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Everything You Have to Know About CCY Conversion Fee

Most often, the terms "cross currency conversion fee (CCY)," and "foreign transactions fee" are interchangeable. But they're not the identical.


The processor of credit card payments is charged a CCY conversion fee when you purchase goods or services in a currency other than the one you are using using your card or debit card. Foreign transaction fees, on the other hand, is due to the credit card issuer when you make purchases at an international merchant, whether on the internet or within the country of the merchant's home.




In this article, we'll concentrate on the CCY fee for conversion, how it works, and also a better alternative.




What is an Cross Country Conversion Fee


If you purchase items from a foreign-based merchant's store and then pay with your debit/credit card, payment is processed in the merchant's home currency. In these cases the CCY charge for conversion could be imposed by the merchant or by your debit/credit card processor.




Currency conversion fees are costs to convert your currency into the currency of the seller. The fee is usually one percent of the amount of the transaction. CCY conversion fees are sometimes called"foreign exchange fee" or "foreign exchange cost" or "foreign currency conversion fee".




When you shop in the foreign market, you may be asked to convert the purchase amount in your currency of home. If you agree that the merchant's POS will convert the amount you paid into the currency you use in your home country with Dynamic Currency Conversion.




While it may appear to be a good idea as it allows you to see the price of your purchase in the currency of your home immediately (instead of waiting for the credit card invoice) however, it comes with a cost. In addition to DCC not providing a satisfactory exchange rate, a service charge is added. The cost of the transaction could be up to 12 percent.




But, if DCC is declined and you pay with your credit card, the exchange rate is the rate paid to your card's provider. The rate is usually a good one. This could be hidden in the foreign transaction fees on the credit card statement.




If you decide to decline DCC for any reason, then ensure you have a currency conversion app handy so that you know what the price of your purchase is in your home currency. It is not possible to determine the amount until you receive your credit statement from your card.




A currency converter application is a must-have. This will enable you to do a quick calculation and find out how much the cost of your purchase is in your currency of choice.




Credit card companies should be able to clearly show how much was the amount they were charged. So, if a statement shows a foreign transfer fee of 3% then 2% would correspond to the actual foreign transaction fee and 1% is equivalent to the fee for conversion of currency.




In general, DCC is much higher than the conversion of currency that is offered by the credit card processor.




Should I Decline DDC?


To avoid additional charges In order to avoid any additional costs, avoid paying DDC. A currency converter app can be utilized to convert the purchase price at foreign stores into the currency of your country. Then you will have an accurate estimate of the price of purchase in your currency. Why pay the extra DDC costs?




Credit card companies provide attractive exchange rates for foreign currency that means you will receive an excellent conversion rate. This is much better than using DDC.




If you are able, you can make your purchase in local currency.




In order to make purchases using local currency, you need to have enough local currency, or locate an ATM at a reputable bank to get an acceptable exchange rate. Make sure you do not make too many visits to an ATM, as you'll be per visit charged for using it. Make sure you withdraw enough cash in one go to cover any purchases that you could make.




What's the way a cross Currency Conversion Fee Function?


We must first know what the foreign transaction cost is so that we understand how the CCY convert fee functions. Foreign transaction fees are charged for purchases made with credit cards that use currencies other than the currency of the home country.




The fee is an extra charge that banks and credit card companies can add to the CCY converter fee for transactions carried out abroad. It typically ranges from approximately 2% to 3.3 percent of the transaction. However, it can vary.




A $30 surcharge will apply to all purchases that exceed $1000 using a credit or debit card. This is in the event that your card issuer has the foreign transaction with a 3% fee. It is also the case if you perform transactions using ATM transactions that charge fees for transactions.




In certain instances it is possible that the CCY conversion fee could be hidden in the foreign transaction fee. Combining the foreign conversion fee with the foreign transaction fee can result in one foreign payment fee.




There are a few credit cards and card providers who don't charge fees for foreign transactions. You need to check with your bank to see whether they have the option of not charging an international transaction fee.




Some common purchases that incur an international transaction fee are:




Tickets to flights on an international airline


Shop online on an international website


International ATMs


How can I avoid foreign transaction fees


Once you know what international transaction costs are, you may be wondering what you can do to avoid them. There are numerous methods to reduce foreign transaction costs. These include:


<img width="490" src="https://www.aletaplanet.com/wp-content/uploads/2021/05/merchantfees.jpg" />



Local Exchange of Currency


To keep from paying international or foreign currency fees, it's a best practice to exchange currencies prior to you leave for your trip. Calculate the estimated cost of your trip or purchase, and then convert the currency at a local branch. There may be a bank or credit union that offers a fair exchange rate. It is not necessary to pay any additional costs for exchange rates. This isn't the case in the case of China as it has modern mobile payment options and is a mostly cashless country. You may be better off with a credit card like the AP-1, that supports the use of QR codes and the direct SGD RMB conversion (using the funds available in your virtual AP-1 card) at point of purchase.




How to Identify Foreign-Friendly Banking Institutions


The best way to avoid having to pay the foreign transaction fee is to identify banks that are foreign-friendly that do not charge foreign transaction charges. It is a good idea to inquire with your bank whether they can choose to issuing a card that does not charge the fee. Some cards do not charge you the foreign transaction fee.




Beware of Foreign ATM


You could also avoid paying the foreign transaction cost by making your payments in foreign currency. However, this may not be feasible as there are limits to the amount of currency you can carry around in a foreign nation.




A good alternative is to make use of the local ATM at an accredited bank to withdraw local currency which you can then use to pay locally. Do your best to avoid foreign banks and determine whether your local bank has been in partnership with the bank of a foreign country. It is best to conduct big transactions one-to-one rather than a number of.




Get a free credit card


A credit card that does not charge foreign transaction fees is a different way of avoiding having to pay large foreign transaction fees. These cards allow you to shop internationally and to make international transactions without having to worry the possibility of being charged more.




Another option is to use one that has an excellent reputation and ensures compliance with CCY charges. We recommend you utilize an app that converts currencies to figure out how much you paid in your local currency.




What is the cost? Who charges them?


These details will provide you with an idea of the different costs and the individuals who are being charged.




Foreign Transactions Fee


Imposed on : Credit card transactions


Issuer: Obsessed


Rate approximative: 2% - 3.3%




Fee : Currency Conversion


Imposed on : Overseas Currency conversion


Processor: Imposed


Rate approximativeof 1%




Fee Dynamic Currency Conversion


Imposed on : International point-of-sale conversion


Merchant demands


Average rate: 3 to 12%






Be mindful when buying items in a foreign country. Knowing the different fees and what they cover will give you more control over costs of your overseas trip.




CCY conversion fees are applicable to purchases made from foreign countries or online from international stores. In certain situations you may be able to avoid the foreign transaction charge. But that only happens when ccy conversion fee is willing to waive the fee for foreign transactions. Consult with your card's processor before making any international purchases.




We recommend that you decline DCC as it could raise the cost of your purchase. You may decline DCC, but you might be required to pay CCY conversion charges or a foreign transaction fee that can amount to 3 to 4 percent of the price of your purchase.




If you are looking for transactions in China or for payments to China There is an option that is inexpensive and easy to use.




An Affordable, Transparent Choice: A-1 Business


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


The AP-1 Business process is swift. Your payment to your supplier or vendor in China is made without the intermediary banks that traditional telegraphic transfers in banks make use of. It only takes T+1 for you for the money to directly transferred to the receivable's UnionPay account.


The AP-1 Business fee is similar to the fees banks charge, but with competitive and direct exchange rates with UnionPay (no double conversions from SGD to USD to RMB like some banks have).


AP-1 Business is simple to set up, you can do it entirely from your mobile.


The only digital business account outside of China which allows transactions with T+1 is the AP-1 Credit Card. It's much faster than telegraphic transfers that are issued by banks. These normally have several fees, and they can allow transactions of up to 5 T+.




This allows you to easily make payments online or offline to China similar to how the Chinese local can. It's easy to top off your account with AP-1 or transfer money. The AP-1 card works with UnionPay. You can transfer money to an UnionPay personal account-holder in China or globally within 60 minutes.




Currently, AP-1 only supports USD and SGD. However, additional currencies will be added in the near time.




The website has more information about the AP-1 Business Virtual Card.




Conclusion


You'll be charged CCY fees and a foreign transaction charge when you purchase or make transactions in a different country. The CCY conversion and foreign transaction fees are different charges, and they cannot be interchanged. Some cards do not charge an international transaction fee. Check with your provider for this.




The AP-1 Business Virtual Card allows the transfer of money to China quicker than banks. Don't hesitate to apply for your AP-1 Business Virtual Credit Card today if you are an entity looking to conduct payments to China.


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