Not to make this political, but  Western Union, Walmart, and other money transfer services for US workers to send money to families in Central and South America practice much the same process. A $200 transaction sent to Colombia, may be lightened by a service fee and foreign exchange adjustment on the US end and then lightened by a check cashing fee on the Panama end. So, the $200 might be $160 when the family gets it.

[LibertyBella]

Whatever banks can do to make money, they will do.  While in Iceland a few months ago I took money out of an ATM and definitely had the foreign transaction fees posted on my bank statement, as well as outside network ATM fees, but I knew I would have to pay all of that.  VAT is usually incorporated into the posted price.  If you make a large purchase at one site, you can get the paperwork to have the VAT returned to you (must submit at airport.) Sometimes I have waited months to get that VAT money back (Greece was very, very slow), but it always eventually arrives. Before I travel to Europe next month I am going to get some Euros from my bank to use for smaller purchases.

[Peregrina651]

1 hour ago, LibertyBella said:

Before I travel to Europe next month I am going to get some Euros from my bank to use for smaller purchases.

 

Now there is a rip-off. My bank charges a higher conversion rate plus a flat fee to buy currency --and AAA is much better. I've always done better using an ATM in Europe, even if I have to pay an ATM fee. In fact, we have taken to making sure we bring home euro to seed our next trip (at least 100€).

[Vagabond51]

13 hours ago, LindaS272 said:

No foreign transaction fees associated with our travel card which is a BofA Visa (it’s an Alaska Airlines card).

You're transaction fee is embedded in your exchange rate. It's all in labeling, packaging and marketing. Most folks have not a clue to what is fair, current, or average card exchange rates. Most folks won't even ever discover their xchange rate. They simply rub their necks, write the check and are pleased they don't have an exchange rate with their card. Thats why the banksters have billions, and we don't. 😉 BTW, I've had a BofA AK Air card for 33 years, having lived in AK for 40 years.I know of what I speak.

 

Schwab One rebates all ATM charges, including foreign.

Edited February 26, 2023 by Vagabond51

[LindaS272]

Whatever you believe. I stand by my statement about no charges. Hey—we use Schwab Bank ATM too! Nice to get ATM charges back. 😉

[Peregrina651]

9 hours ago, Peregrina651 said:

Now there is a rip-off. My bank charges a higher conversion rate plus a flat fee to buy currency --and AAA is much better.

 

Sorry, I didn't proofread very well. This should read "and AAA isn't much better."

[OnTheJourney]

Interesting replies, for which I'm appreciative. I contacted one of the merchants in question, and they assure me that nothing was added directly from them. He referred to possibly a POS company that tacked on extra fees or possibly some other more obscure foreign transaction fees. Guess there's really no more to be found out about it, other than going back to BOA and asking them again if they'd have any idea where the extra charges may have come from.

 

Just so I understand the process, once the purchase is made at the vendor, what exactly happens next? Is the charge than passed through some other agency before making it's way to BOA and my statement charges? 

 

On 2/25/2023 at 3:35 PM, Vagabond51 said:

I have learned over the years to never never never use Bank of A for ANYTHING outside of the US. These people are natorious robber barons.

I don't really agree with this, having used BOA for a long time and never had any issues, to the best of my knowledge, with "extra" foreign charges. That was, however, with an AMEX card, not VISA. 

 

15 hours ago, Peregrina651 said:

AAA is much better.

Not my experience! We got a pack of 200 euros before going on the trip and they charged me a handling fee (or whatever) of 50 euros! Talk about getting ripped off! Wish we would have waited and just got some once arriving in Rome.  Oops...just saw your correction!!!  We'd gotten euro packs at AAA before but...sheesh...should at least have a gun if you want to rob me. 

 

22 hours ago, dd57 said:

So what I am saying is buried in the conversion rate is Visa's fee.  So if your bank says there are no foreign transaction fees, they mean that the bank does not add any on top of Visa's. 

Most interesting, although some quick research shows around a 1% fee (?). The charges I incurred are roughly 8% on each transaction. 

 

On 2/25/2023 at 3:35 PM, Vagabond51 said:

Once spent you can be assured you will NEVER be able to talk to a human being on the phone.

 

Also not my experience at all. I've never had trouble getting through to an agent at BOA. 

 

19 hours ago, Cienfuegos said:

By the time the transaction is presented to Bank of America (the card issuer), the original amount charged has grown noticeably. 

Sounds like the most likely explanation. I was going to call BOA one more time and just see if I get any further with it. All this is not a huge deal, but it's nice to at least know whom I'm paying my money to above and beyond the original charge. Guess I may never know. Your explanation is very thorough and presents some concepts and business practices I wasn't aware of. 

Edited February 26, 2023 by OnTheJourney