Business travelers cost companies £99m in currency fees warns FairFX

A fifth of business travelers are being deceived into forking out £99m in fees when they use their payment cards abroad, according to travel money and prepaid currency card specialist FairFX.

When using credit, debit and prepaid cards on overseas business trips to withdraw cash for expenses or pay at hotels, restaurants and meeting places, business people are often given the option to pay in Sterling rather than local currency. But FairFX warns this practice exposes companies to extortionate fees and unfavourable rates – leaving them, and their company out of pocket without the employees even realising.

The practice, known as Dynamic Currency Conversion (DCC), is offered by restaurants, hotels, meeting places and via ATMs overseas, giving those picking up the tab for international meetings and conferences the chance to pay in their home currency.

By paying in pounds, those on business trips may think it’s easier to keep track of their spending and help them identify if they are remaining within their company’s expense policy, but many are unaware it will actually cost them MORE.

When cardholders use their debit, credit or prepaid card to pay in Sterling, the vendor or ATM is able to define the rate that is used to convert the transaction from, for example, Euros or US Dollars, back into Sterling. FairFX warns that this conversion is charged at an average of 7.7%¹of the transaction value.

The ONS travel & tourism report cites that £5.33bn was spent by UK business people overseas². FairFX data reveals that 24% of card spend was subject to DCC for paying in pounds rather than local currency, meaning that employees on business trips have been “duped” into paying up to an average of 7.7% on every bill or ATM transaction on almost a quarter of all transactions they make.

Collectively this tots up to a whopping £99m in superfluous fees³robbing businesses of additional profits and inflating the costs of doing business internationally.

Ian Strafford-Taylor, CEO of FairFX, commented: 

“When asked if they want to pay in pounds or local currency, opting to pay in pounds may seem logical to employees on business trips, especially if they have been tasked with keeping their expenses within budgets laid out in pounds. But businesses need to be warned, and need to alert staff taking trips that this is nothing but an avoidable rip-off, duping business people into paying unnecessary fees and accepting unfavourable exchange rates, which ultimately could eat into their profits or budget for further trips. 

“The worst part is that business people are actually trying to do the right thing, getting the best deal and keeping track of their spending, but instead are losing out and, as a nation, businesses are being fleeced to the tune of £99m each year.”

“The key thing to remember is, when abroad and asked if you want to pay in pounds or the local currency, always pay in the local currency to avoid nasty surprise fees.”

FairFX tips to avoiding being ripped off: 

• If you’re asked what currency you want to pay in, always choose the local currency. And the same if you’re using an ATM.
• You have a choice: Dynamic Currency Conversion (DCC) is optional, although it’s been reported that merchants have run this automatically. This is against the T&Cs of Mastercard/Visa.
• Be vigilant: If you’re billed in pounds (or any other currency than the local one for the country you are in), refuse it. Write ‘DCC rejected’ on the receipt and insist on being charged in local currency.
• Debit and credit cards are a good back up for travel money but if you want to guarantee your rate, give your staff a prepaid currency card which locks in the exchange rate when you buy. If they’re using a prepaid currency card loaded with pounds, similarly always choose to pay in local currency to avoid third party charges and rates.

• To get the best value for money before you book a business trip, look at which destinations get you more bang for your buck with more favourable long-term exchange rates – attending a conference further away might end up costing you less.
• Set up a currency alert (or ask the colleague responsible for arranging international expenses) with FairFX so that you are alerted to the best time to buy when the rate moves in your favour.
• If your staff like to travel with a little cash as well as card, buy this in advance – organising it at the last minute could also create a waste of company funds. Exchange rates at the airport can be 15 percent more expensive than elsewhere meaning that you could lose £147 for every £1,000 you exchange.
• Beware of the sneaky Airport ATM:Evenif you are savvy enough to have a Euro or Dollar prepaid currency card, be careful about taking cash from airport ATMs. When withdrawing currency from UK airport ATMs with a Euro or Dollar prepaid card, most of them charge you in Pounds. instead of your Euros or Dollars, and hit you with hidden conversion fees