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Foreign exchange rates used for Credit Card purchases

Posted by DBWest DBWest
Message 1 of 9 2,533 Views

Hi,

 

I am new to Bankwest but not new to banking. I have had credit cards from different banks before and have used them overseas. I was really interested in the Bank West Platinum Mastercard Credit Card as there are no fees charged when purchasing overseas, which is usually 2.95% with other banks), so I was really excited as I travel overseas a lot and in the long run can save me a lot of money.

 

Hence I applied and got the credit card no problems. Then I went to China and used my card for the first time on the 18th of December 2018 (yesterday). I used it to pay for 212.4 Chinese Yuan, and no the hotel did not charge me any fees at all. This equates to approximately $42.96 (1 CNY = 0.202257 AUD) with the mastercard exchange rate (as it is a mastercard I am using, and yes I checked it online for both the 17th and the 18th due to timezones and differences and they are exactly the same on both days, https://www.mastercard.us/en-us/consumers/get-support/convert-currency.html).

 

HOWEVER, I got charged $44.84 (and yes I know that the rate will be different on the day it comes out, but that value there is the rate on the day which I used the credit card until it gets cleared). This equates to 1 AUD = 4.7368 ... or ... 1 CNY = 0.21111

 

I called up Bankwest for them to explain why I got charged more than the mastercard rate and the lady on the phone kept telling me that it is a Bankwest Rate and kept referring to me to the cash exchange rates online at bankwest website (1 AUD = 4.5889 CNY .... or..... 1 CNY = 0.217917 AUD). I believe this is incorrect because when you use a mastercard (especially a credit card) it is always the mastercard rate that is used not the banks exchange rate.

 

Anyway I went with what she was saying and went online to look at the rates and used them which were as she said 4.5889 (which was a cash rate and can be found here https://www.bankwest.com.au/personal/international/foreign-exchange/foreign-exchange-rates). So I used this value to calculate what my 212.4 CNY would be in AUD (to check what she is saying about the bankwest cash exchange rates are the ones being used) and it equated to $46.29 AUD, hence not correct as the value calculated on my credit card is $44.84.

 

Therefore, I was very upset to see this as this is a little trick Bankwest have played with the consumer to trick them into thinking they are waiving the fee where in actual fact they are charging the fee with the purchase by charging a slightly higher exchange rate. You may ask, how can you make such an accusation?! I had colleagues with me that used their credit cards from other banks and were charged the mastercard/visa exchange rates being 1 CNY = 0.202257 AUD. When calculating the difference it actually showed to be greater than 4% from the mastercard rate (($44.84-$42.96)/$42.96) = 4.37%).

 

So technically I am better offer to have a credit card with another bank and get the mastercard rate and get charged 2.95% more and it will save me money than having a zero fee credit card with Bankwest. The reason I got this credit card was to save money from reducing my fees compared to other banks but all I got was worse exchange rates.

 

My questions (after all this) are:

 

1. Can you please confirm to me what exchange rates are used when I use my Platinum Credit Card overseas (and show me where this is stated in writing as I couldn't find it anywhere), and please don't tell me it is the cash exchange rate as it does not equate correctly at all,

2. If it is higher than the mastercard rate why so (i.e. why aren't you using the mastercard exchange rates), and finally,

3. If it is higher than the mastercard rate, why you don't let the consumer know that before they sign up?

 

Thank you in advance and looking forward to your reply as I couldn't get much help over the phone.

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Re: Foreign exchange rates used for Credit Card purchases

[ Edited ]
Posted by MegB MegB
Message 2 of 9 2,525 Views

Hi @DBWest, thanks for taking the time to write this post. Sorry for the delay in my reply.

I've escalated this to our Products Team and will let you know when I hear back from the team. 

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Re: Foreign exchange rates used for Credit Card purchases

Posted by MegB MegB
Message 3 of 9 2,517 Views

Hey @DBWest, our Products Team have confirmed that we use Mastercard Internationals exchange rate.

They've asked if you could please flick us an email to forum@bankwest.com.au with your Forum username, full name and best contact number so we can look into this further for you.

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Re: Foreign exchange rates used for Credit Card purchases

Posted by DBWest DBWest
Message 4 of 9 2,500 Views

Hi MegB,

 

I sent them an email on 21st December 2018. No reply yet. Will let you know when I hear anything.

 

Regards,

 

DBWest

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Re: Foreign exchange rates used for Credit Card purchases

Posted by Mr_MR Mr_MR
Message 5 of 9 2,481 Views

When the answer is available, a summary here would be highly appreciated so we, others, also are in the know and don't get surprised by the same.

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Re: Foreign exchange rates used for Credit Card purchases

Posted by MegB MegB
Message 6 of 9 2,480 Views

Hey @DBWest, the team have advised that as per section 20 of the Credit Card Conditions of Use Booklet

 

"Mastercard® foreign currency transactions are converted from foreign currency into United States dollars and then converted into Australian dollars by Mastercard International Incorporated at a wholesale exchange rate selected by Mastercard International Incorporated on the processing date, which may differ from the rate applicable to the date the transaction occurred and that applicable to the date the transaction was posted."

 

The discrepancy between the rates is due to the transaction first being converted to USD and then into AUD.

I hope this has helped clarify your enquiry. 

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Re: Foreign exchange rates used for Credit Card purchases

Posted by DBWest DBWest
Message 7 of 9 2,477 Views

Hi MegB,

 

Thank you for your reply. I was hoping I would get a reponse from the team via email/phone call but that is ok.

 

Conversion to US Dollars then to Australian Dollars does not affect the equation as the calculator automatically calculates that anyway. However, I went to the mastercard currency converter (https://www.mastercard.us/en-us/consumers/get-support/convert-currency.html) and did exactly as you mentioned, I converted 212.4 CNY to USD and then took that USD amount of $30.81 and converted it to AUD using the calculator and it still comes to $42.96 AUD (for the transaction date of 18th of December 2018). This is the exact same amount as converting 212.4 CNY to AUD using the same mastercard currency converter/calculator.

 

Therefore, it still does not explain why I was charged $44.84 AUD. According to Section 20 as you have quoted, I should've been charged only $42.96 AUD (or $43.49 if you want to take the exchange rate at the day the money was cleared from my credit card, 21 December 18), so why was I charged $44.84.

 

Thank you once again and I look forward to your response.

 

Happy New Year,

 

Kind Regards,

 

DBWest

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Re: Foreign exchange rates used for Credit Card purchases

Posted by DBWest DBWest
Message 8 of 9 2,470 Views

Hi MegB,

 

Rebekah contacted me via a phone call. She had great customer service skills. Rebekah confirmed that it was actually the hotel that was at fault here. The Hotel converted the 212.4 CNY to $44.84 AUD before charging my credit card, so in other words they just debited $44.84 AUD not 212.4 CNY after applying their own exchange rate. I was not aware of this until now and not very happy about it as they did not tell me that they were doing that.

 

Therefore, Bankwest was not in the wrong and although that has been my only transaction I am sure that the mastercard rate is used and will now make sure that the vendor charges me in their own currency so I get the best mastercard rate.

 

I wanted to thank you MegB and Bankwest for your patience and assistance with my enquiry. I am really happy with the treatment I received and will definitely be a customer for a long time.

 

Finally, I wanted to apologise for making an accusation that I was incorrect in making without being aware fully of what the hotel did and thank you for handling it well and professionally. I am very impressed by Bankwest employees and their customer service.

 

Have a very happy new year and I look forward to using my card next year.

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