Israelis Lose Millions Abroad by Choosing Currency Conversion at Payment Terminals

Israeli travelers frequently fall into a costly financial trap when paying abroad by credit card. At payment terminals in cities like Prague, Budapest, or Bangkok, users are prompted to choose between paying in the local currency or in dollars or euros. Many instinctively select the familiar dollar or euro option, believing it helps them understand the exact amount charged. However, this choice triggers Dynamic Currency Conversion (DCC), where the merchant converts the payment at inflated exchange rates and hidden fees before the transaction reaches the credit card company. This practice bypasses the cardholder's foreign currency fee benefits, even for cards offering 0% foreign transaction fees.

The digital bank ONE ZERO identified a worrying pattern among thousands of Israeli customers who unknowingly paid extra by opting for the dollar or euro option in countries where these are not the local currencies. This led to millions of shekels lost over just six months. Marketing Automation Team Leader Dor Traser explained that many customers forfeited their foreign currency fee advantages by accepting the merchant’s conversion, resulting in less favorable exchange rates.

The key advice for travelers is to always choose to pay in the local currency, regardless of unfamiliarity. For example, pay in zloty in Poland, koruna in the Czech Republic, baht in Thailand, and pounds in the UK. This ensures the credit card company handles the currency conversion, often at better rates and without hidden fees. Travelers should resist the temptation to pick the seemingly easier or more familiar currency option presented on the terminal screen to avoid unnecessary expenses.