I’m used to being charged at least 2.5% extra by MasterCard when I buy something in a currency other than Canadian dollars. However, I recently had my first experience with a retailer doing the conversion for me at a higher price than MasterCard charges.
I rented a car in Europe and the total cost for 4 days came to a hefty 425.70 Euros. According to the Bank of Canada, converting this to Canadian dollars at a fair rate on the day I paid would give C$560.31.
Based on credit card charges on the same day, MasterCard would have charged me $575.90 or 2.8% more. This differs slightly from their advertised 2.5% fee possibly by random variation and possibly due to choosing a favourable rate during the day.
However, MasterCard never got the chance to make an extra C$15.59 from me because Hertz did a conversion to Canadian dollars. They charged me C$586.37 or 4.7% more than a fair exchange. Hertz made an extra C$26.06 from me, which is C$10.47 more than MasterCard would have charged me.
The most amusing part of all this is the following note printed on my receipt:
“I have been offered a choice of currency and chosen to pay my rental charges in the currency of my card.”
This isn’t true. No doubt there was something buried in the papers I had to hurriedly sign when I picked up the car, but I would never have chosen to be charged in Canadian dollars if I understood the choice I was making.
So, Hertz, congratulations on extracting an extra ten bucks from me in addition to MasterCard’s money. Maybe you could have converted the charge to U.S. dollars so that MasterCard could get a piece of me as well.
The part of all this that irks me the most is that there is virtually no cost to currency conversion when there is no physical cash involved. The extra amounts are almost completely extra profit.