With or Without Conversion: How ATMs Get Foreigners to Take Out too Much, then Apply Extortionate Exchange Rates
Euronet Worldwide, a US-based electronic payments provider, was operating 24,761 ATMs worldwide by March 2016. One year later they had another 10,000. The sight of Euronet ATMs has become ubiquitous in the centers of European cities like Prague, Berlin, and Budapest. Some streets have one every three buildings. Shops, restaurants, and exchange offices pocket handsome rewards in exchange for hosting these machines. Euronet is increasingly opening more and more of its own ‘branches,’ nests of ATMs, but nothing else.
What drives this growth?
One way ATMs make money today is by offering Dynamic Currency Conversion (DCC). DCC is a service by which ATM operators offer customers to convert the withdrawal amount into their home currency when taking out money abroad.
DCC is the reason why ATMs abroad often ‘offer conversion to your home currency’ or ask whether you want want your money ‘with or without conversion.’ Of course, when the money on your account is in one currency and the cash that comes out of the machine is in another, the money is converted, regardless of your choice. The ATM operator is really just asking for permission to handle the conversion.
- ‘With conversion’ means the bank or company that operates the ATMs does the conversion.
- ‘Without conversion’ means your home bank or credit card company does the conversion.
Whoever does the conversion applies an exchange rate. Setting that rate effectively allows them to take a cut. And this is the point: ATM operators tend to take big cuts. They offer bad exchange rates*.
It’s a scam that goes by the name of Dynamic Currency Conversion (DCC) (..) The only thing more likely to screw you over than your bank, is a foreign bank.
The difference between the rates offered can be as much as 10% or more. This means that if you take out €100 worth of cash, your account might be charged either €102 or €112.2 depending on which option you chose. That’s an extra €10.2 for taking out money just once.
It might not be a coincidence then that Euronet ATMs tend to congregate in the centers of cities where there are lots of tourists and visitors carrying foreign credit cards. They are rarely seen in the suburbs or smaller towns.
Euronet is also oddly persistent in getting customers to choose their exchange rates and in nudging them towards taking out as much money as possible.
This is the withdrawal process at one of Euronet’s ATMs in Prague, Czech Republic (where the local currency is Czech Crowns):
Suggested amounts using a local (Czech Crowns) card
Suggested amounts using a foreign (Euro) card
Suggested amounts using a foreign (Euro) card — after you press ‘Other Amount’
With or Without Conversion
The ‘with conversion’ cautionary screen
*Of course avoiding DCC is not necessarily always the better option; it’s always best to ask your bank what you will be charged.
Big thanks to Broadcast Atlanta for producing the video.