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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