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Credit card purchases overseas – exchange rate anomaly – no fault of bank
Mr C had a credit card issued by a New Zealand bank. He used the card for purchases during a visit to Australia. When he checked his credit card statement on his return to New Zealand, he noted that the exchange rate applied on one particular day differed significantly from the rates on the two other days when he had made purchases. Upon further checking he concluded that the bank must have made a mistake, since the rate in question was 3% less than official rates published on the same day, including those published by the Reserve Bank. He complained to his bank, which told him that there had been no mistake, and that in any event by the time the transactions came under the bank’s control the conversion to New Zealand dollars had already been made. Mr C then complained to me.
My investigation found that the standard terms and conditions of Mr C’s credit card specified that the exchange rate used would be the rate supplied by Visa or Mastercard. This means that the cardholder agrees to accept whatever rate is supplied by the card consortium, irrespective of whether it corresponds to locally published exchange rates. The investigation confirmed that the rate used was that supplied.
I consequently concluded that, although Mr C had clearly identified a discrepancy between the published data on exchange rates and the rate supplied by the credit card consortium to the bank, the bank had nevertheless complied with the terms of its contractual obligations to its customer, and I could not uphold the complaint.