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Avoiding Currency Conversion FeesAvoiding Currency Conversion Fees

shinahdragonshinahdragon9 months agoMisc
This mainly focuses on HLJ but it can apply to any other other sites regarding conversion fees. Apologies for any confusion ahead of time, please do ask questions and I will clarify the best I can :)

In order to avoid fees you first must have or sign up with a card that does not charge foreign transaction or currency conversion fees



Unimportant Context Summary:
Recently this week I had an issue with HLJ believing I was (and actually being) overcharged & double charged. Here are the posts if you just want the full read: Post 1 | Post 2 | Post 3
I wasn't aware of conversion fees so the first payment for my items (1955¥ → $18.49) was correct but as for the shipping charge, their system must have tweaked since they charged me the same price for my items (charged $18.49 instead of 1310¥ → ~$12.42) and double charged it. Contacted, tried again, now it's all good and in the end did not have to pay for the conversion fee on shipping (paid $11.85), more info on how below:


Summarized Tip to Avoid Fee(s):
  • have/sign up for a bank card that doesn't have any foreign transaction fees, or conversion fees for the currency you're trying to buy in (ex. price in Yen)
  • choose or say you will "pay in Yen" (don't chose USD/your local currency)
  • If you pay through PayPal don't pay via PayPal balance
Das it!: you won't be charged any fees.


The Financial Explanation:
This was my first time using HLJ as I always use amiami (still prefer them since they give notice before charging) or GSC. When I had first input my card payment info I saw HLJ had the option to charge in USD, I first choose that thinking it would make it payment possibly easier but this is the mistake that caused my issue: Thanks to the help from Darkluna and some research (smartassests© and other) I found out HLJ, and other foreign merchants (shopping online and in-person in a foreign place) charge a conversion fee, because of Dynamic Currency Conversion (DCC). shopping in store close spoilerThere is also a foreign transaction fee that can be charged by your bank (which is on average 3% but your bank should state their fee %, if any) when shopping in-person because “banks need to convert the money you spent into U.S. dollars so they can charge your account and to avoid big losses from fraudulent international transactions. Any time an issuer converts money, they take on a risk” (smartassets, 2017) The DCC fee rate is determined by the merchant’s DDC service provider (HLJ uses GoInterPay). By choosing “USD” on HLJ’s payment method page I basically agreed to also be charged the conversion fee. Nerdwallet states that the merchant is required to give you the option before charging you through DCC. If you say no to the merchant in paying in USD (or your currency), a.k.a choose to pay in Yen on HLJ, your credit card payment network (ex. MasterCard) will instead do the conversion, and it will show up on your statement in dollars (so your bank is practically paying the merchant in the foreign currency but charging you the converted price in your local currency) so what is the downside close downsideThe reason some choose to intentionally pay through DCC is to know what the price will be on the spot and properly budget without worrying about not having enough money, and not worry about conversion rates fluctuating. Especially important to consider when preordering figures since there is a few months or more in-between ordering and payment time, giving chance for conversion rates to possibly rise, hence why GSC also gives option to show prices + charge in USD. You will still be charged fees if you pay through PayPal balance (Darkluna confirmd they charge their own conversion fee), More PayPal info below.
I use American Express Bluebird© (this service doesn't charge any conversion fees for JPY and other currencies: check their site's list) which I personally highly recommend using for any of your figure expenditures on any site (like amiami, HLJ etc) since it it works like a PayPal balance where it's a preloaded balance where you put the amount of money you're expecting to pay without having to worry about auto-charges taking away from your main card that you use for necessity expenses, for example: lets say you put $10 on the card, if a site charges you $11 the charge won't go through until you load the extra $1 onto the card otherwise the American Express will just drop the charge rather than it going through.


Disclaimer:
I haven't physically shopped within another country outside of the US so I can't say this is completely fool proof if you're shopping in store at places like Japan. This information is also USA based so I'm not sure how much of this applies to other countries.


New info regarding PaPal conversion fees (thanks to Sparxxors and Karumi):
- When using paypal balance you convert the currency and paypal will then charge the fee.
- when checking out with paypal: you're given an option to to convert through paypal or convert using your card issuer (you have to do it every time you check out)
- Automatic Pre-ordering charges: go into PayPal and cancel the billing agreement with the store (HLJ) after ordering so when it's time to pay, the store (HLJ) will send an e-mail with a PayPal link to pay within three days



Sources:
**Of course first do more research on your card provider and look at other lists before relying on nerdwallet, for a better range of options & information on cards
2,053 hits • 15 comments

Comments15

1pt
Ah nice...thanks for sharing that info!! :D
9 months ago
1pt
Note Paypal charges currency conversion fees like most credit cards or banks. It's probably 3% fee and that gets reflected in their conversion rate.

Note if you say convert with your card issuer, the credit card or bank debit card you use may or may not charge a conversion fee. Some cards don't charge a fee especially those credit cards aimed at foreign travelers. But most credit cards and debit cards do charge a fee and they're usually around 3%.
9 months ago
1pt
take123 (9 months ago) #36874619When I have preorders I make sure I pay them manually and select conversion of currency with card issuer in Paypal.

same here , i notice paypal conversion rate are way off the market rate , as im writing this post 1GBP = 146.314JPY on www.xe.com/curr... and the card issuer are pretty close to what the market fx rate currently my card issue at 146.256, compare to paypal are 139.405
http://piclair.com/data/lustz.jpg.
9 months ago
1pt
You could trying using a Forex (Foreign exchange) card to avoid the Markup fee(Foreign currency conversion fee) of 3.5 to 5%, which is usually charged by debit/credit cards for each transaction.

Its like a prepaid debit card loaded with foreign currency of your choice(Ex:Yen), at a specific exchange rate against your local currency at that time of loading.
Prepaid forex cards are powered by Visa/Mastercard. You can use it globally just like your debit card without the Foreign currency conversion fee.

Paypal does not accept Forex card, because they make their income from the 4% exchange Markup fee.
9 months ago
1pt
take123 (9 months ago) #36874619When I have preorders I make sure I pay them manually and select conversion of currency with card issuer in Paypal.
Appreciate the info! When you say manually do you mean prepay or are you referring to HLJ giving you a payment waiting period (like what Karumi was saying)?
9 months ago
1pt
Karumi (9 months ago) #36871261For this, I always go into PayPal and cancel my billing agreement with HLJ after ordering. That way, when it's time to pay, I get an e-mail from HLJ with a PayPal link to pay saying I have three days to do so. That way I can avoid any surprises...

Interesting, I always used amiami for the payment waiting method but it's good to know I can now do it on HLJ through PayPal as well, thank you.
9 months ago
1pt
When I have preorders I make sure I pay them manually and select conversion of currency with card issuer in Paypal.
9 months ago
1pt
Karumi Bishie Enthusiast
shinahdragon (9 months ago) #36870801How does this work with pre-orders that automatically charge when the item is available, does paypal default to their fees then? Thank you for the help with answering.
For this, I always go into PayPal and cancel my billing agreement with HLJ after ordering. That way, when it's time to pay, I get an e-mail from HLJ with a PayPal link to pay saying I have three days to do so. That way I can avoid any surprises...
9 months ago
1pt
Solarstormflare (9 months ago) #36869787Huh, i read this through but i'm still confused; currently i use paypal's conversion rate + fee but it would be nice if you didn't have to pay currency conversion, I agree.Karumi (9 months ago) #36870574Super confused by this. I always pay using PayPal balance, and have it set to pay in yen on HLJ's website, because their conversion rate ends up being cheaper than my card's rate + fee. However, I have never been charged this mysterious extra fee? I wonder if it would have something to do with me having options on my PayPal for both a USD and yen balance... (Even when I use a USD balance I am not charged any extra fee...)
Sorry for any confusion I've caused(ó﹏ò。). I should clarify and emphasize that you first must have or sign up with a card that does not charge any foreign conversion fees (like american express).
Second: If using paypal don't use your balance and instead pay through your card and choose to leave the conversion fees to your card holder therefore not getting any fees from paypal and since your card would be/is currency conversion fee free.

As for the hidden fee I was talking about: If I search the current conversion for 1310¥ it would be about $11.86 (no fee included) but if I chose to pay the USD price on HLJ rather then the Yen price it would be $12.42 because foreign sites charge their own fee to convert currency (the DCC I was talking about)
9 months ago
1pt
Sparxxors (9 months ago) #36869154If you checkout with paypal to pay in JPY, there's an option somewhere to convert with paypal or convert using your card issuer. I don't think there's an automatic setting, you have to do it every time.

How does this work with pre-orders that automatically charge when the item is available, does paypal default to their fees then? Thank you for the help with answering.
9 months ago
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