How To Dodge Foreign Transaction Charges For Online Media

How To Dodge Foreign Transaction Charges For Online Media
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Games and media purchased online can seem like a bargain, but there’s often a nasty sting in the form of credit card charges. Here’s some strategies to avoid the worst cases of sticker shock.

Last week, we reported on an annoying issue for Windows Phone 7 customers purchasing apps for their shiny new devices. While prices on the Marketplace are quoted in Australian dollars, Microsoft actually processes the transactions in Singapore. This means that a foreign currency transaction fee is often applied to the card, even though from the user’s perspective no conversion has taken place.

Whether you actually get hit with a charge appears to depend on the type of card you have. While Microsoft seems to be the newest offender, it isn’t the only guilty party: readers report occasional similar issues with Sony’s PlayStation Network store.

For any transaction quoted in Australian dollars, getting hit with a “foreign transaction” charge seems entirely unjustified. It’s particularly noticeable with digital media and apps because the transaction charge can often be as much or more than the actual cost of the content itself. That’s enough to make many users curtail their purchases through such stores, which we doubt is what the developers had in mind. If you’re deliberately using an overseas media store (to gain access to content not released in Australia), it’s also something to bear in mind.

Strategies to adopt

Checking credit card statements carefully is your first line of defence against these unwanted expenses. After you’ve made a purchase from any app or media store that you haven’t used before, look up what has actually been charged on your card. Online banking means you shouldn’t have to wait a whole month to see those details, though credit card charge details still often don’t appear online until 24 hours or more after going through.

Banks differ in how they list charges. Some break out foreign transaction charges as a separate item, but don’t always list them next to the relevant expense (my bank bundles them all in a block at the end of each monthly statement, which can make them hard to notice). Others incorporate currency conversion and foreign exchange into the overall amount, so they won’t necessarily stand out.

You can’t do much about the charges after you’ve been hit with them, though sending a polite complaint email to the provider of the service certainly won’t hurt. You might also consider writing to the ACCC; while retailers are generally allowed to impose surcharges associated with payment methods, they have to make it clear that they are doing so. Offering a price in Australian dollars but then imposing a foreign currency charge arguably doesn’t meet that requirement for transparency.

Presuming you want to consider using the Windows Phone 7 app store (or any other offending site), you have a few possible options. One is to identify a credit card that doesn’t impose foreign currency transaction charges. On our previous post, one reader suggested Wizard’s ClearAdvantage card as a good option in this regard. Another is to try and make purchases in larger groups, rather than one app or content type at a time, so that you don’t get an individual charge for each item. The design of many online stores can make this difficult or impossible, however.

Using non-credit card alternatives (such as gift cards or charging to your phone bill) is the other obvious possibility if it is offered, which has the additional benefit of not requiring you to share your credit card details. Sometimes, you might not have much choice; if you have set up a US iTunes account, for instance, topping it up with iTunes card credits is your only effective alternative.

Got your own tricks for avoiding foreign transaction fees? Let’s hear them in the comments.

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  • “Offering a price in Australian dollars but then imposing a foreign currency charge arguably doesn’t meet that requirement for transparency.” <-- Is this really the fault of the retailers? I was under the impression that currency exchange was charged by the card provided to the customer. Retailers don't have any control over this as far as I'm aware as the retailer is not involved with that part of the transaction. The credit-card auth system does not report to the retailer if any exchange charges were done in the background, it just reports "success" or "failed". This is of course distinctly different from retailers passing on the % fee associated with using a credit card - I don't think I've ever seen an online retailer that does this though.

  • Whilst it is not the retailer that charges the fee, it should be incumbent on the retailer to specify at the time of the purchase where the transaction will be processed, especially when purchasing from an Australian website in AUD. Unless they already have you express consent to send your personal data overseas, they could be breaching the privacy act. (Most hide this deep within the terms of use though).

  • Wizard’s card is now becoming a card with a chip called 28 degrees. All current customers are getting the new cards in the next format. Might be losing the “Wizard” moniker as well.

    I have one of the Wizard cards, and I also have a NAB Gold Banking account, which does the same job but it is Visa Debit so it is my own money. I tend to use the NAB card more.

    I am constantly travelling so it is great overseas. Just remember to move $5 into your NAB account each month otherwise you get whacked with a $10 account fee. Don’t worry, you can move it out bank into your savings again straight away (I use ubank for that)

  • The Wizard clear card is being rebranded 28 degrees, as they sold the rights to the wizard name during the financial crisis. Still no currency conversion or annual fees, plus its getting pay pass. the tap and go for purchases under 100 thing at JB hifi.

  • I moved to Australia and I am in shock that anybody puts up with the excessive no reason what so ever “international transaction fee”. FYI … I lived pretty much everywhere around the world and had bank accounts with cards issued and this is the first time I heard about this. Australian banks are ripping you off for bogus charge which no card company charges and trust me I had VISA, AMEX and MasterCard in other countries. What is insult into the injury here is there is no cap on the charge. The FX difference the bank maybe exposed is minimal if they charge you with the FX rate used by the card system. So could be zero cost for the bank. That is how it is done in the civilised world.

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