How f irms rip you off abroad by making you pay in pounds

HOTELS, airlines and supermarkets are raking in hundreds of millions of pounds from unsuspecting tourists by inviting them to pay in pounds overseas.

Known as dynamic currency conversion, the ruse happens at the till in popular destinations such as Spain, France and Italy when someone uses a credit or debit card.

Among the firms based abroad which levy the charge are small shops, major supermarkets, airlines, car hire firms such as Europcar, and banks including Santander.

At payment, customers are asked whether they want to be charged in pounds or the local currency.

The retailer will then use its own exchange rate and fees when it converts the transaction from the local currency to sterling. This is typically far higher than would be charged by the customer’s own bank.

In some cases firms force customers to pay in pounds without giving them the choice of paying in local currency.

It is only when shoppers return home that they discover they have been hit with huge charges of up to 10 per cent.

According to an analysis conducted for the Mail, a family of four taking a typical fortnightlong holiday abroad could effectively be hit with a bill for an extra £427.

The amount British tourists are losing in these charges has ballooned by 26 per cent in a year to £380 million, said the currency firm FairFX.

Combined with the fees levied by their own bank for using their card overseas, it means holidaymakers are being hit with eyewatering sums.

Ian Strafford-Taylor, chief executive of FairFX, said: ‘Dynamic currency conversion is often nothing but a hyper-inflated ripoff, duping holidaymakers to pay unnecessary fees and accepting unfavourable exchange rates.

‘The worst part is that the holidaymakers are actually trying to get the best deal but instead, are losing out and, as a nation, we’re being fleeced to the tune £380 million each year.’

The rip-off’s explosive growth has been sparked by contactless technology, which allows customers to pay for an item by tapping their debit or credit card on a terminal instead of having to enter a PIN.

James Daley, managing director at consumer website Fairer Finance, said: ‘The key thing is not to pay in pounds if you are offered the opportunity to do so. If you pay in the local currency, at least you know you are only being charged your own bank’s fees. And if you are taking credit cards with you, it can be virtually nothing.’

In a further blow to holidaymakers, they can face fees from their own card firm of about 2.99 per cent for using their card abroad. Analysis by currency firm Caxton found that a family of four could be hit with a £427 bill if they paid in pounds every time they were invited to pay in pounds, and hit with a 5 per cent fee, over two weeks in Spain.

They would also face fees from their own bank of about 2.99 per cent, the analysis showed.

This total involves two meals a day, visits to a local attraction, drinks, ice creams and car hire for the fortnight.

Santander said it offered British customers the chance to pay in pounds. Europcar said many holidaymakers requested to be charged in their own currency, which was why it made the option available.