By Miguel Cervantes
Sources: Visa Security, Visa User Blog, Mexico Diario, The News
If you use a credit card to pay for restaurant and/or hotel charges protect yourself and be sure and if your charges are being submitted to Visa/MC in pesos (which they should be) or in US currency.
During a visit to Cabo in mid-June 2014, I noticed that several restaurant and hotel receipts showed the total price in pesos and dollars. How nice - I thought the dollar conversion was a courtesy. Not true. Some, if not all hotels and larger restaurants are submitting their receipts to Visa in dollars using their chosen exchange rate instead of the daily official rate of exchange.
Ex. Dinner for three at Panchos Restaurant in Cabo San Lucas came to a total of $1866.60 pesos including tax of $257.46 pesos. The receipt also showed "Total USD: $154.26".
When I reviewed my Visa charges I found that the restaurant had submitted $154.26 in total charges instead of the peso amount. As a result, instead of being charged the correct $1866.60 peso to U.S. dollar currency rates, the restaurant charged their own exchange rate.
If Panchos restaurant used the proper conversion (by submitting the charges to Visa in pesos), the charges would have been $143.70. The hotel (Casa Cascadas and the on-site restaurant) did the same - used their own exchange rate and submitted the resulting charges in USD.
I have notified Visa of this practice. Visa claimed to be unaware of hotels, restaurants and some professional services providers were doing this and said foreign countries should be submitting charges in their respective currencies. Visa will then determine the correct conversion rate. Buyers in Cabo, beware!
Ed - This is called Dynamic Currency Conversion and is found in lots of places. It's rarely a good deal for the consumer. People should pretty much always choose local currency for credit card charges. If local currency is not offered, don't sign the slip - write "local currency not offered" and dispute the charge with your cc company when you get home.
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