Originally Posted By SuperDry Dynamic Currency Conversion (DCC) is a "feature" whereby when you use your credit card abroad, the merchant offers you the option to settle the charge in either the local currency or your home currency. HKDL has introduced DCC within the last few months for all credit card transactions in the park (and probably the hotels, although I didn't see that personally). DCC is presented as a potential benefit to the consumer, but I think it's almost entirely a money grab by the merchant. The only "benefit" of DCC is that you know exactly how much the transaction will cost in your home currency, instead of having to wait for the transaction to post. But at what cost? Well, let me tell you. The thing that's not obvious about DCC is that the merchant isn't simply converting the charge to your home currency at the market rate, but is adding in additional profit for doing so. In HKDL's case, they add 4% to the charge amount for the benefit of listing the charge in USD (assuming you use a US-issued card). Is it really worth paying 4% more for everything, just so that you know the exact amount in USD up front? Credit cards typically charge a 3% fee for foreign transactions, although some of the better cards do it for 1% or even 0%. Another issue is that some cards will charge the "foreign" fee for any transaction made outside the US, even if it's already in USD. For such cards, choosing DCC at HKDL adds the 4% fee to Disney on top of the 3% fee to your bank. So, if you choose DCC, it's costing you at least 1% more and at most 4% more than if you just left the charge in HKD and let your bank convert it. Is the benefit of knowing the exact amount in USD really worth the extra fee? I think the introduction of DCC at HKDL is a guest-unfriendly policy. I'd be willing to bet that virtually every guest that takes advantage of it doesn't actually understand how it works.
Originally Posted By Mr X Isn't the HKD pegged to the USD anyway? So it makes even LESS sense (if so). At least at a place like, say, TDL, where the exchange rate fluctuates daily and sometimes fairly significantly in a short time, the benefit (I suppose) would be to stay aware of any significant fluctuations so you are constantly aware of your budget constraints (though someone so budget conscious would surely be savvy enough to check the daily rate back at the hotel, and plan accordingly). Good info SD. Thanks!
Originally Posted By SuperDry That's right. One of the benefits the bank will tell you is that it takes the uncertainty out of the transaction, as if you charge in local currency, the exact amount in USD may not be known at the time as it will be determined by the market rate as of the date of settlement, which could be a day or two or longer after the transaction. But since DCC costs between 1% and 4%, I think it's highly unlikely that the exchange rate would fluctuate more than that amount in a day or two, and if it did, it's just as likely to be in your favor (thus making the cost of DCC even higher, not lower) than against you. Unless you are faced with some known, highly unusual situation, such as you heard on the news that there was a sudden, immediate 5%+ devaluation of the USD vs the local currency that happened just that day after the merchant set the DCC rate for the day, it's very likely that DCC will just be extra profit for the merchant and provide you with something of far less value than what you pay for it. You're also right that in the particular case of Hong Kong, there's essentially no currency fluctuation risk against the USD, as the HKD-USD exchange rate is fixed by Hong Kong gov't policy within a narrow range. The most it can fluctuate under current law is 1% over time, let alone in a day or two. I suppose that one possible exception is if you use a debit card linked to your checking account and have a low balance, whereby every penny may count and a deviation of a few dollars when a transaction posts might make the difference between whether or not a check bounces or an overdraft fee applies. But in that case, you're paying what is essentially a 4% additional tax for the certainty of the USD amount, which is probably partly responsible for your low balance over time. This is but one example of how retail banks in the US make more money from fees from relatively low-balance accounts than they do from the traditional interest rate spread from making loans on the deposits, and how those least able to afford it end up paying the most. And, as a secondary issue, anyone using a debit card for purchases rather than a mileage-earning affiliate card is forgoing an important freeloading opportunity.
Originally Posted By leemac <<HKDL has introduced DCC within the last few months for all credit card transactions in the park (and probably the hotels, although I didn't see that personally).>> When was the last time you were here SD? We implemented this last year. Worth adding that it is a very common feature across Hong Kong - it is being driven by the mechant service providers rather than the merchant (they do share any upside though).
Originally Posted By SuperDry I was last there in the week or so after Mystic Manor opened - perhaps I didn't use a credit card during that visit so I didn't notice it then. And yes, it is quite common in Hong Kong and in mainland China for that matter. At least now MasterCard/Visa regulations require an "opt for one or the other" as opposed to the previous "opt-out" situation. One problem I have with it is that MasterCard/Visa regulations stipulate that the customer option at point-of-sale is final and non-reversible. I understand that they want to protect themselves from the consumer getting home, and then a month later learning about the true nature of DCC and wanting all transactions switched back. But the problem is that each transaction relies on the cashier correctly keying in the DCC option into the terminal. If a cashier mistakenly (or "mistakenly") keys a transaction for DCC rather than local currency, the cardholder's only recourse is to present the original receipt with the non-DCC option clearly marked in order to sustain a partial chargeback. So, this means that the cardholder now needs to keep all original charge receipts, reconcile them against the statement, and open a dispute whenever there is a "mistake." And, my experience is that such "mistakes" happen more frequently than you might guess when using a credit card in China.
Originally Posted By FerretAfros I've always heard that the best conversion rate for anything is to use a credit card and pay in local currency, or find an ATM that doesn't charge fees (partner with your bank) and get your cash there. Any time you rely on someone other than the bank to convert your money (whether at a currency exchange, hotel lobby, or random merchant), you're going to get a pretty crummy deal
