When Americans pay for something in other countries and they’re asked if they would rather charge their accounts in the local currency or in U.S. dollars, only one correct choice will save money.
So why is Uber automatically forcing its customers to make the wrong choice?
This is a question that has to do with currency conversion. We’ll try to explain this as simply as possible.
Is it better to pay in euros (or another local currency) or dollars?
When you travel internationally with a credit card, your credit card issuer has already negotiated an exchange rate. Your card automatically converts foreign currency for you as a part of its standard service.
Credit card issuers such as Mastercard and Visa have so much power in the industry that they’re able to determine their own exchange rates for your purchases, and those rates aren’t too bad. In fact, they’re far better than what you’d end up paying at a money-changing booth at the airport.
But if a transaction screen offers you the option to pay in your home currency even though you’re not in your home country, something else is happening. That option is being extended to you by a vendor, not by your credit card company.
The service is called Dynamic Currency Conversion, or DCC, an added option that vendors can extend to customers. This option seems convenient, but it’s actually paid for by a less beneficial exchange rate than what your credit card company already offers. It’s a way for a middle-man to get between you and your credit card bill and take a cut for themselves.
When travelers agree to pay credit card charges in their home currency rather than the local currency, they’re getting a worse exchange rate.
In other words, you lose money. You should have just stuck with the local currency.
That’s why is so disappointing to see Uber pull such a dirty trick.
How to stop Uber from charging you DCC fees
As noticed by The Flight Deal, Uber is using Dynamic Currency Conversion as the default in its app, which enables Uber to automatically and needlessly skim a small percentage off every transaction its users make while abroad.
To disable this option, open the Uber app
Step One: Tap Account, then Wallet. Once in the Wallet section.
There, three menu pages deep on a page most Uber users don’t even know is there, Americans will discover that Uber has automatically set “United States dollars” as the default.
Your credit card doesn’t set DCC as a default. Yet Uber is quietly—and extremely shadily, we might add—overriding that configuration for its own purposes.
In puny print at the bottom of that easily overlooked settings page, Uber admits that the choice the app has already made for you will actually result in 1.5% being added to every fare you purchase.
Don’t allow Uber to skim your money by default.
Down under your list of payment methods , almost like an afterthought, you’ll find the path to changing to the correct setting .
Step Two: Tap Set preferred currency. That will take you to the menu you’ll need to change this.
Step Three: At the bottom of the resulting list, look for “No preferred currency.”
Only after you tap “No preferred currency” will you see previously hidden text explaining that this method allows you to “Always pay in the local currency of your ride”. Which is what your credit card does anyway, without this interference. That’s the setting that should have been the default setting in Uber.
If you tap “No preferred currency”, though, Uber suddenly shows you yet more previously hidden verbiage. This time, it warns you that your selection means you “may be charged additional fees by your payment provider.” Uber presumably does this to try to deter you from committing to this better setting that makes Uber less money.
Don’t let Uber frighten you. You almost certainly won’t be charged extra fees for making this choice, particularly if your credit card already levies no foreign transaction fees. (The best credit cards for travelers no longer charge that fee anyway.) And if you doubt us, go ahead and ask your credit card issuer if paying in the local currency will result in added fees.
Step Four: Confirm your choice and exit your Uber Wallet. Now Uber will no longer be able to scam you of that extra 1.5% that you don’t need to be paying at all.
It’s exhausting when services bury pre-selected options in little-seen settings screens, and it’s even more exhausting that Americans decreasingly have anyone in authority who is policing this kind of incremental pickpocketing by corporate giants.
But let Uber’s backhanded grab at convenience fees be your education: If paying the least amount of money is your goal, Dynamic Currency Conversion should always be rejected.