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Did you actually check the currency conversion rate applied to your transaction?

Were you aware that you were effectively being charged a rate that was somewhat worse than that advertised by the same bank that processed the transaction?

Well I did notice this some time ago and thought that everyone knew the CC companies were screwing an extra few cents out of every dollar they handled.

It seems however, that a great many people weren't aware of this, and neither so it seems, was the Commerce Commission who have now launched a criminal prosecution against the banks concerned.

I don't know why it came as a surprise to anyone that the CC companies would do this -- I mean, you only have to look at the outrageous interest rates they apply to borrowings made against their cards to realise that they are completely mercenary in their attitude to separating customers from their money.

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But is this really such a big deal?

Well the big deal is not that they charge what amounts to a 1-2% premium for foreign currency transactions, but that they don't disclose this in a clear and open manner.

I doubt too many people are concerned that their US$100 purchase is actually going to cost the US$103 by the time it appears on their next credit-card statement -- but no being told this in advance is a bit rough.

Until the arrival of the Net, the chances of the "average" Kiwi being affected by the bank's "oversight" in respect to advertising these charges was minimal. But these days every man and his dog are using the Net to do a bit of off-shore shopping so the Commerce Commission's move is a reasonable one.

In fact you have to wonder why the Banks didn't act preemptively because there have already been successful prosecutions overseas for exactly the same thing. In the USA Visa and Mastercard were ordered by the courts to return over a billion dollars to customers as a result of these undisclosed charges.

Of course (wouldn't you know) the CC companies found guilty have appealed the decision.

But what kind of penalties will NZ banks face if the Commerce Commission's prosecutions are successful? Well it seems that the maximum fine for such things is just $200K. I think that's a very small price to pay for reaping an extra $35 million don't you?

This all raises the question of whether we can come up with something better than credit cards for the purposes of settling international transactions.

Certainly services such as PayPal have made huge inroads into the business of CC companies when it comes to online transactions and here in NZ, many successful bidders on sites such as TradeMe are paying by direct transfer using electronic banking services.

Could "the next big thing" be a CC alternative that also provides for micropayments?

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