Thai banks are introducing a 1 per cent dynamic currency conversion fee when paying with Thai bank cards abroad or on foreign online marketplaces.
Credit card holders issued in Thailand will be charged a 1 per cent fee for conversion to foreign currency when paying in baht abroad or on online shopping sites registered outside the country. According to a notice on Bangkok Bank’s website, the measure will take effect on 1 May.
Local credit card issuers are introducing a fee known as dynamic currency conversion (DCC) for baht payments using Visa and Mastercard credit and debit cards. The fee also applies to cash withdrawals from ATMs abroad.
Visa and Mastercard charge the fee to local card issuers, who pass it on to consumers, a financial sector source who wished to remain anonymous told the Bangkok Post.
Local credit card providers charge a foreign currency conversion fee with a maximum rate of 2.5 per cent of Thai Visa and Mastercard charges when paying in foreign currency abroad or online on platforms registered outside Thailand.
That is, now, when paying with a Thai bank card in a foreign currency abroad or at a foreign online shop, a 2.5 per cent fee is automatically deducted from the payment amount.
The introduction of the new fee means that cardholders will have a choice of two options when paying with a Thai bank card abroad or at foreign online shops:
Paying in foreign currency. A 2.5 per cent fee will be charged based on a calculation of the prevailing exchange rate. Payment in Thai Baht. A 1% fee will be charged based on a dynamic currency conversion calculation.
Some offshore merchants, including Apple, Netflix, and Agoda, have no choice but to calculate the commission automatically from the DCC. As a result, cardholders will be charged 1 per cent,” a source told the publication.
Dynamic currency conversion offers shoppers the convenience of paying in their currency on overseas e-commerce sites. Transparency and conversion rates increase as the decision-making process simplifies, said Paul Srivorakul, group chief executive of aCommerce Group, a regional e-commerce operator.
However, it entails additional fees for consumers and operational complexities for merchants. To avoid customer dissatisfaction, there needs to be clear communication.
Local rules may govern the use of DCC and how it is made available to consumers, including the requirement to provide a choice between local and customer currency and to clearly disclose associated fees. Finding a balance between these factors is critical to the effective use of DCC in e-commerce,” Paul added.
Dynamic currency conversion will affect consumers who frequently use Visa and Mastercard abroad or on overseas online platforms, said Thai E-Commerce Association president Kultirat Pakawachkrilis. However, Kultirat said consumers can choose other payment options, such as e-wallets.
The DCC will affect platforms such as Spotify, VIU, Agoda, and Booking. However, Kultirat notes that Shopee (Thailand), Lazada (Thailand), and Grab Taxi (Thailand) should not Be Affected.
According to a Bank of Thailand report, e-payments totalled 28.8 trillion baht last year, up 10.4 per cent from 2022. Bank card payments totalled 5.9 trillion baht, up 8.2 per cent from 2022.
However, Piyachart Ratanaprasatporn, executive director of regional payment gateway 2C2P, said he disagreed with Thai banks charging consumers an additional 1 per cent fee.
Credit card holders choose a currency before making a transaction abroad. Piyachart said a financial institution that provides merchants with a card terminal makes a profit of 2.5 to 3 per cent on the exchange rate.
Piyachart advised Thai users to choose the currency of the destination country, such as dollars in the US, to avoid the 1 per cent fee.
More Articles Here
More Articles Here
