Not so funny money tricks the travel industry likes to play

Maks Narondeko/Shutterstock
Maks Narondeko/Shutterstock

Hold on to your wallet. Businesses don’t just want to get their hands on your cash when you’re on the road — they also want more of your money, and on their terms.

Take what happened to Gordon Angell when he was visiting La Paz, Mexico, recently. Many restaurants in town display the “Visa” and “MasterCard” stickers, signifying that they accept credit cards.

But on Angell’s first evening, after finishing a meal at a restaurant, his server informed him the credit card machine didn’t work, and pointed to an ATM. He paid in pesos.

“The following evening we went to another restaurant called The Three Virgins,” he says. “We made sure that we asked them if they accepted credit cards and they said ‘yes.’ Surprisingly, when we offered to pay our bill, it was a repeat of the previous evening. Their machine was ‘not working.’ They told us to use the ATM.”

The ploy allegedly uncovered at The Three Virgins is just one of two interesting tricks used by clever businesses to get more of your money when you cross a border. And make no mistake, businesses love to “think different” when it comes to money abroad — just ask Apple Computer if you don’t believe me.

In a way, these little games assume you won’t think about money, and do the necessary math.

It’s no secret that any businesses would prefer your cash, for example. After all, they don’t have to pay any fees to Visa or MasterCard. But saying the business is “cash only” is a turnoff to many tourists, who don’t carry a lot of local currency.

So in order for the restaurants to have their metaphorical cake and eat it too, they tell a little white lie. Yes, they accept credit cards. But you didn’t ask if our machine works. Those naughty virgins!

The currency exchange trick

Here’s another interesting sleight of hand involving money. It happened to Chris Hynak on a recent stay at Bluebay Hotel in Zanzibar. When he checked in, an employee informed him that all of his incidentals would be charged in shillings, the native currency of Zanzibar.

“I figured this wouldn’t be a problem,” he says. “I would simply pay my bill by credit card and have the amount of shillings converted by Visa at the daily rate, which as of today is slightly more than 1600 shillings to the dollar.”

That’s an absolutely acceptable strategy. Hynak would have to pay a “foreign transaction” fee for any purchase made overseas to his card, whether it’s made in dollars or shillings, but at least he’d get a favorable exchange rate.

But the Bluebay had other plans for his money. When it came time to settle up, it insisted on converting his shillings to dollars at a 13 percent markup.

“I protested, saying that I wanted to be charged in shillings, only to be told that their machine wouldn’t allow them to do that,” says Hynak. “I find this hard to believe. Where in the world can you not settle a bill in the local currency in which it was quoted?”

Indeed. After a brief argument, the hotel agreed to adjust its exchange rate, shaving about $23 off his final bill. He may still have to pay a credit card exchange fee on top of that, but at least the exchange rate is a little more reasonable.

Not ‘Monopoly’ money

What do Hynak and Angell’s stories mean for you? Well, if you travel overseas, some merchants obviously hope you won’t bother to ask basic questions or do a little mental math before you plunk down your credit card.

They think the fact that you’re paying in shillings and pesos will somehow short-circuit your reasoning skills. They want you to look at their money and think: “It’s just Monopoly money” — and obediently fork it over.

The remedy is equally obvious. If a business claims to accept credit cards — and especially if it’s a product you can’t return after it’s consumed, like a restaurant meal — find out if the credit card machine is actually working. If a hotel or car rental company offers to exchange your dollars for local currency “as a courtesy,” then ask what the exchange rate is, and if it’s not competitive, insist on paying in local currency.

Don’t turn off your brain when it comes to using money overseas. Because they’re counting on you to.

Does the hotel industry unjustly profit from currency exchanges?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at Got a question or comment? You can post it on the new forum.

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  • deemery

    Not just the hotel industry. I’ve seen this offer to ‘pay in dollars’ (at our outrageous exchange rate) in restaurants and stores, too. Except for hotels, I prefer to stay on a cash basis when traveling. And if the hotel insists it has to convert to dollars, I tell them “No.”

  • jpp42

    The ruse of “we’ll charge your card in US dollars” (or whatever your native country’s currency is) is becoming increasingly common – I’ve noticed that almost all tourist oriented businesses here in Australia try this nowadays. The terminal automatically detects the native currency of the tourist’s card, applies its own exchange rate, and prompts the user in that currency. This is touted as a “convenience” since you see exactly how much you’re charged in your home currency, which I admit is a bit helpful. But the problem is that the exchange rates used in this situation are almost always horrible compared to the rate you’d get from the MC/Visa network through your own bank. And often it still counts as a “foreign transaction” despite being denominated in US dollars (or whatever), so you still get charged a foreign transaction fee! Tourists should never accept this system (you can deny it and insist on being charged in the local currency), but I feel that most are poorly educated about it.

  • polexia_rogue

    i never knew you can insist on being charged in the local currency. I was in Euope for a year and since the Euro is worth more the the dollar i always just “let it go” rather then do any math (because totals always seemed kind of high- and i just fired that’s how powerful the euro was compared to the dollar.)

  • MeanMeosh

    I was going to say the same thing – NEVER accept being charged in dollars when traveling in a foreign country. It is a sneaky double scam perpetrated by both the vendor and the credit card issuers. The vendor gets a nice profit by giving you a lousy exchange rate, while the issuing bank still gets to charge you a foreign transaction fee. In all my foreign travels, I have never seen this work to the traveler’s advantage.

  • citizentraveller

    This sort of thing happened last year at two Chinese hotels using Bank of China to process my credit card payment. The bill was automatically converted from yuan to $Aust. Although the exchange rate seemed fair, I was charged a further fee by my own bank in Australia for the transaction. Unfortunately we had no warning at the point of payment that this would occur.

  • jm71

    The Dynamic Currency Conversion scam is everywhere, and as far as I know it’s *never* a good deal for the customer. Most cards that charge a “foreign transaction” fee will do so based on location, regardless of the currency the charge is in, and the regular exchange rate is always better than the DCC one. I always state “Please charge in Rupees/Shekels/Euros” etc as I hand over the card, before they have a chance to run it. Haven’t had to make them rerun it, but before I stated that it would be charged in dollars more than half of the time by default.

  • Richard

    On my last two trips in China, every time I’ve used my French Visa card I’ve always been charged in yuan, as a matter of fact any time I’ve used my credit card I’ve always made sure that I’ve been charged in local currency, be it in the US, Egypt, Jordan, Australia, New Zealand, Tunisia, England… Never had any problem. Back in the Euro zone I’ve always gotten decent exchange rates, I check each time. In France there are no foreign transaction fees, at least announced. When in the US there are agreements between Bank America and my French bank so I don’t even get charged ATM fees.

    OTH in numerous countries I’ve run into tourists that can’t think in local currency. Last time I was in Egypt I asked some people how much they were tipping and they could only quote their tips in Euros, they had absolutely no idea what the Egyptian pound was worth. Their tip amounted to twice the price of a very good meal (~£150) in a good Cairo restaurant.

  • citizentraveller

    It is not only what currency is used at a hotel or restaurant but what appears on some booking websites. For example, if I use Expedia to check internal flights or hotels in China, the price always appears in $Aust, based on the location of my ISP. Other websites are much better and I will only book through a website where prices are shown in the local currency.

  • Guest

    I voted no to this poll only because I don’t feel it is a hotel industry problem but rather one of individual merchants. I doubt you would find anything produced by the industry trade groups suggesting or encouraging this sort of behaviour.

  • John Baker

    It’s actually a EU law that they have to charge you in your home currency (or so I’ve been told). My first statement when checking in is that I would like all charges in Euros.

  • jpp42

    The usual setup is that the readout on the screen or the receipt will show the currency that the terminal is converting to (AUD in this case). Before entering your PIN or signing the receipt, you should have an opportunity to object to the configuration and ask for it to be denominated in the shop’s currency – here that’s Renminbi (CNY) – get to know those three letter codes as they are universal. I realize that can be difficult in a country where you may not speak the language, and the shop assistants may not be well trained on their machines. In your case, if the exchange rate was fair, then you weren’t really scammed as your bank’s fee is the normal foreign transaction fee. The bank would claim that it still incurs costs to process the transaction from the Chinese networks even if it was denominated in your home currency. It’s still annoying though!

  • catena

    Same thing happened to me when staying at a major chain-affiliated hotel in Moscow. After extended mail exchanges, the parent company pressured the individual hotel to return almost all of the overcharges.

  • jpp42

    I use a lot when travening in Asia and they have a similar setup. I don’t mind this too much as then I don’t have to do the conversion myself. However, with this site when you go to the “checkout” the amount is shown in the hotel’s local currency as it should be – they aren’t using this scammy conversion system. I can’t speak for expedia though.

  • jpp42

    I’m not sure if you’re referring to Dynamic Currency Conversion (DCC), the automatic conversion of credit card charges into your home currency by the hotel, or the other practices in the article such as claiming the credit card machine is broken. But for DCC, it is definitely promoted by the credit card processors as an income stream for the hotels and other tourist industry merchants.

  • oceankitten

    The businesses not only prefer your cash to a Visa or Mastercard, if the ATM is located on their property, usually they get a percentage of the fees charged by the ATM, so they get your money twice.

  • Anthony Smith-Chaigneau

    There is something in the world called ‘Business’. Margins drop and costs go up so Companies have to make money in other ways. This is just a small part of the holiday industry and all other industries. people seem to think that there is a right to have everything at cost and that nobody should make any money anywhere? The world runs on margin and skimming off the top…otherwise you pay cash and the person makes their slice…the government nothing and this is called a BLACK ECONOMY or BLACK MARKET. Cash is king but to get cash you have to draw it from a Bank WHO CHARGES YOU MONEY to do so…Change Money at the Airport Money Changer and THEY CHARGE YOU MONEY to do so. That is life and the way the world turns. This is not a revelation it is the fact of international travel that has GONE UP since it cost almost nothing to fly to foreign destinations with LOW COST airlines – Who Skim off the top when it comes to food on board, extra baggage, security charges, fuel charges etc. etc.

  • Thomas Ralph

    Dynamic currency conversion is a disgrace. Although you can officially decline it, many businesses feign ignorance about turning it off. If you weren’t offered the option, you can raise a chargeback for the excess amount.

    Amex prohibits merchants from applying dynamic currency conversion, so the problem magically doesn’t happen.

  • cjr001

    You shouldn’t have to insist; it should be the default for payment.

  • ClareClare

    ??? I’m an American living in Europe, and this is the first I’ve ever heard of this “EU law”! I’ve never been charged in anything other than the Euro here, even though I still carry a US credit card…

  • ClareClare

    Ah, Moscow! THAT’s one city where I wouldn’t dare use my credit card, and pay everything in cash… thank God your hotel was part of a western chain, that’s the only thing that saved you!

  • Cam

    Yes, a lot of hotels try the dynamic currency conversion. It’s not a scam, as such, but the rate used for the ‘convenince’ is always terrible. Plus on Australian cards, you still have to pay the foreign exchange fee.

    So always refuse it and pay in the local currency.

  • John Baker

    I had multiple vendors tell me that the EU requires that they charge in your home currency unless you specifically request the local currency. Always seemed funny to me. I wonder if its because you give an EU address as your home address. It could also be vendors playing games too.

  • James Orth

    Discover Card has stopped charging foreign transaction fees

  • Richard

    Last December while in China I booked two internal flights BeijingXian and Beijing Guangzhou, both were quoted in yuan and I paid in yuan on my CC.

    Like wise for hotels in China.

    I can safely say that when I been in China I’ve operated completely out of yuan, never once in any other currency.

  • Richard

    That’s not true! I’m sorry to say that you’re being ripped off. I’m an American living in France for the past number of years. That’s never happened to me no matter what country I’ve traveled to. In the Euro zone all prices by law have to be quoted in Euros.

    A favorite rip off here is that they expect Americans to leave a tip. By law in France, the tip/service charge has to be included in the price that you see on the menu while on the receipt it has to be listed as a separate item..

  • kmwcary

    The Dynamic Currency Conversion scam does seem to be spreading.
    Western chains are also guilty – I’ve been hit with it in a Marriott
    (Tbilisi) and an Ibis (Bangkok). If you are met with a refusal to void
    the charge and re-do it in your own currency, you shold write on the
    slip that you decline the conversion and contest it with your card
    company. I travel with Capital One cards, which have no foreign
    conversion fee, so this is particularly annoying!

    I haven’t heard anything about an EU law regarding this. Citation, please.

  • Bill

    Where can you use Discover other than the US?

  • Barfeld

    So far, I’ve never had trouble getting a charge made in euro (rather than dollars).

    If a merchant refused me, I’d simply walk out the door. But if a restaurant server ever refused me, I would adjust my usually fairly generous tip down to zero. I usually state the amount for the tip when I hand them my card (as you have to do in Europe, to get it included). Thus, they would know what they were missing.

    When I’ve been faced a couple of times with the “non-working credit card machine” trick, I’ve tipped at 0% and felt more or less okay overall.

  • DavidYoung2

    There’s a good mobile app called XE that gives you up to the second exchange rates. Now, those are for large interbank transactions so you won’t get that exact rate, but the number should be close.

  • Barfeld

    BTW, anybody who’s been ripped off this way should DEFINITELY warn other people by a posting on TripAdvisor or the like. For any restaurant that hopes to attract tourists and is worth going to, a bad review about a rip off is like poison. The owners I’ve talked to are VERY concerned not to get bad reviews on these services because a bad review or two can cost them dearly.

  • ExplorationTravMag

    EXCELLENT suggestion, David! I have that app on my phone whenever I go international and it’s helped out a great deal.

    Also, I take with me local currency, bought at my bank prior to my departure so I don’t get stuck anywhere w/o cash. Most major banks (and some smaller ones) will exchange cash to another currency at a lower fee for their customers (though some banks don’t charge a fee at all for their customers. At one time, I was with Wells Fargo and with all their fee grabs, they were very favorable towards their customers when it involved exchanging money) That also saves me from having to run around looking for a place to exchange that has a favorable rate. Banks give better exchange rates than the little kiosks you see in some places and I was fortunate on one trip that a major bank was right across the street from my hotel, making it easy to exchange when I needed to do so.

    A little planning ahead save a tremendous amount of money, in the long run, and will help avoid pitfalls like this one.

  • ExplorationTravMag

    Really nice article, Chris, and the conversation flowing here is also thought-provoking and informative! Infrequent travelers don’t realize all the planning that goes into traveling overseas that can mean the difference between a good vacation and a great one.

  • ExplorationTravMag

    When I was in Ireland and England, I was always asked, when using my credit card, “Would you like that charged in Euros/Pounds or in US dollars?” I can say this was w/o exception.

  • Tones

    I HATE what I call “the currency conversion scam” at retailers. Many shops oversease won’t even tell you they’re running the transaction in USD– you only know when you look down at the receipt and see a line about how you allegedly accepted the conversion. I’ve decided that the next time this happens, I will speak up and demand a refund … and then pay in local currency only.

  • TonyA_says

    Maybe we should just go to Ecuador. Their currency is the US Dollar. Galapagos and Cuenca anyone?

  • Daddydo

    This proves again and again why travelers need a real live travel agent. I would have advised my clients prior to leaving of these situations. Travelers are to blame; that they don’t know what to do in these circumstances. I have heard it all and always respond the same – thank you for the meal, I believe that we need to call the police. The credit card machine always seems to start working.

    I had a gentleman pay 4600 pesos for shorts and they charged 46000 pesos. He signed the receipt. $46.00 USD against $460.00 USD. By the way, our agency got his money back while his credit card company did nothing.

  • LTMG

    Hotels in China may only use the government mandated exchange rate. That rate is very reasonable. My repeated experience in Malaysia is that the independent money changers offer the best rates, even better than banks, and the service can be very pleasant and personable. Malaysian money changers can be found in every shopping mall.

  • MarkKelling

    On credit card transactions and ATM withdrawals (at machines run by major banks) done in the local currency, you will get that rate.

  • cjr001

    Huh, I never knew that Ecuador and (per WIkipedia) Panama and El Salvador have the US dollar as their currency. Less surprising is how a number of smaller places, especially in the Caribbean, will take them as well.

    But I was surprised when visiting Halifax and St. John last fall that pretty much everybody there is more than happy to take US dollars and often had notes up on the exchange on paying Canadian vs US.

  • MarkKelling

    No, that is not true. I have been to various places all over Europe and this is not forced on you. The law may be that they must OFFER to charge you in your home currency as most businesses and even ATMs now do.

  • kmwcary

    The cheapest way to get cash in Europe is to have a bank account with no or low fees (try Capital One or a Credit Union) and use an ATM, which will get you the interbank rate.

  • TonyA_says

    Is it on the top of my go to list. Just fly (no need for cruise lines), lots of yachts offered island hopping in Galapagos. People from the area tell me Quito (near the mountain range) and Guayaquil (near the coast) are very different areas. I’m going for the food :)

  • TonyA_says

    Same here. Always charged Euros in Europe even with American hotel chains.

  • TonyA_says

    IMO, even if there is a fee, your bank ATM will usually end up cheaper than using your credit card (that also has a fee).

  • TonyA_says

    Don’t understand why folks don’t just use ca$h except for large amounts like hotel rooms. Because I might have to travel at a moments notice (or more often than I care), I have a small safe with different currencies ready at all times. The Euro is great because it is useful in many countries. Anything else, the ATM at foreign airports are quite good.

  • MeanMeosh

    That works in more developed countries like Western Europe/Singapore/Hong Kong/etc., but cash isn’t necessarily the best idea in less developed countries, especially those with large black market economies and/or issues with corruption. Argentina is a good example. There are a large number of cash scams targeting tourists, such as taxi drivers passing off counterfeit notes as change, or a vendor claiming you paid with a $10 note when you really gave them $100 (and of course, most ATM machines only dispense high denomination notes). At the very least, I’ll ask my hotel to give me some small bills that I can carry around for things like taxi fares or buying a soda off the street. That also helps combat my favorite scam in India – the “no change, sir” scam, where you try to pay with a large denomination bill, but they claim they can’t break it. Naturally, they’re betting you don’t have small bills, and will just give them the big bill and cough it up to the tourist tax!

  • TonyA_says

    I also have small bills and coins in my safe (together with large bills also). I arrange the coins in small ziploc bags. Small bills are a must for almost all countries including and specially Europe. I think money issues (including using money belts) are all part of trip planning.

    Added: if SIM cards do not expire, I will collect them, too :)

  • MeanMeosh

    Most major touristy places in Latin America, especially cruise ship ports, will accept USD. In fact, on my last cruise, I found that the vendors in the tourist-frequented places only took dollars. Which I actually found annoying, because I like collecting currency from the various places I go to, and that made it impossible.

    Ecuador is lovely, by the way. Be sure to get a tagua nut carving while you’re there!

  • Michael__K

    US-based OTA’s generally quote foreign reservations in USD as well. Even though the payment is usually processed in the local currency.

    In my few experiences with that, any discrepancies have been tiny. But it bugs me that they usually don’t clearly disclose up front what exchange rate is being used.

  • DavidYoung2

    Just booked a hotel reservation for October in Brazil. They quoted the price in dollars but expect payment in real. When I asked why, they said inflation expectations are so bad in Brasil that they can’t take the risk of what the rate might be. They now change their rates every month! But, they assured me we’d pay the lower of the quoted rate in US$ converted to Br$ or the then existing rate in Br$.

  • kmwcary

    Before you pay in USD in cruise ports, check the exchange rate. You are almost certainly getting a bad one.

  • BobChi

    That’s exactly what I was going to say. With today’s easy ways to share warnings with others, a scam like this should not last – the value of future business lost should be enough to keep people honest.

  • TonyA_says

    Isn’t expedia and the same company?

  • Zod

    There really is no good reason to spend our American Dollars somewhere else…stay here at home. We have everything everybody else offers with all the protections of the United States Government!

  • y_p_w

    Not exactly but close. Not sure what “affiliate” means in terms of their relationship, but it’s supposedly a limited partnership with Expedia as one of the partners.

    “ LP is an affiliate of Expedia, Inc. (NASDAQ: EXPE). CST:
    2083949-50. LP headquarters are located at 10440 North
    Central Expressway, Suite 400, Dallas, Texas 75231. The Expedia Group
    has office locations across Europe.”


    I looked a little more into it. Apparently Expedia and are at least partially owned by the same ownership group.

  • illumin8ed

    “tricks the travel industry likes to play” – really, Chris? Shall we say all media and all journalists are burying the lead for “sensationalist witch hunts”?

    Definition of BIGOT: a person who is obstinately or intolerantly devoted to his or her own opinions and prejudices; especially : one who regards or treats the members of a group (as a racial or ethnic group) with hatred and intolerance

  • MeanMeosh

    Exactly – which is why it’s all the more irritating. In Colombia, the street vendors were asking for $2 for a bottle of water. I found a supermarket a block or so away and bought one for the equivalent of about 40 cents.

  • TonyA_says

    Both are owned by Expedia, INC.,0,6827399.story
    btw this list must be updated.

    The OTAs grow by acquiring travel companies.

  • Dr Humbug

    I travel internationally about 75,000 miles/year. I just returned from a trip to Dublin, Belfast and London. I used my credit card extensively, which has no 3% foreign transaction fee. I watch the exchange rates daily and I am always asked if I want to charge the transaction in dollars instead of euros (or pounds, etc). In one case when the euro was $1.30, they wanted to charge me a rate of $1.36. I have always found it to be a losing proposition. If I had to pay the 3% fee, the euro would have equaled $1.34, still less than the $1.36 rate the store was going to charge me. Caveat emptor!

  • Eileen Joan

    Usually when I am in France, I look to see if the tip is added knowing that it is supposed to be — but I’m always told “no” and I have never seen it as a separate line item. Have I been getting ripped off all these years??????

  • JewelEyed

    Try “members of a marginalized group”. It does not make you a bigot to say all lawyers are scumbags that should be chained together at the bottom of the ocean. Just mean and kind of intolerant.