New Credit Card Scam in Thailand?
For many years now when visiting Thailand I have preferred to exchange my Sterling (GBP) notes for Thai Baht (THB) in Bangkok as the rates have been better than back in the UK as well as being more convenient. I maintain a GBP bank account in Bangkok for the same reason, as TT (wire) transfers of GBP from the UK and then a currency exchange locally were always at a better rate.
Following the imposition of new regulations by the Bank of Thailand a couple of years ago in an attempt to control speculative short term inflows of foreign currency (which had been causing an over valuation of the THB) offshore THB buying rates at least for TT have been marginally better than onshore. This situation persists today albeit the margin is narrowing.
I would hope that the majority of tourists visiting Thailand are aware that the country ranks high on the list of countries considered to pose a security risk in connection with credit card fraud and that they therefore use their cards only in the larger ‘retail / hotel’ outlets.
Most of my expenditure in LOS in common with other visitors is for hotel rooms which are usually paid for with a credit card.
Recently I have been making frequent visits to one of the well known Bangkok hospitals with my Thai wife and noticed that the credit card receipts were now indicating a value in Euros as well as THB. I naively thought ‘what excellent service’, helping foreigners understand their real expenditure. The same helpful service was given at a hotel in Pattaya when using the same card.
A couple of weeks back I received my statement for the aforementioned card and I was surprised to see billing was in Euro instead of THB for the first time. So what is wrong with all of this you might think?
Well I was initially angry with myself for failing to read the small print on the card receipts which informed me that apparently I had given permission for the respective local Thai bank to make the foreign currency exchange which is based on counter rate (note buy) including a hedging margin not exceeding 3%. This is a much more expensive rate than that used by the card provider when converting THB back home to the ‘card’ currency, especially as for the last two years offshore TT rates have been better than those offered by the Thai banks per my introductory note.
That however, is not the end of my story. My card is issued by a European Bank in the Eurozone but is a GBP account so you see I now had to pay for an additional conversion from Euros to GBP by my card provider. All in all, a costly experience.
Most importantly I had not (knowingly) given explicit permission to be billed in Euros and was not asked by the respective cashier to agree to this at any time.
I decided that I wanted to carefully go through the same experience at the same hospital again, and if necessary to confront the cashier with the facts before I was ‘defrauded’ again.
Somewhat wiser for the previous experience I offered the same card in payment at the same hospital this week but before handing it over I informed the cashier (in Thai) that it is a European credit card and did she have a question to ask me before processing the transaction.
At first she appeared to be confused and began to reach for the telephone apparently for help but only because this was clearly the first time she had been challenged (a different cashier on every visit by the way). Still she did not put the required question to me to obtain my permission for the agreed currency of the transaction so I was forced in desperation to explain to her (in Thai) as nicely as I could and without confrontation the point I was trying to make. Without hesitation she then processed the card producing a receipt in THB only, whilst at the same time admitting that instructions from the Thai bank providing the credit card service were to allow the machine to make the decision (in the bank's favour).
So back to the beginning of my, hopefully not too boring, piece. It would seem that the Thai banking system has recognised that it is missing out on a lucrative currency conversion opportunity as more and more credit cards are used by tourists in payment for services and they have accordingly identified this additional money making ‘service’ opportunity.
My guess is that either the local or remote software used in the terminals for processing cards was updated or defaults changed sometime around September such as to potentially disadvantage anyone paying with a foreign currency based credit card.
Interestingly, when I paid using my UAE Dirham credit card the transaction (at the same location) was processed in THB.
Readers might feel that I am over reacting to what can be described as the loss of only a couple of cents on the dollar so why get upset? It is my understanding that the least detectable frauds are those which seek to cream off only small amounts from individuals at any one time; these can be perpetuated for years without being detected. I can only guess at the total annual foreign credit card transaction value in Thailand, but I’m sure the banks know what it is worth to make the FOREX conversion locally!
So my message is watch out when using your credit cards for payment in Thailand if your card account is based on a convertible currency such as Euro, GBP or USD as in my opinion you are likely to be overcharged, and shame on those hotels, hospitals and other establishments who are aiding and abetting those participating Thai high street banks.
Thailand’s newest credit card scam or not?
I seldom use credit cards in Thailand. First of all, I am concerned about fraud. Secondly, they often try and add 3% to the cost of the transaction (which is contrary to what merchants, as per the credit card merchant agreement are allowed to do) and thirdly unless you have a local credit card, and I don't, you get screwed on the exchange rate.