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0 pointsdkjaudyeqooe3y ago0 comments

> This is big part of the reason you don’t see high value reward cards or cashback program in the EU.

Interestingly my US 1.5%-3% (regular, also 5% special) cashback cards keep paying out on transactions here in the EU. I've always wondered who is losing out in that equation.

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triceratops3y ago

You probably pay for it with the exchange rate spread. Your card may say no foreign transaction fees but they're already taking a 3% profit margin on the currency conversion.

lotsofpulp3y ago

I expected this, but I have tested this theory many times, and my credit card issuing bank or even debit card issuing bank offer exchange rates extremely close to the spot rate.

For credit card, I have tried this with Bank of America, Chase, and AmEx. For debit card, I tried with Schwab. And in all cases, I checked the currency exchange rate, and it was very close to the spot rate.

Where you do get hammered is by international merchants, who ask if you want to pay in local currency or USD (if you are American I guess). You should always choose to pay in local currency (meaning the merchant requests the payment in local currency from your card), because your credit card issuing bank will give you a much better currency conversion rate than the merchant will.

If you say you want to pay in USD, then the merchant will calculate a USD price that is much higher than the local currency price.

pembrook3y ago

This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto.

Even the people who claim to offer raw spot market rates (ie. Interactive Brokers), in fact do not offer that. I would not be surprised in Visa & Mastercard do the same--although they claim otherwise.

triceratops3y ago

Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.

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dkjaudyeqooeOP3y ago

I definitely don't. Visa/MC takes about 0.5% and the bank takes nothing. I've checked many times.

ar03y ago

The answer is in the original Stripe article: The merchant pays much higher fees when you pay with your US credit card than when you pay with a EEA credit card because the interchange limits only apply to purchases within the EEA made with a "standard" EEA credit card (corporate cards are also exempt, which is why Stripe is charging higher fees for them as well).

mytailorisrich3y ago

The EU cap only applies if both payer and payee are local. If you have an US card and uses it in the EU then the cap does not apply.

j / k navigate · click thread line to collapse

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triceratops3y ago

You probably pay for it with the exchange rate spread. Your card may say no foreign transaction fees but they're already taking a 3% profit margin on the currency conversion.

lotsofpulp3y ago

I expected this, but I have tested this theory many times, and my credit card issuing bank or even debit card issuing bank offer exchange rates extremely close to the spot rate.

If you say you want to pay in USD, then the merchant will calculate a USD price that is much higher than the local currency price.

pembrook3y ago

This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto.

triceratops3y ago

Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.

3 more replies

dkjaudyeqooeOP3y ago

I definitely don't. Visa/MC takes about 0.5% and the bank takes nothing. I've checked many times.

ar03y ago

mytailorisrich3y ago

The EU cap only applies if both payer and payee are local. If you have an US card and uses it in the EU then the cap does not apply.

j / k navigate · click thread line to collapse