Many credit card and ATM networks charge currency conversion fees when a purchase or withdrawal is made overseas. These fees are often hidden within the foreign transaction fee on your credit card statement.
A common way to avoid this is by asking to pay in local currency. 문화상품권매입 Another is to choose a credit card that does not charge foreign transaction fees.
Paying In The Local Currency
When a customer places an order in your online store, you will likely ask them whether they want to pay using their home currency or local currency. While it may seem convenient to choose your own home currency (especially if you’re traveling abroad), choosing the local currency can end up costing you more in the long run.
This is because most merchants use dynamic currency conversion (DCC) to calculate the purchase amount, which results in a more expensive rate than that provided by credit card payment networks. However, you can avoid DCC fees by refusing the offer at the point of sale.
Another way to avoid DCC is by exchanging cash at a local bank or currency exchange bureau instead of at an airport or hotel. This way, you’ll be sure to get the best possible exchange rate. If you do need to withdraw cash abroad, try to limit your withdrawals to one per day and stay away from out-of-network ATMs that charge extra fees.
Avoiding Dynamic Currency Conversion
Many travelers are unaware that when they pay with a credit card abroad, merchants often offer the option to convert the purchase amount into their home currency. This feature, which is commonly known as dynamic currency conversion (DCC), may seem convenient for consumers, but it comes with a cost. The DCC exchange rate is usually much less favorable than the market rate, and there are also often fees added.
The best way to avoid DCC is to always pay in local currency whenever possible. This can be accomplished by using a currency conversion app on your phone or simply making a note of the price in the local language. Moreover, you can use a credit card that does not charge foreign transaction fees for even more savings.
The cash conversion cycle is a critical metric for most businesses, and it is important to find ways to improve it. However, it is also important to focus on reducing the CCC sustainably and not with extreme (and sometimes risky) measures.
Avoiding Credit Card Atms
Using the right credit card at the right times can help reduce ATM fees. If you’re going to be withdrawing a large amount, consider a bank that offers fee-free ATMs worldwide (such as Global ATM Alliance). If the store is not near a bank you can join, ask if they participate in the All Points Network – an independent ATM network that has hundreds of thousands of free cash machines across the world.
Another way to avoid ATM fees is to use a debit card that does not have foreign transaction fees, and to only withdraw money at the credit card payment processor’s own ATMs. In addition, you can also try to skip the ATM altogether by using a payment app like Venmo or Zelle to send money to friends and family in the local currency. The transaction may have a small fee but it’s often less than paying to withdraw from an out-of-network ATM plus a currency conversion fee.
Avoiding Credit Card Payments
Whether you’re a business owner or just starting out, cash conversion cycles are an important metric to keep in mind. It’s how long it takes for a company to turn the money that was invested in inventory or accounts receivable back into actual capital.
One way to shorten your cash conversion cycle is to minimize fees and charges. For instance, many credit card issuers charge a foreign transaction fee and a currency conversion fee (which are often lumped together or referred to interchangeably). This can be avoided by choosing cards that don’t have these fees.
Another way to avoid fees is to use a local bank or credit union for purchases in a foreign country instead of ATMs and currency exchange kiosks. This way, you’ll get better exchange rates and avoid paying additional fees. Lastly, you can use peer-to-peer payment services that offer low fees for transferring funds in different currencies. This is an easy and convenient option for travelers.