Credit cards and exchange rates

Miscellaneous and Personal Stuff I Must Share
1

I’m in Canada, and I recently ordered some stuff from an American website. I changed my mind the very same day and cancelled the order, and was told that I would receive a full refund. The company had actually already charged my Visa, and it took them almost three weeks to post the refund (I called and emailed a number of times during that time asking them when they were going to get around to it). This would be fine with me, except that their delay means that the original charge was at an exchange rate of 1.2171, and the refund was at an exchange rate of 1.1954, which means I’m out about $10.

After spending a little while trying to get my head around where exactly that $10 had gone to (the vendor? Visa? the government?), I called Visa and asked them. Their answer was that Visa keeps it.

Now, I’ve tried and tried to get my head around that part, and really can’t. The vendor isn’t getting any money from anyone, and I’m not getting any merchandise, so why should Visa get $10? I could understand if Visa had already submitted a payment to the vendor, but they hadn’t, so it’s not like they were out anything over the transaction, so the $10 is what, a tip?

I’m not really all that upset about $10 or anything, but it doesn’t strike me as fair, or even logical. I mean, how does Visa justify that, financially? I realize $10 is pretty irrelevant in their overall profits, but it still has to be accounted for, doesn’t it? What if my purchase had been bigger and I was now out $100, or $1000? Would that just go on the books as a $1000 Gratuitous Exchange Charge or what?

I want my $10 back. I don’t know whether I should be dealing with Visa or the original vendor to get it back, or if I’m even entitled to it at all.

Can someone who understands economics in general, and how credit card companies work in particular, a whole lot better than I do explain this situation to me?

Why does Visa get the money? Do I have any right to fight to get it back? Who should I fight with?

Thanks!

2

Shoot. I’m sorry, I meant to put this in GQ.

3

Basically, Visa sells you US dollars at one exchange rate and buys them back at a different rate. The sell rate is always higher than the buy rate. This is how they make money on curency exchanges.

4

I don’t think you have a claim against the credit card company. When you charge in a foreign currency, you’re taking some risk since exchange rates do fluctuate. Suppose the rates had worked in your favor (that is, your refund is more than what you originally was charged), would you had asked the credit card company to take back some of the refund? Your best chance might be to try to get the $10 back from the deadbeat company that took 3 weeks to process your refund. If they had done it right away, the difference between what you paid and what was refunded would undoubtedly be less. Good luck.

5

It’s one of the prices you pay for the convience of using CC. They handle exchange rates for you, so you don’t have to have two CCs or run to the bank to get US currency. So VISA did in fact do something, they made the transaction quick, easy, and efficient.

6

I believe that companies legally can wait up to 30 days to process a refund.

I worked for years for a cc company. I’d try calling their customer service line and seeing if the rep will credit you the $10. They might be authorized to credit you back that small of an amount, although technically they don’t have to.

Yeah, it sucks, but based on my years in the industry, there’s not much else you can do.

7

Aw crap. I was hoping you’d tell me how gosh-darn right I was and I’d magically get my money back. :wink:
Thanks for the info, I kind of had a feeling I was SOL.

8

It gets worse than that. At least in this part of the world. Credit card companies have an additional 1% fee added in to the exchange rate. Compare the rates that the company uses with those advertised at a bank at the same time. It’s always a bit different. That said, when you change currency a bank will usually charge a processing or transaction fee of a few dollars in addition to the buy/sell rates bing stacked in their favour. So VISA isn’t doing anything strange here.

9

Yeah, I guess it would make sense to me if there was xome kind of fee on an international transaction, but there isn’t. Had I not cancelled the order, Visa would have ended up doing more work, for less money. I just find it odd. But I’m suckin it up.

10

Don’t forget, Visa is getting a percentage of each order so they are getting paid. Presumably they’ve already factored in the extra work needed to handle international orders into their fee structure.

11

Most likely the $10 will go into a currency exchange “slush fund” for the current fiscal year. Sometimes Visa comes out ahead on these type exchanges and would credit the accout. Sometimes they get the short end and would debit the account. At the end of the year it’s probably pretty close to a wash.

12

The terms and conditions of the card will tell you everything you need to know. Grab a copy from your card company.