The £60m currency trap: Why you should never convert your restaurant bill into sterling when abroad

Currency trap: Say a big NO to paying in pounds at shops, hotels and restaurants abroad

British tourists could save themselves more than £60million in rip-off fees next month – by wising up to the biggest currency trap used by overseas firms.

A week ago, The Mail on Sunday highlighted how consumers routinely lose out on poor exchange rates before they have even left home. But today, we expose the trick that dupes millions of holidaymakers every year while abroad. It is known as ‘dynamic currency conversion’.

Foreign shops, restaurants and cashpoints offer to convert a bill or cash withdrawal into a customer’s home currency – so the sum charged can be seen in pounds straightaway.

Currency trap: Say a big NO to paying in pounds at shops, hotels and restaurants abroad

Currency trap: Say a big NO to paying in pounds at shops, hotels and restaurants abroad

Those who accept this offer ditch the rate set by their bank card provider and accept whatever rate the business wants to charge. In some cases, the mark-up on conversion costs is as high as 12 per cent.

It is a big profit-winner for businesses in popular holiday destinations such as Spain. Last year, it cheated British tourists out of £1.3million a day, according to currency provider FairFX.

But our research shows that with tourism at its peak during the school holidays, the cost of the currency trap in the coming weeks will be running at far higher than the daily average.

James Hickman, chief commercial officer at FairFX, says: ‘When people are asked if they want to pay in sterling, their first reaction is to say yes. Many consumers are unaware that they are being charged handsomely for the privilege.

‘It is an expensive mistake, especially if repeated throughout the course of a summer holiday. The simple solution is to always pay in the local currency.’

The first place to look out for such traps is at cashpoint machines.

Coded message: Jenifer Swallow says cashpoint wording is deliberately confusin

Coded message: Jenifer Swallow says cashpoint wording is deliberately confusin

Coded message: Jenifer Swallow says cashpoint wording is deliberately confusing


Nasty traps await users of cashpoints abroad. Convoluted language about currency conversion is one tool used to bamboozle customers who feel under pressure to make a decision quickly, especially when there is a queue of people behind.

There may be a choice to ‘continue with or without conversion’ with an asterisk and lengthy explanation about what this means.

Hickman says it is like ‘taking an exam without being able to read the questions properly’. It is also natural for tourists to gravitate to the currency they are most familiar with.

Knowing this, cash machine providers have been clever about the wording they use.

Jenifer Swallow, at money transfer and currency specialist TransferWise, says: ‘The language you see at a cashpoint for dynamic currency conversion is deliberately confusing and worded in the bank’s favour. 

For example, if you are in Spain and it says press ‘yes for GBP’ and ‘no for EUR’, you may assume selecting ‘no’ is the wrong choice. It is unfair but a common trap that many tourists fall into. I would urge anyone abroad to remember that selecting the local currency option is always best.’

How to navigate the currency traps 

  • Say a big NO to paying in pounds at shops, hotels and restaurants abroad. Choose the local currency. Similarly, withdraw money from cashpoint machines without the dynamic currency conversion.
  • Get the right plastic – load a prepaid card or take a debit or credit card that is good for travel. For prepaid cards consider Revolut, WeSwap and FairFX. Accounts with travel-friendly debit cards include TransferWise, Monzo, Starling Bank and Metro Bank. Good credit cards to take with you include Halifax Clarity, Barclaycard Platinum, Tandem and Aqua Reward. 
  • Order cash before you go. Use websites such as TravelMoneyMax and Compare Holiday Money to find good currency deals on cash with no fee for home delivery or for collection in person. Otherwise, use a suitable card to withdraw money fee-free from a cashpoint abroad – but be wary of ATMs that charge their own fees.


Another swindle is emerging on home soil and comes from the multi-currency cashpoints found at tourist hotspots, such as airports.

Many Britons now travel with prepaid cards loaded with a foreign currency. But those who want some holiday money in cash before they land often use these cards at multi-currency machines in the UK.

For example, a customer with a prepaid card who has already converted their pounds to euros might withdraw €100. However, they will find an extra sum is deducted from their card. This is because the ATM converts the sum twice – from euros to sterling, then back to euros again. This means their money has been converted three times over.

Hickman says: ‘It is shocking. We have had customers contacting us to ask what is happening, but it is a charge from the ATM vendor, not the card provider.’


Dynamic currency conversion lets travellers choose who sets their exchange rate – the merchant or cardholder’s bank. It is also simpler for business travellers claiming expenses in pounds.

But customers who choose this route lose out nearly every time – and are not given fair and simple information about the costs.

The European Consumer Organisation has called for a ban on the practice, saying ‘there is very little added value to a dynamic currency conversion service’. 

It said: ‘The evidence shows the price paid for this service is extortionate. All bodies dealing with consumer issues are unanimous – consumers should never accept dynamic currency conversion.’ 

In March, the European Commission proposed new rules for how the choice between exchange rates will be shown to customers. It should mean a customer knows instantly whether it is cheaper to pay in the local currency or their home currency – which could effectively kill off the practice.

These rules could be made law by January, but firms will have three years to comply. During that time a temporary cap on conversion rates may be introduced.

How I spent an hour fighting €18 extra fee… on a €42 bar bill

'Frustrating': Ryan Davies spent an hour trying to settle his bill in Gdansk, Poland

'Frustrating': Ryan Davies spent an hour trying to settle his bill in Gdansk, Poland

‘Frustrating’: Ryan Davies spent an hour trying to settle his bill in Gdansk, Poland

Ryan Davies battled an unfair currency conversion in a Polish pub that would have seen him lose £16.

The 27-year-old, from Leytonstone in East London, was on a weekend away with friends in Gdansk a fortnight ago.

The local currency of Poland is the zloty, though euros are widely accepted.

In one pub the bill came to the equivalent of €42, but the group only had €20 notes on them so handed over €60.

After a long wait Ryan asked for his change. To his surprise he was told he could not have it because the additional €18 (equivalent to £16) only just covered the exchange rate to zloty.

Ryan, who works in digital marketing for a clothing retailer, says: ‘I was not about to pay an €18 tip so I demanded to pay on my card instead.

‘They said they could not do this because I had already paid in euros, but I insisted.’

He then opted to pay in sterling on his bank card – which also meant a dynamic currency conversion charge.

Gdansk, Poland

Gdansk, Poland

Gdansk, Poland

Ryan says: ‘I spent more than an hour trying to settle the bill because I wanted to be sure exactly how much I was paying.’

Throughout the trip the group were given change in zloty after paying in euros and found pubs were charging different exchange rates. Ryan says this was a ‘frustrating experience’.

He adds: ‘We were paying in one currency and then getting a different one back. It was a nightmare.’



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