CCY Conversion Fee: Everything You Need to KnowPosted by Ovesen Matthiesen on July 2nd, 2021 The majority of the time, the words 'cross currency (CCY) conversion fee' and 'foreign transactions fee' are interchangeable. But they're not the exact equivalent. If you conduct purchases or transactions in foreign countries using the credit card processor, the CCY conversion fee will be due. If you purchase items in foreign countries, whether online or in person the foreign transaction fee is imposed by your credit card issuer. This article will focus on the CCY Conversion Fee, its workings and an alternative. What is an Cross Country Conversion Fee If you buy items from a foreign-based merchant's store and then pay with your credit/debit card, the transaction is in the merchant's home currency. In these instances the CCY charge for conversion could be charged by the retailer or by your debit/credit card processor. The fee for currency conversion is the amount you pay to convert your home currency into the currency of the merchant. This is typically 1% of the transaction. The CCY conversion fee is sometimes called the "foreign currency conversion fee" or the "foreign currency exchange fee". There may be a question asking if you'd like to convert the purchase price to your local currency when you shop in foreign stores. If you accept then the store's POS will change the cost of the purchase to the currency you use in your home country with Dynamic Currency Conversion. While it might appear like a good idea as it allows you to see the cost of your purchase in your local currency instantly (instead of waiting for the credit card bill) but it comes with an expense. The DCC could not offer a good exchange rate, and an additional charge for service is added. Additionally you may have to pay up to 12% to cover the transaction cost. However in the event that you do not accept DCC, and make the payment with your credit card, then the currency conversion rate is that charged by your card provider that is generally a good conversion rate. The foreign transaction charge could be concealed in your credit card statement. If you do not want to use DCC for any reason, then make sure you have a currency conversion app available to help you determine how much your purchase is in your currency of choice. If you don't, you'll find out the cost only when you receive the credit card bill. A currency converter app is an essential. This will enable you to do a quick calculation and figure out the amount your purchase would cost in your currency of choice. Credit card companies should be able to show clearly the amount that was due. If the statement shows a foreign transaction charge of 3percent, then 2 percent represents the actual foreign transaction fee, and one percent is the currency conversion fee. DCC usually is much more than the currency conversion provided by your credit card processor. Should I Declinate DDC? It's better to decline DDC to avoid additional charges. Additionally, you can use a currency converter app that converts the foreign currency price to the local currency. This will provide you with an estimate of the price of your purchase. Why should you pay additional DDC costs? Credit card companies can negotiate favorable exchange rates for foreign currencies and, therefore, you will get the best conversion rate. This is far better than opting to use DDC. If you can, try to make the purchase using local currency. For purchases made in the local currency, you'll need local currency, or locate an ATM at a reputable bank to get an acceptable exchange rate. Be sure not to visit too often to an ATM because you'll be the same amount each time you use it. You must withdraw enough money immediately to pay for any purchases you might make. What is a cross-currency conversion fee work? To comprehend how the CCY converter fee operates it is important to first comprehend the foreign transaction charges. A foreign transaction fee is an expense that is assessed on purchases made using credit cards in a foreign currency that is not the currency used by the card. It's an additional amount that banks or card companies will add to the CCY conversion cost for transactions which are made abroad. The fee is usually approximately 2% to 3.3 percent of the transaction. However, it may vary. You'll be charged for each 00 you transfer from your debit or credit card. It is assumed that the issuer of your card charges the foreign transaction with a 3% fee. It's also the case if you conduct transactions through ATM transactions that charge the transaction fee. The foreign transaction charge may include the CCY conversion fee in certain circumstances. Both the fees for conversion to currency and foreign transaction fee can be combined in what's known as a one-time foreign transaction fee. Nonetheless, there are some credit cards and card companies who don't charge fees for foreign transactions. It is important to inquire with your bank to determine whether your bank has the option of not charging a foreign transaction fee. There are some common purchases that may incur the cost of foreign transactions: Find international flight tickets Online shopping from an international website International ATMs How to Avoid Paying Foreign Transaction Fee? Now that you know what constitutes international transaction fees You're probably wondering how to avoid these fees. Yes, there are methods that will help you avoid paying foreign transation fees. The following are the methods: Local Exchange of Currency It is an excellent idea to exchange currency before traveling to avoid foreign or international exchange costs. If you can, estimate the cost you anticipate for your trip or purchase and prepare ahead of time by exchanging currency in a local bank. You may be fortunate enough to find a bank or credit union that has an equitable exchange rate and won't have to pay extra charges for exchange rates. If you are traveling to countries like China however, with advanced mobile payment practices and is mostly cash-free the advice above would not apply. It might be more beneficial to choose a card like AP-1 that accepts QR code transactions as well as direct conversions from SGD to RMB (using the money in your AP-1 virtual cards) at the time of purchase. Locate Foreign-Friendly Banks Foreign-friendly banks are best when you don't wish to pay the foreign transaction cost. Check with your bank to see if they have an account that does not charge this fee. Some cards don't charge foreign transaction fees. Avoid foreign ATMs You can also avoid the foreign transaction cost by paying using foreign currencies. You might be restricted in the currency you can use in the foreign country. Another option is using the ATM at a local, well-respected bank to withdraw cash which you can utilize to pay local debts. As much as you can to avoid banks that are foreign and verify whether your local bank is in a partnership with the bank of a foreign country. Also, it is best to make huge transactions in one go rather than multiple transactions. Get a Credit Card for Free Another way to avoid huge foreign transaction fees is to obtain a credit card that does not charge international transaction fees. These cards let you purchase online and conduct transactions without having to worry about costs. A reliable credit card issued by a company that requires sellers to pay CCY fees can be utilized. A currency conversion app is recommended to help you identify the value of your purchase using your native currency. How Much are the Fees and Who Charges Them To give you an idea of the costs of various fees and the people who charge them, here are some details: Fees : Foreign Transaction Charges for international credit card transactions Obtained by Issuer Approximation of rate: 2 percent - 3.3 percent Conversion Fee Excluded from: Overseas Currency Conversion Processor imposes The approximate rate is 1%. Fee for Dynamic Currency Conversion Imposed on : Point-of-sale for overseas conversion Merchant: Imposed Rates approximativeof 3 to 12 % Pay attention when buying in a foreign country. Knowing the different costs and their respective costs will help you to have more control over costs for your trip overseas. When you purchase in a foreign country , or on the internet at an international store CCY conversion fees are inevitable. In certain situations there is a way to get around the foreign transaction fee. But, aleta planet is only possible if your card processor has waived any foreign transaction charges. Before making international purchases be sure to check with your credit card company. We warn you to decline DCC since it is likely to increase your purchase price. Refuse DCC and you could be required to deal with CCY conversion fees as well as foreign transaction charges that could be as low as 3-4 percent of the cost of the purchase. It's simple and cost-effective to make payments or conduct transactions in China. An affordable, transparent alternative: The AP-1 Business A virtual card with multiple currencies, like the AP-1 Business card is a ideal way to pay into China. It's simple and efficient. Here are some advantages: The AP-1 business system is speedy. It means your payment to your Chinese supplier or vendor does not require intermediary banks, which the majority of telegraphic transfer banks use. It takes only T+1 for the money to directly deposited into the receivable's UnionPay account. AP-1 Business costs are comparable to bank charges however it also offers competitive exchange rates from UnionPay. There isn't double conversion of SGD to USD or RMB as some banks do. AP-1 business is easy to set up, and you can complete the process right from your phone. The AP-1 Business card is the only digital business account that is not issued in China that allows payments up to T+1. It's faster than the telegraphic transactions made by banks. Telegraphic transfers generally incur multiple charges. It is possible to facilitate transactions up until T+5. This permits you to make online or offline payments to China like you would a Chinese native would. It is very easy to load and top-up funds in your AP-1 account and the AP-1 card is integrated with UnionPay. In less than 60 seconds, funds will be transferred to the UnionPay personal account owner in China or anywhere else in the world. AP-1 currently includes USD/SGD as a currency. But, it is likely that other currencies will soon be added. For more information about the AP-1 Business virtual card, visit the website.
Conclusion
If you purchase or make transactions in a foreign location, you will be charged CCY conversion fees and foreign transaction fees. Foreign transaction charges and CCY conversion fees are different fees. They cannot be interchangeable. Certain cards might waive foreign transaction fees. Ask your provider about this.
The AP-1 Business virtual card allows you to transfer money into China much faster than what banks can. Do you have a company that wants to send money to China? Then get your AP-1 Business Virtual Card now!
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