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All you need to know about the CCY Conversion cost

In most cases, the words 'cross currency (CCY) conversion fee' as well as 'foreign exchange fee' are often used interchangeably. But they're not the exact same.


The processor for credit cards will charge a CCY conversion cost when you purchase products or services in a foreign currency by using your credit or debit card. The credit card issuer will charge a foreign transaction fee when you buy online from foreign merchants.




This article will discuss the CCY Conversion Fee, the way it operates and a possible alternative.




What exactly is Cross Country Conversion Fee?


If you buy something from the location of a foreign retailer and make payment with your credit or debit card the transaction is processed in the local currency of the merchant. The retailer, or the debit/credit card processor, may charge you an CCY conversion cost.




Conversion fees are cost of converting your currency into the currency of the seller. The typical fee is 1%. CCY fees for conversion are often called"foreign exchange fee" or "foreign exchange cost" or "foreign currency conversion fee".




When purchasing in a foreign store it is possible to be asked if you want to convert the purchase amount to your home currency. If you give your consent to this, the store's POS will convert the purchase price into your currency at home using Dynamic Currency Conversion.




Although this might seem like an excellent idea because it allows you to view the price of your purchase in the currency of your home instantly (instead of waiting for the credit card invoice), it comes at costs. Additionally the DCC could not provide a favorable exchange rate. You could end up paying as much as 12% on the cost of transaction.




However, if DCC is denied when you pay with your credit card, the currency exchange rate is the one charged to your card provider. This rate is generally an excellent one. It could also be concealed in the foreign transaction fees on the credit card statement.




If you do not want to use DCC ensure that you are using a currency converter application so that you can know the cost of your purchase in the currency of your home. You won't know the amount until you receive your credit statement.




It is strongly recommended that you have a currency converter app or at the minimum be aware of the exchange rate currently. This will allow you to do the quick calculation that will let you determine how much your purchase costs in your home currency.




Credit card companies are supposed to clearly state the amount that is charged. If the statement indicates that a foreign transaction charge of 3percent, then 2 percent would represent the actual foreign fee and one percent is the cost of currency conversion.




DCC generally is much greater than the conversion of currency offered by your credit processor.




Do I have to stop using DDC?

<img width="343" src="https://www.aletaplanet.com/wp-content/uploads/2021/05/merchantfees.jpg" />


To avoid additional fees To avoid additional charges, be sure to decline DDC. Additionally, you can use an application that converts currency and converts the price of foreign currency to your home currency. This will give you an estimation of the price of the purchase. Why should you pay additional DDC charges?




Credit card companies can negotiate favorable exchange rates for foreign currencies and, therefore, you will get an excellent conversion rate. This is much better than using DDC.




Try to buy the item in local currency, when you can.




For ccy conversion fee in local currency you'll require enough cash or an ATM at an established bank. As you will be charged each when you go to an ATM, be sure you don't go to too many ATMs. You should withdraw enough cash in one go to pay for any purchases you may make.




How does a cross-currency conversion fee perform?


To fully comprehend how the CCY converter fee works, it is necessary to first understand the foreign transaction fees. Foreign transaction fees are the charges for purchases made in foreign currencies using the use of a credit card.




The fee is an extra cost that banks or credit card companies charge in addition to the CCY convert fee for transactions that are made outside of the country. It is generally charged at about 2% to 3.3% of the transaction, but it is subject to change.




A $30 surcharge will apply to all purchases that exceed $1000 using a credit or debit card. If the card issuer you have chosen to use charges you a 3% foreign transaction fee, this is the case. This is also the case when you perform transactions using ATM transactions that require fees for transactions.




The foreign transaction charge may comprise the CCY conversion fee in certain instances. The combination of the foreign conversion fee along with foreign transaction fees may result in one foreign transaction fee.




But, certain credit cards and companies offer cards that don't have the foreign transaction fee. To determine if your bank offers foreign transaction fees without charge, consult them.




Common purchases that trigger fees for foreign transactions include:




Fly with an international airline and receive flight tickets


Shopping online on an international site


Use international ATMs


How to Avoid Paying Foreign Transaction Fee?


You're probably interested in knowing ways to stay clear of foreign transaction charges now that you have an idea of the nature of them. Yes, there are ways to help you avoid paying foreign transation fees. The following are the methods:




Local Exchange of Currency


To avoid international or foreign exchange charges, it's an excellent idea for travellers to exchange currency prior to travel. If possible, calculate the anticipated cost of your travel or purchase and make a plan prior to the time by exchanging currency with a local bank. You may be fortunate enough to find a local bank or credit union that provides an exchange rate that is fair and doesn't require you to pay any additional fee for exchange. If you're travelling to countries such as China however, with advanced mobile payment practices and is mostly cash-free This advice may not be relevant. It may be better to use a card such as AP-1 that permits QR code payment or direct conversions from RMB to SGD (using the money in your AP-1 virtual cards) at the time of purchase.




Identify Foreign-Friendly Banks


The best way to avoid paying the foreign transaction cost is by identifying foreign-friendly banks that do not charge foreign transaction charges. It is worthwhile to ask your bank if they are able to issue a credit card that has no foreign transaction cost. It is possible that you will not need to pay the foreign transaction charge if you have one of these cards.




Avoid Foreign ATM


You can also avoid the transaction fees for foreign transactions by paying using foreign currencies. This might not be possible because of restrictions on the amount of currency you are able to bring into the country of your choice.




Another option is to use an ATM in your local area of a bank that is reputable to withdraw local currency that you can then use to pay locally. Try as much as possible to avoid banks that are foreign and check whether your local institution has an agreement with the bank of a foreign country. It is better to do big transactions one-to-one rather than a number of.




Find a free credit card


A credit card that doesn't charge foreign transaction fees is another option to avoid paying hefty foreign transaction charges. Credit cards let you shop internationally and make international transactions without worrying whether you'll be charged more.




You can also get a reputable credit card from a reputable company that forces merchants to follow the proper CCY charges. Also, we suggest that you use a currency conversion app to know what the cost of your purchase is in your local currency, rather than using DCC.




What are the costs and who are the people who charge them?


Here are some specifics to provide you with an idea of what will be charged and the charges they will incur.




Fee : Foreign Transaction


Imposed on : International credit card transactions


Issuer: Imposed


Approximation of rate: 2 3 3.3 percent




Fees for Conversion of Currency


Conversion to Overseas Currency is subject to a surcharge of 10%.


Processor enforces


Average rate 1 percent




Cost for Dynamic Currency Conversion


Impose : International point of sale conversion


Merchant: Implied


Rates approximative: 3 - 12 %






Be aware when you purchase in any foreign country. Be aware of what the different kinds of fees are, who imposes them, and what the rates are so you can have more control of what you're paying for when you go on an overseas trip.




CCY conversion charges apply to purchase made in foreign markets or on the internet from international retailers. Sometimes, the charges for transactions in foreign countries are eliminated. This is however only possible if the card processor has waived any foreign transaction charges. Check with your card processor before you make any international purchases.




We'd also like be sure to remind you that DCC is not a way to increase the cost of purchasing. It is possible to decry DCC, but you might be required to pay CCY conversion costs or a foreign transaction charge that could amount to 3 to 4 percent of your purchase price.




If you are looking for transactions in China or payments to China there is an excellent option that is affordable and simple to use.




The A-1 Business is a Cheap and transparent option


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. Here's what it can do:


AP-1 Business is fast, the money you pay to your supplier or vendor in China avoids intermediary banks that are typical for telegraphic transactions that banks use. It takes just T+1 to have your money directly transferred to the receivable's UnionPay account.


The costs for AP-1 Business are similar to the bank's charges however, it offers the most competitive exchange rates offered by UnionPay. There isn't double conversion between SGD to USD or RMB as some banks do.


AP-1 business is simple to set up, and you can do it all using your smartphone.


The AP-1 Business card is the only digital business account that's issued outside of China to permit payments up to T+1. It is quicker than telegraphic transfers issued by banks. Telegraphic transfers generally incur several fees. This could make it easier to pay up to T+5.




This allows for you to pay online or offline to China in the same manner as a Chinese native can. It's very simple to load funds into your AP-1 account. Furthermore the AP-1 card integrated with UnionPay. In just 60 seconds, funds will be transferred to a UnionPay personal account holder in China or anywhere else in the world.




At present, AP-1 only supports USD and SGD. However, additional currencies will be added in the near future.




The website provides more details regarding the AP-1 Business Virtual Card.




Conclusion


Foreign transaction costs and CCY conversion fees are applicable to transactions conducted in foreign locations. Foreign transaction fees and CCY conversion fees are distinct charges. They are not interchangeable. Some cards may waive the foreign transaction fees. Contact your card provider for more information on this.




The AP-1 Business Virtual Card allows the transfer of money to China faster than banks. Are you a business owner that wants to send money to China? Apply for the AP-1 Business virtual card today!


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