CCY Conversion Fee: Everything You Have to Know

The terms "cross currency (CCY)", conversion fee" and "foreign transaction fees" are
typically interchangeable. They are however not the identical.

The processor for credit cards is charged a CCY conversion fee when you purchase products
or services in a currency other than the one you are using through your debit or credit card.
The issuer of your credit card will charge a foreign transaction fee when you purchase online
through foreign merchants.

In this article, we will concentrate on the CCY fee for conversion, the way it works, and offer
a better alternative.

What is an Cross Country Conversion Fee

If you buy something from a foreign merchant's store and then pay with your credit/debit
card, the transaction is made in the merchant's home currency. In these instances the
merchant or your credit/debit processor might charge you the CCY converter fee.

The fee for currency conversion is the amount charged to convert the currency of your home
into the home currency of the seller. This fee is typically 1percent of the amount of the
transaction. CCY conversion fees are sometimes called"foreign exchange fee" or "foreign
exchange fee" or "foreign currency conversion fee".

You might be asked if you would like to convert your purchase into your home currency when
you shop in foreign shops. If you give your consent to this, the store's POS will change the
cost of the purchase to the currency of your home country using Dynamic Currency
Conversion.

While this may seem like an ideal idea as it lets you see the price of your purchase in the
currency of your choice in a matter of minutes (instead waiting for your credit card invoice),
there are some disadvantages. The DCC could not offer the best exchange rate and an
additional charge for service is added. To top it off, you could pay up to 12% to cover the cost
of transaction.
If, however, DCC is rejected and you make payment using your credit card, the exchange
rate is the rate that is charged to the card company. The rate is usually excellent. However,
in the credit card account statement, it could be concealed in the foreign transaction fee.

If you do not want to use DCC for any reason, then ensure you have a currency conversion
app in your pocket to know the amount of the purchase in your home currency. If you don't
have a conversion application, you won't be able to be able to determine the cost until the
credit card statement is received.

A currency converter app is a must-have. This will allow you to do an easy calculation in your
head to know how much your purchase will cost in your local currency.

The credit card companies are expected to show exactly how much is being charged. If a
statement shows a foreign exchange fee of 3% then the 2% amount is the actual foreign
transaction fees and 1% will correspond to the conversion fees.

Most of the time, DCC is much higher than going through the currency conversion offered by
your credit processor.

Do I have to stop using DDC?

To avoid paying any additional fees and additional charges, you should decline DDC. You
may also utilize a currency converter app that will convert the foreign currency cost to your
home currency. This will give you an estimation of the cost of the purchase. Why do you
have to pay for additional DDC costs?

aleta planet forget that credit card companies negotiate favorable exchange rates for foreign
currencies, which means you will get a favorable conversion rate. This is much better than
using DDC.
It's also recommended to pay for your purchases in the local currency, if possible.

To make purchases in local currency, you'll need local currency or look for an ATM with a
reliable bank to receive an exchange rate that is acceptable. As you'll be charged each when
you go to an ATM, ensure that you don't visit too many. In order to cover any potential
purchases take out enough cash at to cover the cost one time.

What is the Cross Currency Conversion Cost?

To understand how ccy conversion fee is important to first be aware of the fees for foreign
transactions. A foreign transaction fee is the cost that is imposed for purchases made with
credit cards using a currency which is not the currency used by the card.

It's an additional cost that card companies and banks add to the CCY exchange fee for
international transactions. Foreign transaction fees are typically assessed at 2 to 3 percent of
the transaction.

For instance, when you withdraw funds from purchases in the amount of $1000 using your
debit or credit card, you'll pay an additional $30. Your card issuer may charge a three percent
fee for foreign transactions. You can also perform ATM transactions without paying an
additional transaction fee.

The foreign transaction cost may include the CCY converter fee in some circumstances. The
combination of the foreign conversion fee along with foreign transaction fees may result in a
single foreign payment fee.

But, certain credit cards and providers offer cards that don't require an international
transaction fee. Contact your bank to find out if they have the option to not charge a fee for
foreign transactions.
Common purchases subject to a foreign transaction charge are:

Tickets for flights with an international airline

Shopping online on an international website

International ATMs

How can I avoid paying the Foreign Transaction Fee?

After you have a better understanding of what international transaction fees are You may be
wondering how to get them out of your way. There are some ways that will help you avoid
paying foreign transation fees. These include:

Local Exchange of Currency

To keep from paying international or foreign fee for currency, it's ideal idea to exchange
currencies before you leave for your trip. Determine the approximate cost of your journey or
purchase, and then convert the money at a local branch. There might be a credit union or
bank that provides an acceptable exchange rate. There is no need to pay additional costs for
exchange rates. If you're traveling to countries such as China however, which is a country
with modern mobile payment options and a largely cashless society the advice above would
not be relevant. A card like AP-1 is able to accept payment via QR codes as well as the
direct SGD to RMB currency conversion (using funds from your AP-1 Virtual Card) at the
point of purchase.

How to identify Foreign-Friendly Banking Institutions

Foreign-friendly banks are best if you do not want to pay the foreign transaction cost. It is
important to inquire with your bank about whether they are able to issue a credit card with no
foreign transaction fees. There is no need to pay the foreign transaction fees if you have one
of these cards.
Beware of ATMs in foreign countries.

A second way to avoid paying the foreign fee is to make payments in local currency. This
isn't always possible because of restrictions on the amount of money that you can bring into
the country of your choice.

You can also use the ATM at a reputable bank to withdraw local currency, which you then
can use locally. Avoid foreign banks whenever you can, and also find out if your bank is a
partnership with the foreign bank. It is preferential to complete big transactions one-to-one
rather than a number of.

Get a Credit Card for Free

You can also save money on foreign transaction costs by using credit cards that do not
charge fees for international transactions. With these cards, it is possible to shop overseas
and make transactions without worry that you'll be charged more.

You can also choose to use a reputable credit card from a reputable company that forces
retailers to pay the correct CCY charges. A currency conversion app is recommended to help
you determine the value of your purchase in the local currency.

What are the costs? Who charges them?

Here are some facts to give you an idea of the costs that will be charged and what the costs
will incur.

Fee : Foreign Transaction

Charges for international credit card transactions

Issuer imposes

Estimated rate : 2% to 3%
Fee: Currency Conversion

Excluded from: Currency Conversion for Overseas.

Processor Processing

Average rate 1 percent

Charge for Dynamic Currency Conversion

Implied on: Point-of-sale conversions to foreign countries

Merchant is able to impose

Approximate rate : 3 - 12%

Be aware when you purchase in the country of your choice. Knowing the different fees and
what they cover can help you have more control over the cost of your overseas trip.

If you make purchases in a foreign nation or on the internet from an international retailer,
CCY conversion fees are unavoidable. You may be able to avoid the fee for foreign
transactions in certain situations. This is however only possible if the processor is willing to
waive any fees for foreign transactions. Before you make international purchases make sure
you check with your card's processing company.

And, we would advise you that you must never decline DCC because it will make your
purchase more expensive. Refuse DCC and you might be faced with CCY conversion costs
and a foreign transaction fee which could amount to 3-4 percent of the price of your
purchase.
For transactions within China or payment to China there is a good option that is cost-effective
and simple to use.

The AP-1 Business is a Cost-Effective and Transparent Alternative

A virtual card that supports multiple currencies such as the AP-1 Business card is a great
way to pay into China. It's simple and effective. What it does is:

AP-1 business is fast. It means the payment you make to your Chinese vendor or supplier is
able to bypass the intermediary banks that most banks that offer telegraphic transfers
employ. The money is immediately deposited to the account of the receivable UnionPay bank
account. It's only T+1.

The AP-1 Business prices are comparable to bank charges however, it offers an exchange
rate that is competitive with UnionPay. There isn't double conversion between SGD to USD
or RMB as some banks do.

AP-1 business is easy to set up and you can complete the process on your phone.

The sole digital business account outside of China that allows payments with T+1 is the AP-1
Credit Card. It's faster than telegraphic transfer that banks offer. They typically have several
fees, and they can allow payments of up to T+5.

This allows you to make payments online or offline to China as a Chinese local could. It's
simple to top-up your AP-1 account , or add funds. The AP-1 credit card works with
UnionPay. You can transfer funds to a UnionPay personal account holder in China or across
the globe in less than 60 seconds.
At present, AP-1 only supports USD and SGD. However, more currencies will be soon
added.

For more details on the AP-1 Business virtual card, visit the official website.

Conclusion

There is a CCY fee and an international transaction fee whenever you make purchases or
perform transactions in a foreign nation. The CCY conversion and foreign transaction fees
are two different fees , and can't be used interchangeably. Certain cards do not charge fees
for foreign transactions. Check with your provider for this.

The AP-1 Business virtual card allows you to transfer money into China more quickly than
banks can. Are you a business owner that would like to send money to China? Get your AP-1
Business Virtual Card now!