Abroad

They base them on the current wholesale exchange rate as determined by the markets at the time the transaction is processed. Unfortunately, you can't view those rates in advance without a good crystal ball. They then build into that some markup which they make a profit from. This varies from one bank to another, but is usually between almost zero and about 3%.

Chris

The rate they base on is usually the rate determined by Visa/Mastercard once a day (or the next business day if after hours or weekend). It's pretty close to the interbank closing rate you see online like

or , with a small mark-up (up to 1%). But already stated, your bank or card issuer (other than Nationwide and Liverpool & Victoria) will tuck on extra commission (which varies - the total comes to around 2.75% above interbank) - you don't see this as it's incorporated into the exchange rate used. So to give an example, if /euro interbank rate is 0.6698 to the euro (as it was on Friday), most cards will use 0.6698+ 2.75% = 0.6882. Plus most issuers (again with the exception of NW and L&V) will add cash handling fee of around 1.5% (min 1.50), which will push the effective rate to 0.6982. So when withdrawing 200 euro, you will be charged around 133.96 with NW and L&V and 139.64 with most other cards.

Alec

"Alec" wrote

That reminds me of the old joke:

[In a museum...] Kid: How old is that dinosaur? Curator: It's 65 million and ten years old! Kid: Gosh! How can you be so accurate? Curator: Well, I was told it was 65 million years old when I started here; that was ten years ago...

You're right to correct me about the source of the rate, although in practice the Visa/Mastercard rate is actually almost the same as the interbank rate. I feel sure its somewhat less than the 1% figure you mentioned. Also, I think the exchange rate they use varies continuously throughout the day. I've sometimes had multiple overseas transaction appear on my statement on the same day, and they each show a slightly different rate of exchange.

Chris

I think it depends which country, IIRC the markup is lower in Europe than the rest of the world. Also I've read that Visa/Mastercard, as well as some banks, are switching most of the exchange rate markup fee to "foreign use" fees, because their profits are being hit by DCC becoming more prevalent. With a bit of luck, this might lead to the death of DCC.