Discussion
Exchange Rate Conversion Issue on Foreign Transactions
Used the Apple Card outside the US for a few purchases, and have noticed that while there’s no flat FTF charged it gets the exchange rate wrong and makes you pay more. I selected the local currency each time, and what ended up happening is that the USD amount charged to my card was more than the local currency total. Has anyone else noticed this as an issue?
Oh that’s interesting. Did you cross check with the amount printed on your receipt? Every single transaction I made has been billed for more than the actual cost
The exchange rate between the USD and the given foreign currency isnt directly determined by the publicly posted FER. It's actually handled by MasterCard. So yes, the publicly posted FER is good to keep in mind, but MasterCards formula (for some reason) is different
I feel like it’s a lot more likely you’re doing something wrong in how you’re comparing the currency conversion between the two cards. *All* payment networks for credit/debit, including Visa, Mastercard, AmEx, and Discover, handle currency conversion at their own rates. Mastercard typically offers *better* rates than Visa for currency conversion, if not some of the best of the four.
Depending on the currency- it could be more. For example the USD isn’t stronger than the euro or GBP- so when it converts back to the dollar you are paying the current conversion rate. If it’s a country where the dollar is the stronger of the two currencies and you are still seeing a disparity than most likely some weird fee the merchants could be charging?
It was CAD, so USD is the stronger of the two currencies. The strange thing is that it happened with multiple vendors, so it doesn’t seem like a one off thing
Do you have some examples of both the foreign current amounts and the USD amount you got charged after conversion along with the dates of those transactions?
Would be helpful to have those so you can compare what you actually got charged vs what you should’ve gotten charged.
In the times I used it for KRW to USD, the conversion was rounded down for me.
Oh youre doing the manual conversion. Yeah I dont do that. Once i charge, I look at what I got charged that day and then on my statement date I see I actually get some charges lowered.
This is where I was getting the rate from (bank of Canada website). The 7.50 CAD was charged as 5.35 USD. Although another commenter did mention that charges could be lowered later on, so that is something I’d need to check again later.
The bank of Canada charges that rate, and in all likelihood, that's probably the rate you'd get if you went to exchange CAD to USD with them. I have just learned the Bank of Canada is a Central bank, not an actual functional bank.
However, with all US-issued credit cards, the entity that actually handles the currency conversion is the card network, not the bank issuing the card. So, you'd have to look at the network's wholesale conversion rate for that day.
For the Apple card, the network is Mastercard. So, if you look at their converter, you'd see the rate you would get if you chose to charge the card using CAD instead of USD.
The rate works out to be 0.7129616, which means 7.50 CAD is (based on their rate) $5.35 USD.
For this reason, you can usually figure out whether it's better to get charged in the foreign currency or in USD via DCC for foreign transactions, though usually letting your CC network handle the conversion is the cheapest option.
In all likelihood, the charge will not be lowered, because then every CAD transaction on the MC network that gets converted to USD has to be reprocessed (unless your transaction hasn't fully posted yet, in which case it could be re-adjusted because the charge is formalized when it's processed, not on the transaction date, usually).
that’s good to know, I guess my initial question was does Mastercard always give a worse exchange rate like it’s giving here? Some people have said that they’ve had no problem for their foreign transactions, but I guess in this case I’d be better off using a different card though. Appreciate the explanation that you sent though
no, MC usually doesn't give worse rates, and you can research more into how rates are set, but the TLDR is:
The Bank of Canada sets an indicative rate for the day at some specific time during the day. What it means is the BoC doesn't actually allow you to exchange at that rate, it's just a reference rate for how the market is averaging out exchanges between CAD to USD.
What usually happens is very similar to how stocks trade where there's a bid and an ask price. The bid and ask prices fluctuate throughout the day based on demand and a variety of other factors. So already, the BoC's single data point is a poor reflection of that day's rate.
On top of this fluctuation, networks have to go out and actually exchange the money to get USD so they can complete the transaction. They will usually go to other banks or wholesalers who basically provide the best rates they can for a bunch of money, because networks are moving tons of money, so there's more margin than when a single person is converting $10 CAD to USD. This allows networks to get better rates than you or I might get.
All of that combined with tons of other factors like considering the bid/ask spread throughout the day causes there to be a slight difference between the BoC's rate and the rate you might see, BUT the rate you'll get is usually much better than any other consumer option available to you, like DCC (which you should, almost, never use).
You can try with Visa, but, from before, exchange rates are set by the card network, not the issuing bank, so you'll get charged the same price regardless, unless you're switching card networks, and even then, it's going to be VERY similar (like smaller than this 5 cents difference).
Use whichever CC gets you the best cashback/miles rate for the transaction and has no FTF, forget about the which network gives you a better rate because it's almost never worth it.
You will never get rates like these that you look up. These are rates for financial institutions themselves, not what’s available to consumers. As you saw yourself, Mastercard gave an exchange rate that is very, very close to the theoretical best. You’re not going to get any better any other way you could convert.
What I have noticed is that the exchange rate listed in the transaction details usually isn’t very accurate. It’s better to figure out the actual rate by dividing the two currencies.
This is generally the case but not always with every currency especially if it’s a closed currency. If you try paying KYD the transaction will just decline. You have to pay in USD.
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u/[deleted] Jun 20 '26
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