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Author: Caesar Chen
Link:/question/25520993/answer/36006565
Source: Zhihu.
Let's talk about a question that many people care about, but it is difficult to understand: what is the clearing process of credit card transactions? As an ordinary cardholder, how can cross-border consumption of credit cards save money? Let's do a theoretical analysis.
There are two main characteristics of cross-border consumption of credit cards. First of all, the diversity of transaction currencies makes it possible to use different currencies when spending in different countries. Secondly, currency conversion, a credit card can not support all currencies, and the cardholder can not have all currency income, so currency conversion becomes inevitable. How to exchange money is a key factor to save money in cross-border consumption. In order to solve this problem, we need to briefly introduce the clearing and settlement process of credit card transactions.
Before talking about the clearing process of credit card transactions, let's talk about the following currencies in the business sense:
1. bookkeeping base currency (BC for short): that is, the account currency of a credit card, such as US dollar VISA card, and its BC is US dollars; Euro MasterCard, whose BC is euro. There are two points to note: In China, the dual-currency card we often say should actually be a dual identification card, that is, the US dollar account is a BC(VISA \ master card, etc.) of a foreign card organization. ), and the RMB account is the BC of UnionPay. Choose which channel when trading, and choose the corresponding BC; A card not only has one BC, such as a multi-currency card with multiple foreign currency accounts, but also can have multiple BCS.
2. Transaction currency (TC): the currency corresponding to the amount at the time of transaction. For POS consumption, it is the currency of commodity price, which will be displayed on POS machines and POS documents. Generally speaking, the currency consumed abroad is the local currency in circulation.
3. Payment currency (PC for short): the currency of the cardholder's income, which is used to repay the credit card bill.
The clearing process of credit card transactions can be represented by a simplified chart:
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There are four main stages in the liquidation process (in chronological order):
C: the settlement between the acquiring bank and the card organization, "Your cardholder spent money with me, please transfer this money to me."
D: The acquiring institution transfers the transaction amount to the merchant according to the transaction currency. It should be noted that different acquirers may have different provisions, and the order of C\D may also be different.
B: After receiving the payment request from the acquiring institution, the card organization acts as an intermediary to convert the transaction currency into the bookkeeping currency by using its own exchange rate and send it to the issuing bank. At the same time, transfer the position of the issuer's clearing account to the acquirer's clearing account. SWIFT system is generally used for cross-border transactions.
Answer: The issuing bank receives the payment request forwarded by the card organization, records the transaction amount in the cardholder's account in the functional currency, and the cardholder pays the credit card bill (repayment) in his own payment currency.
As an ordinary cardholder, we should first pay attention to the B+C stage. The card organization has carried out currency conversion, converting the transaction currency into the bookkeeping currency; Secondly, we should pay attention to a. We used the payment currency to repay the credit card, and another currency conversion occurred when the payment currency and the bookkeeping currency were different. Here are a few points to note:
1. The clearing process and the credit card process are asynchronous. Unlike WYSIWYG credit card consumption, the liquidation process occurs periodically in the background, usually once a day; Card organizations provide a global exchange rate for currency exchange every day, and this exchange rate will be used for settlement processing on that day.
2. The exchange rate used by the clearing institution of the card organization is inconsistent with the exchange rate at the time of transaction. There is a prompt on the VISA website that "the rate applies to the date when visa handles the transaction;" This may be different from the actual date of the transaction. Generally speaking, UnionPay transactions are settled on the same day, and the acquiring institution does not need to ask for payment; However, most transactions of foreign card organizations are based on the date when the payee asks for payment. It is normal for a POS consumer transaction to be liquidated after one week or even one month.
3. During the B+C clearing process, the card organization may charge a currency conversion fee. When card organizations do currency conversion, the exchange rate will not change in real time like foreign exchange transactions, which may bring the risk of exchange rate loss. In order to compensate for this risk, the issuing bank will charge a currency conversion fee, which will generally be passed on to the cardholder. At present, UnionPay is free of currency conversion fees, while Visa organizations charge 1% and MasterCard organizations charge 1.5%. For China, the fees charged by ICBC credit cards to cardholders adopt this standard, while the rates of other banks will be higher.
The theoretical preparation is over. Let's look for the selection points in the whole process:
1 in the process of liquidation. B+C, we can choose card organization and card type;
2. In the process of liquidation, we can choose the issuing bank and the bookkeeping currency of the card.
There are two principles to save money in cross-border consumption of credit cards: preferential exchange rate and low currency conversion fee;
We selected six common currencies to compare the exchange rate of 20 14 14 on February 23rd. All exchange rate conversion rates come from the public exchange rate provided by the card organization and the issuing bank. It should be noted that the exchange rate is not updated every day. For example, VISA directly uses the exchange rate of the previous working day on holidays. In order to be more accurate, we chose the exchange rate announced on Tuesday.
UnionPay (exchange rate inquiry _ overseas card service)
B.Visa (exchange rate calculator)
C. MasterCard (Welcome to MasterCard's currency conversion tool | MasterCard? )
D. Bank of China (foreign exchange quotation of China Bank)
E. Industrial and Commercial Bank of China (foreign exchange market-financial information)
0. Pure exchange rate comparison
The blue part in the table below is the more expensive exchange rate, and the yellow part is the more favorable exchange rate.
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We can see that VISA's RMB exchange rate against the US dollar is more favorable, and there is no currency conversion fee, while MasterCard's other five exchange rates are more favorable. Among the more expensive exchange rates, UnionPay accounts for 4 and VISA accounts for 2. Conclusion: MasterCard's exchange rate is more dominant without currency conversion fee.
In terms of currency conversion fee, except RMB-USD, the situation of other five currencies is surprisingly consistent, UnionPay is the most favorable, VISA is the most expensive, and MasterCard is in the middle.
In terms of currency conversion fee, UnionPay is the most cost-effective, which is why UnionPay has been promoting the advantage of "no currency conversion fee". But in fact, UnionPay has suffered a lot from the exchange rate, which can be seen from the comparison of exchange rates without currency conversion fees.
Let's end two myths.
1. Is it cheaper to settle in RMB through UnionPay channel than in USD through wild card channel?
This is the most common transaction scenario. For dollar V/M cards (or double-label V/M cards), the transaction clearing process is: transaction currency-bookkeeping currency (USD); Repay the foreign exchange purchased in RMB (USD). For RMB UnionPay cards (or cards with double logos), the transaction clearing process is: transaction currency-bookkeeping currency (RMB).
There was no V/M card free of currency conversion fee before, and this myth was established. But now that there is a V/M card free of currency conversion fee, the situation is reversed:
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For dollar transactions, because there is no real V/M card for RMB bookkeeping, you can only choose dollar bookkeeping. In this case, the exchange rate of UnionPay is basically the same as the highest exchange rate of the bank on that day, and the two trading channels are actually similar, even subject to the foreign card channel.
For currencies other than the US dollar, although the V/M card free of currency conversion fee requires additional foreign exchange purchase procedures, it is still more cost-effective than the exchange rate of UnionPay channel. In contrast, the UnionPay channel is about 0.67%-0.93% more expensive than the wild card channel.
2. Is a multi-currency card more cost-effective than a single-currency card?
Using multi-currency cards, the currency conversion fee is free, but it is easy to be overlooked that we still use RMB for repayment in most cases.
In China, the exchange rate of RMB against the US dollar belongs to the basic exchange rate, and the exchange rates of other currencies belong to the cross-market exchange rate, which is calculated by the basic exchange rate of RMB and the quotations of non-key currencies against the US dollar in the international foreign exchange market. For example, the exchange rate between RMB and Euro is converted from USD-EUR and RMB-USD twice. By comparing the exchange rate between RMB and USD, we can see that the exchange rate provided by domestic banks is higher than that provided by foreign card organizations, which is also a secondary conversion. It is more cost-effective to buy foreign exchange in RMB to repay US dollars than to repay Euro in RMB. For example, the lowest price of RMB-Canadian dollar foreign exchange quoted by ICBC on February 23rd1is 5.3557, and the highest price is 5.380 1. However, the RMB-Canadian dollar exchange rate converted from MasterCard dollar account without currency conversion fee is 5.3493.
Conclusion: MasterCard dollar account and Cabido currency credit card free of currency conversion fee are cost-effective.
To sum up, the ways to save money by cross-border consumption mainly include:
1. If there is no V/M credit card free of currency conversion fee, it is more cost-effective to use the RMB account of UnionPay channel;
2. Under the condition that the V/M credit card is free of currency conversion fee, it is more cost-effective to use MasterCard's dollar card;
3. It is cost-effective to use a multi-currency credit card when the cardholder does not need to purchase foreign exchange for repayment (that is, the payment currency is the same as the bookkeeping currency); If you purchase foreign exchange for repayment, multi-currency credit cards are not as cost-effective as MasterCard.
4. If the VISA RMB credit card free of currency conversion fee is launched in the future, it will be the most cost-effective cross-border US dollar consumer credit card because the US dollar exchange rate of VISA is lower than other institutions for a long time.
In addition, it should be emphasized that the settlement date of V/M and other foreign card consumption transactions is at least one day later than the consumption date, which means that the exchange rate comparison we calculated before only exists in theory, and the actual settlement exchange rate fluctuates with the fluctuation of the exchange rate market. For large cross-border consumption, the ultimate solution to save money is to pay close attention to the exchange rate market and absorb foreign currency on dips.