We generally don’t bring too much cash with us when traveling. Today I will tell you about the card swiping problems that you usually encounter when traveling abroad. You will definitely think about this when swiping cards abroad. Whether to use UnionPay or Visa, the editor will tell you.
Whether to use local currency or foreign currency
When swiping cards overseas, consumers often only consider VISA or UnionPay. However, there is actually a crucial step before choosing VISA or UnionPay, which is to choose foreign currency transactions. It’s still local currency trading, but most people don’t understand this.
The so-called foreign currency transaction or local currency transaction, for those who hold Chinese credit cards, is the choice of what money to use to buy things. Choosing local currency trading means buying in RMB, while choosing foreign currency trading means buying in local currency. For example, in Hong Kong, it is bought with Hong Kong dollars, in Europe, it is bought with euros, in the United States, it is bought with US dollars, etc.
At present, the U.S. dollar, pound, euro, and yen are the most important currencies in international circulation and can be freely exchanged with any currency, but the liquidity of the renminbi is relatively poor. Therefore, currently, there are not many possibilities for Chinese consumers to use local currency for transactions abroad. Except in areas where the RMB is relatively popular, such as Hong Kong and Macau, most of the time Chinese tourists can only choose foreign currency transactions.
If you can choose local currency transactions, then consumers can save the trouble of choosing between VISA or UnionPay, because local currency transactions do not need to go through the settlement channel of VISA or UnionPay, and consumers only need to pay back RMB directly. That’s it. However, although the settlement link is omitted, and compared with foreign currency transactions, multiple currency conversions are omitted, in fact, using local currency transactions is often not the most cost-effective way, because local currency transactions and foreign currency transactions also have currency conversion. There is an exchange rate issue, and this exchange rate is determined by the merchant and the acquirer. In other words, the merchant will convert the local currency into RMB price according to their respective exchange rates to swipe the card. According to some people familiar with the matter, when using local currency for transactions, the exchange rate of merchants or acquirers is often much worse than the exchange rate of banks or bank card organizations. The difference may even be as much as 5, which is different from the 1-2 charged by VISA. It really pales in comparison to the currency conversion fees. Therefore, under normal circumstances, it is best not to choose HomeCurrencyTransaction, but to ask the merchant to swipe the local currency. Of course, this is not absolute, and consumers are best to first understand the exchange rate situation with the merchant before making a choice.
Swipe UnionPay or VISA
If you choose to use foreign currency for transactions, then you should consider whether to use VISA or UnionPay, and this choice for consumers is actually choosing which currency to use. For accounting, if you choose the VISA channel, VISA will convert the local currency into US dollars; if you choose the UnionPay channel, then UnionPay will convert the local currency into RMB.
Credit cards currently in the hands of Chinese consumers. Most of them have UnionPay and VISA, UnionPay and MASTERCARD or UnionPay standard cards (UnionPay alone). There are also a few foreign currency cards, namely Euro cards, pound cards, Japanese yen cards, etc. VISA or MASTERCARD cards can directly consume US dollars, while UnionPay cards You can directly spend RMB. If you spend currencies other than US dollars and RMB, such as Japanese yen, Australian dollar, Korean won, etc., card organizations such as VISA, MASTERCARD and UnionPay must first perform currency conversion, and the so-called "money counting fee" It is generated during this process, that is, the currency conversion fee. Currently, UnionPay does not charge this fee, while VISA and MASTERCARD usually charge a fee of 1-2. Of course, if you pay with VISA or MASTERCARD in the United States, Since transactions are conducted directly in U.S. dollars, there is no need for any currency conversion, and there is no handling fee.
Therefore, under normal circumstances, it is most cost-effective to use VISA or MASTERCARD in the US dollar zone. Similarly, if you choose to use the corresponding foreign currency card in the corresponding country, such as using the Euro card in the Euro zone, the British pound card in the UK, and the Japanese yen zone Japanese yen cards, etc., also do not have to pay any currency conversion fees, so they are the most cost-effective way to use card transactions
Of course, in more cases, people tend to use VISA or MASTERCARD and UnionPay cards to spend in non-US dollar areas , at this time, is it definitely not as cost-effective to use VISA as UnionPay? The answer is no, because the exchange rate factor must also be considered.
The exchange rate is generated in the process of currency exchange. It is determined by a large number of matching transactions by various trading entities in the foreign exchange market. Banks, banks and other institutions and foreign currency exchangers constitute the trading entities in the foreign exchange market. , the day's foreign exchange quotation of each bank, bank, and card organization is actually the institution's quotation in the foreign exchange market. Therefore, different card organizations and different banks will have different exchange rates.
Take VISA and UnionPay as examples. VISA uses US dollars to purchase local currency, while UnionPay uses RMB to purchase local currency. As for whether the transaction price is cheap or not, it depends on their respective bargaining power. Therefore, the exchange rate for our card consumption will also change every day, and each card organization will update this exchange rate every day. This exchange rate is not as simple as checking the central bank's exchange rate. You can find it directly on Baidu. Currently, VISA's exchange rate prices can be queried on its English website, while UnionPay can only check them by calling the consultation hotline, and there are 9 currency rates that can be queried. Intuitively speaking, the fewer the number of currency conversions, the less the exchange rate loss, because the conversion process needs to involve exchange differences (that is, the difference between the buying price and the selling price. In contrast, as one of the world's largest credit card organizations, VISA has a relatively obvious advantage in currency negotiations, and the exchange rates they give are often better. UnionPay is indeed slightly inferior in this regard, but if you add a 1-2 currency conversion fee, in many cases. The next step is to use UnionPay, because the difference in exchange rates is generally not as much as 1-2.
Of course, there are special circumstances, such as Vietnamese Dong, Malaysian Ringgit and other small currencies. The total amount of settlement with RMB is small, the management cost is high, and the difference between the buying and selling prices is larger. Therefore, if the difference between the currency buying and selling prices exceeds 1-2, it is more convenient to use US dollars for accounting OK.
A special reminder is that the dual-currency credit card that is very popular in China can be used with both UnionPay and VISA. You must pay attention when using it and remember to clearly inform the cashier in advance that you need Which channel to choose for billing? In actual situations, sometimes even if clearly informed, cashiers often make mistakes. Originally they were going to use UnionPay but instead they were using VISA, and only the local currency will be shown on the consumption receipt. The final settlement amount will only be known after checking the bank statement. Therefore, if you want to avoid this embarrassment, it is best to use a single currency card, that is, UnionPay standard card (RMB single currency card or foreign currency card (USD single currency card, etc.).
The exchange rate on the card payment date or the exchange rate on the statement date
In addition, when choosing to use VISA or UnionPay, another factor that should be considered is that VISA settles according to the exchange rate on the statement date. UnionPay settles based on the exchange rate on the day when the card is swiped. Therefore, the trend of the US dollar and the RMB will also affect the final consumption amount. For example, if you spend 100 US dollars on the card, if the exchange rate on the day of swiping the card is 6.95 yuan per US dollar. RMB, but the exchange rate on the billing day is 1 U.S. dollar to 6.83 yuan. Putting aside other influencing factors, if the account is recorded in U.S. dollars (using the VISA channel and settling at the exchange rate on the billing day), then the cardholder will need to repay 100× 6.83=6830 RMB; but if the account is recorded in RMB (go through the UnionPay channel and settle at the exchange rate on the day when the card is swiped, the amount shown on the bill is 100×6.95=6950 RMB, and the cardholder will eventually use this amount directly. The repayment can be done in RMB. Therefore, when the RMB is expected to appreciate, it is more cost-effective to keep accounts in US dollars; otherwise, it is more cost-effective to keep the accounts in RMB.
The same is true for other currencies, especially some currencies with large exchange rate fluctuations in the short term. Knowing their trends can indeed "buy the bottom". However, this is not something that ordinary consumers can grasp flexibly and accurately. There are also considerable risks involved in "buying the dip".