Thai credit card holders hit with new 1% fee
In a recent development, holders of credit cards issued in Thailand are set to face a 1% fee for foreign currency conversion starting May 1, as revealed in a notice on the Bangkok Bank website.
Local credit card issuers, including Visa and Mastercard, will enforce this fee, also known as dynamic currency conversion (DCC), for transactions made in baht with merchants and online shops registered outside the country. The charge will extend to baht withdrawals from ATMs abroad as well.
A financial industry insider, speaking on condition of anonymity, disclosed that Visa and Mastercard are imposing this fee on local card issuers, who, in turn, pass it on to consumers.
Previously, Thai-issued Visa and Mastercard cards incurred a maximum 2.5% fee for spending in foreign currencies overseas or online with foreign-registered platforms. With the new 1% fee, cardholders face a choice: stick to spending in foreign currencies abroad and bear the 2.5% charge, or opt for spending in baht abroad or through foreign online merchants and pay the 1% DCC fee.
Major offshore merchants like Apple, Netflix, and Agoda will automatically apply the DCC fee, affecting cardholders irrespective of their preference.
Paul Srivorakul, CEO of aCommerce, highlights the benefits of DCC in simplifying payment decisions for customers on foreign e-commerce sites. However, he acknowledges the added fees and operational complexities for merchants, stressing the need for clear communication to prevent customer dissatisfaction.
Kulthirath Pakawachkrilers, Thai E-commerce Association President, expresses concerns over the impact on consumers who frequently use Visa and Mastercard abroad or on foreign online platforms. She suggests exploring alternative payment methods like e-wallets.
While certain platforms will be affected by DCC, others like Shopee, Lazada, and Grab Taxi (Thailand) are expected to remain unaffected, reported Bangkok Post.
Last year’s e-payment transactions, amounting to 28.8 trillion baht, witnessed a significant surge, with card payments totalling 5.9 trillion baht, as reported by the Bank of Thailand.
Piyachart Ratanaprasatporn, CEO of 2C2P, opposes the additional 1% fee imposed by Thai banks. He recommends opting for payment in the destination currency to avoid the charge, citing potential profit margins for financial institutions through foreign exchange rates.
