Tourists who pay in sterling abroad lose £500 million

TOURISTS are losing up to £500million a year by opting to pay in sterling when making card purchases abroad.

Shops, restaurants and cash machines often ask customers to decide whether to pay in pounds or local currency but a poor exchange rate is applied to those who opt to pay in sterling.

The lower exchange rates are equivalent to charging six per cent per transaction. Overall, this costs British holidaymakers around £500million a year, an analysis by the BBC has found. In some cases, if the exchange rate is not displayed, tourists can be left in the dark about the extent to which they are being ripped off.

James Hickman, of currency trader Fairfx, said it was “abhorrent” that tourists should be charged such high fees, adding that any extra charges should be capped.

The charges are so high in the Netherlands that Dutch consumer organisation Consumentenbond is urging visitors to take extra care. “Let me warn those that are offered to pay by card – don’t do it,” said Sandra de Jong, a spokesman for Consumentenbond.

Giving the option to pay in Sterling – known as dynamic currency conversion – is legal in the UK and across Europe, as long as traders display the exchange rate being used before the payment is made. Earlier this month, the Government said “rip off” card fees would be banned, and paying by card would be free for consumers from next year.