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Paying for accommodation in SA

In cooperation with: Cape Town Tourism
London
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Paying for accommodation in SA

WE have booked a game lodge and they have given us their bank details for the deposit. If we pay by CC they will charge us 3%. My bank will then charge 2.75% for the currency exchange and probably another fee of about £2.50. Does anyone know a better way?

Cape Town
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1. Re: Paying for accommodation in SA

Presumably if you use your UK Debit Card rather than a Credit card the 3% CC charge does not apply?

Then, other than opening up a UK bank account which does not charge for "currency exchange" such as Metro Bank or Norwich and Peterborough, then there is no way round your own bank fees. A SWIFT Transfer direct to their Bank account would cost a fixed charge of around £25 (depending on your bank) and you would still pay currency exchange charges.

BTW your Bank charging you 2.75% plus £2.50 for "currency exchange" is simply a straight profit. On a Credit or Debit card transaction it is Visa or Mastercard that do the foreign exchange NOT your bank. Your bank is billed in sterling by Visa, just as any local card transaction. The foreign exchange cost that Visa bill your bank is approx 0.6 percent against the Interbank Spot rate at that particular minute - the rate quoted continuously on all financial websites. This is the rate that banks like Metro Bank and N&P pass on to their customers. Nearly all other banks add a hidden profit charge.

For Credit Card transactions Visa or Mastercard make their money, either for a foreign or UK CC transaction, by charging the merchant not the customer. Typically around 3%. In SA it is legal to pass this charge on to the customer. Some merchants, such as your game lodge do, most do not.

So the "better way" is to open a Metro Bank (easy as you are in London) or N&P current account and then use your Debit Card to pay the bill.

Palma de Mallorca...
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2. Re: Paying for accommodation in SA

Technically speaking it is not permitted for a credit card merchant to apply any surcharge on top of an advertised price. It is against the credit card merchant sales agreement.

Prices quoted by any vendor must include (i.e. make allowance for) any credit card processing fees they are charged for from their bank (usually between 1.5% and 5%).

Berkhamsted, United...
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3. Re: Paying for accommodation in SA

If you bank with HSBC, you can do online transfers to SA for £8, I think it is.

London
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4. Re: Paying for accommodation in SA

Many thanks to everyone for replies. I always understood that adding on surcharges was not allowed but I think that rule has been changed. I assume that's how Ryanair get away with it! I have made some enquiries and decided to use www.tranzfers.com. They give a much better rate than the bank. The first 2 transfers are free, then it's about £7 a time. Needless to say, slightly different rules apply to SA as the transfers have to go via the USA so there will be a small charge. That will probably be added on in SA. If it's a good experience I'll post it here for info. Thanks again.

Cape Town
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5. Re: Paying for accommodation in SA

Crox, the vendor is not charging more. The banks charge for converting currencies and for their services.

When you transfer funds to S.A. there are charges involved on both sides.

Agree with VDC - use a debit card.

Palma de Mallorca...
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6. Re: Paying for accommodation in SA

TG – in this case the vendor is charging more (3% according to the OP). I am merely picking up on the fact that as a vendor you should not (infact by law cannot) increase the price to cover your banking fees. For example If I advertise services for R1000.00 the clients credit card will be charged R1000.00 which is converted into their own local currency along with any other fees that card may take, As a merchant (eg. here in South Africa) I will be credited R1000.00. But I will be charged a handling fee by my merchant banking system (Standard Bank, Nedbank etc) for making the transaction. This can be anything from 1.5% - 5%.

What I CANNOT do is advertise services for R1000.00 but if you pay by credit card they will cost R1030.0 to cover my bank handling costs. This is what the poster is referring to and it is this practice which I am saying is not supposed to be going on (it’s against a credit card merchant services agreement).

Cape Town
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7. Re: Paying for accommodation in SA

Many UK (and South African) travel operations now add a fee for paying by credit card - not just Ryanair! Some now even also charge for paying by Debit Card!

Not sure that tranzfers.com is such a good deal. Just checked the rates a minute or two ago. If you want to pay a R5,000 bill. This will cost you £453.17 (quoted rate 11.055) plus a fixed fee of £7 – total cost £460.17.

Current Interbank Spot rate (1 minute ago) is 11.25010. R5,000 at this rate would cost £444.45. You are therefore being charged £15.72 or 3.5 percent commission. This is worse than most UK Debiit Cards – average 2.75%

If you pay by Metro Bank Debit Card you are charged 0.6%. Total cost would be £447.12 – commission of £2.67. Less than one fifth of tranzfers.com!

Edited: 03 March 2011, 21:34
Cape Town
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8. Re: Paying for accommodation in SA

Interesting.

In Zimbabwe (now that is different territory!) you are advised up front that payments by Visa are free but through Mastercard an additional 4%.

London
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9. Re: Paying for accommodation in SA

thank you all for the advice - interesting topic! I have made arrangements through tranzfers.com as they offered the best rate. The amount I am transferring is not huge and I'd be v. unlikely to get the spot rate! Tranzfers.com beat anyone else I tried and they don't charge for the first 2 transfers you do through them. Will report back if it works OK!!

10. Re: Paying for accommodation in SA

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