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This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto. Even the people who claim to offer raw spot market rates (i

This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto. Even the people who claim to offer raw spot market rates (ie. Interactive Brokers), in fact do not offer that. I would not be surprised in Visa & Mastercard do the same--although they claim otherwise.

triceratops 4y ago
Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.
- Denatonium 4y ago
  When I took my Schwab debit card to Europe, the exchange rates that I got were identical to the ones posted on Visa's website, suggesting that it's Visa doing the ForEx conversions. A lot of banks do charge a percentage fee on top of Visa/MC's exchange rate, but my bank does not.
  - Cyph0n 4y ago
    Schwab and Fidelity debit cards are the only ones that do this AFAIK. In addition, you get unlimited ATM fee rebates, even outside the US. I’ve stopped taking cash home and instead withdraw from my Schwab account :)
- dkjaudyeqooe 4y ago
  Visa/MC are doing the conversion, and that does makes sense to me given their central position in the transactions. There are (basically crooked) originating (I think that's the right word) banks/payment processors that convert it for you, with a 3% plus spread. Paypal is the most egregious in this category. The rewards are funded by the banks via interest income. 3% cashback cannot be covered by interchange fees, for instance.
- avianlyric 4y ago
  Visa/MC do the conversion, but it’s not unusual for banks to tack on extra fees. Additionally banks can choose to settle in multiple currencies, and handle the FX themselves. VISA/MC do offer the spot rate. But the idea of a spot rate is a little iffy anyway, as it assumes that there’s a counterparty willing to sell/buy at that price, and at the volume you want to transact at. When you’re operating at MC/VISA scale, that isn’t a given, and neither of them are interested in taking on FX risk. So their spot prices will be close, but likely not identical to spot prices you might find at other FX providers. Over the long term though, I would expect any delta to balance out.

triceratops 4y ago

Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.

Denatonium 4y ago
When I took my Schwab debit card to Europe, the exchange rates that I got were identical to the ones posted on Visa's website, suggesting that it's Visa doing the ForEx conversions. A lot of banks do charge a percentage fee on top of Visa/MC's exchange rate, but my bank does not.
- Cyph0n 4y ago
  Schwab and Fidelity debit cards are the only ones that do this AFAIK. In addition, you get unlimited ATM fee rebates, even outside the US. I’ve stopped taking cash home and instead withdraw from my Schwab account :)
dkjaudyeqooe 4y ago
Visa/MC are doing the conversion, and that does makes sense to me given their central position in the transactions. There are (basically crooked) originating (I think that's the right word) banks/payment processors that convert it for you, with a 3% plus spread. Paypal is the most egregious in this category. The rewards are funded by the banks via interest income. 3% cashback cannot be covered by interchange fees, for instance.
avianlyric 4y ago
Visa/MC do the conversion, but it’s not unusual for banks to tack on extra fees. Additionally banks can choose to settle in multiple currencies, and handle the FX themselves. VISA/MC do offer the spot rate. But the idea of a spot rate is a little iffy anyway, as it assumes that there’s a counterparty willing to sell/buy at that price, and at the volume you want to transact at. When you’re operating at MC/VISA scale, that isn’t a given, and neither of them are interested in taking on FX risk. So their spot prices will be close, but likely not identical to spot prices you might find at other FX providers. Over the long term though, I would expect any delta to balance out.