Travellers should be careful when paying by card – the local currency is often the most affordable option

Travellers should be careful when paying by card - the local currency is often the most affordable option

During the summer vacation season, payments made abroad increase. When paying by card, a small choice made at the checkout can have a surprisingly large impact on the final price.

Many people don't realise that the currency selected at the payment terminal directly affects the price. When a Finnish person makes a card payment outside the eurozone, the payments are converted into euros using the so-called wholesale exchange rates set by international card companies such as Visa or Mastercard.

"A simple rule of thumb is to always choose the local currency. In this case, the exchange rate is determined based on the card company's wholesale rate, and the merchant does not add its own currency exchange fee," says Teemu Korte, Head of Card Business at OP Pohjola.

The wholesale rate refers to the general exchange rate used in the currency market, to which the bank's currency conversion fee is added. With OP cards, the currency conversion fee is 2.5 per cent of the purchase or withdrawal amount.

Select the local currency at checkout

When paying abroad, customers can often choose whether to be charged in euros or in the local currency. This choice has a direct impact on costs. If a customer chooses to pay in euros, the merchant performs the currency conversion itself and may charge a an additional fee in accordance with their own pricing policy. This can significantly increase the price of the purchase.

For card payments, the exchange rate is determined based on the date on which the transaction is processed in the payment system. For this reason, purchases made on the same day may be shown at different exchange rates, and the amount in euros is often finalised with a delay of 1-3 days.

A card is the easiest and safest way to pay while travelling

When travelling abroad, using a card is often a more comfortable and safer payment method than cash. In cases of card misuse, consumer protection is very strong, whereas it is difficult to recover lost cash. It is recommended that you bring two payment cards with you on your trip, for example, in case one is lost or damaged. It's also a good idea to add your payment card to a mobile wallet, such as Apple Pay or Google Pay, so you can make secure payments without needing the physical card.

"Having two payment cards and the option of mobile payment adds peace of mind to your trip. You can still make payments even if your card is lost or damaged. If necessary, a new card can also be quickly added to the mobile wallet, so there's no need to wait for a physical card," Korte says.

It is also often most affordable to withdraw cash from an ATM in your destination country and select the local currency as the withdrawal currency. The exchange rates for ATM withdrawals are based on the same wholesale rates as those for card payments, and they are often more affordable than the rates used by currency exchange offices. However, it is important to note that the parties that maintain the machines may charge their own service fees.

In addition to the exchange rate, the final costs are affected by the fees associated with using the card, as specified in the list of charges and fees.

Media enquiries:

OP Pohjola Communications, tel. 010 252 8719, [email protected]