Don’t fall for the big lie that you MUST pay in pounds on holiday 

British tourists are being bullied into paying more for food, drink or accommodation abroad by retailers insisting they pay their bills by card in pounds rather than the local currency.

It is the latest twist on a currency conversion con that experts believe will cost holidaymakers £1.7million a day between now and the end of September. 

When paying by card at a cafe or shop, tourists are usually given a choice between paying in pounds or the overseas currency (typically euros). Millions opt for the familiarity of dealing with sterling. 

‘Dynamic currency conversion’ catches out one in five travellers

Yet it is a more expensive option, adding around 7 per cent to the overall bill. This is because the retailer’s bank chooses the conversion rate, rather than the cardholder’s own bank.

The trick, known as ‘dynamic currency conversion’, catches out one in five travellers. But The Mail on Sunday has learned that even the most financially astute tourists who demand to pay in local currency are now being routinely refused this option and told they must pay in pounds instead.

This is even though such a refusal is against European rules – and the terms and conditions that foreign banks abide by with card issuers Visa and Mastercard.

EU law stipulates that merchants must disclose charges and give customers a choice – but some are failing to do so. Even worse, customers are being handed receipts claiming they were given a choice and opted to pay in pounds – despite this not being the case.

One tourist, who last week contacted The Mail on Sunday, said he insisted on paying in euros at a restaurant in Bilbao, northern Spain. But he was told by a waiter that staff had received a memo from management insisting they charge customers in this way. Experts say this is not allowed, but incidents like this are now happening regularly.

Alana Parsons, from travel money card provider Caxton FX, says: ‘While customers should always be given the right to choose the currency they want to pay in, they are frequently faced with no choice and forced into dynamic currency conversion.

‘It is common for restaurants, hotels and shops to sneakily over-ride the option to pay in local currency and present a final bill only in pounds.’

Sven Schindele is banking products director for Tandem, which does not charge fees when its credit cards are used abroad.

He says: ‘There are always those looking to profit off people visiting from overseas.

‘UK holidaymakers waste as much as £100 a year each from transaction fees and costly exchange rates. This is per customer so costs rack up on family holidays and extended trips.’


Paying in cash helps customers to swerve this problem. Caxton FX’s Alana Parsons adds: ‘It is worth carrying some local currency in cash. We might be moving towards a cashless society, but cash is still king in some places.’

The cash should also be converted before travelling while still in the UK, because rip-offs extend to cash machines at the destination too.

Some cashpoints are charging additional fees if a customer refuses to allow the ATM provider to carry out a conversion to pounds. If this happens it is worth seeking an alternative cash machine. But physical currency won’t be the practical solution every time, especially for those who do not wish to carry large sums of cash on holiday.

Schindele says: ‘Anyone who travels abroad regularly should use a card that doesn’t charge them fees to spend overseas and offers them a good exchange rate.’ 

When using a card, ask to pay in the local currency at the same time you request the bill

When using a card, ask to pay in the local currency at the same time you request the bill

When using a card, ask to pay in the local currency at the same time you request the bill and be present when the card is used at the payment terminal so you can see what currency has been selected. If the receipt shows the payment has been made in pounds, be prepared to fight back.

Ian Strafford-Taylor, of currency exchange company FairFX, says: ‘If you’re not asked which currency to pay in, then insist on paying in local currency. Remember, dynamic currency conversion is optional and you always have a choice. If you are billed in pounds you should refuse it and ask for the bill to be amended.’

However, some customers will find themselves in a sticky situation if staff at a cafe or hotel refuse to void the previous transaction and charge in the local currency instead. In this case, be ready to escalate the fuss. Experts recommend that customers make it clear it is their right to pay in local currency and that they write ‘DCC rejected’ (for Dynamic Currency Conversion) on the receipt.

Strafford-Taylor adds: ‘There are many instances where people believe they have rejected DCC but it is done anyway. Writing ‘DCC rejected’ allows customers to have some sort of recourse with their card provider. Although not legally binding it does show the customer’s intent for the transaction.’

Using prepaid cards with Mastercard and Visa logos also affords some protection. This month both companies announced they have banned the use of dynamic currency conversion on any prepaid card bearing their brands, including at foreign cashpoints.

This is because these customers have already decided the currency they wish to pay in by pre-loading travel money cards with euros or dollars before departing the UK.

Strafford-Taylor adds: ‘The new rules don’t apply to credit or debit cards which means holidaymakers using these methods of payment are still at risk of falling into the trap and should stay vigilant.’

Some restaurants are still likely to flout rules and apply their bank’s own conversion even on prepaid cards. In this instance customers should raise a dispute with their prepaid card provider.

Most prepaid cards for travel bear the Mastercard logo and include those from WeSwap, Caxton FX and FairFX.

Have you been prevented from paying for holiday spending in the local currency? Email