British holidaymakers are losing hundreds of millions of pounds each year due to dynamic currency conversion (DCC), a practice where shops, restaurants, and cash machines offer to charge in pounds sterling instead of the local currency, often at poor exchange rates.
Analysis for the BBC by currency trader FairFX estimates that UK tourists are paying nearly £500 million annually in unnecessary charges, with an average fee of about 6% per transaction. In some cases, the loss can reach up to 10%.
The Netherlands is highlighted as a particular hotspot, with the Dutch consumer group Consumentenbond urging visitors to be vigilant. Sandra de Jong of the group advises: 'If a shop owner offers to show the exchange rate in pounds, don't do it.' High proportions of tourist-focused businesses in Amsterdam use DCC.
Dynamic currency conversion is legal in the UK and Europe, provided traders display the exchange rate before payment. However, critics argue the practice is confusing and often hidden. James Hickman from FairFX calls it 'abhorrent' and calls for a cap on charges.
Tourists are advised to always choose to pay in the local currency, as the standard exchange rate from networks like Mastercard or Visa is typically more favourable. Countries where caution is advised include Thailand, Malta, Spain, Cyprus, Turkey, Hungary, and Sweden.
