It’s called convenience exchange, dynamic currency conversion or many other names and defended by businesses as a “practice instituted for the convenience of our valued customers.”  We call it a rip-off.

The concept is that travelers are most comfortable paying for purchases in their home currency so the business acts as an extremely well paid exchange intermediary in credit card transactions to submit the charge in dollars instead of colones.

I would maintain that most travelers would be more comfortable paying the amount on the price tag for their purchase instead of a 5% to 25% higher price in their home currency.

Generally the way it works is a price in Colones is converted into dollars at a very poor exchange rate and sometimes with an additional fee or commission and that is what is posted to the credit card.

Many cardholders will then also be charged an additional 3% foreign transaction fee by their credit card company because the transaction is still initiated in a foreign country…the currency has no bearing.

To add insult to injury, the foreign transaction fee applies to the scam exchange fee and scam commission as well.

When we made a purchase in the Britt souvenir shop at LIR in March of 2018 they did not even ask if we wanted to pay an extra 24.6% for “convenience” so an overpriced $28 souvenir ended up as a $34.89 charge on our credit card statement and Britt pocketed most of the extra.  We caught the scam when we saw the receipt but didn’t want to miss our plane waiting around for a manager to reverse it.

Definitely a sleazy business practice and it should be illegal but apparently it’s not.

While the practice is relatively new to Costa Rica it’s been going on for a few years elsewhere.  Restaurants, resorts and hotels have started pulling the same crap and seen complaints against Avis, Hilton, and others online.

It’s not trivial either – a one week resort stay for two people could result in hundreds of dollars of excess charges.

Avoiding Dynamic Currency Conversion Fees

Some of the businesses running this scam make it doubly insidious by not requiring a signature on the credit card form.  That way there’s no chance for you to realize you were charged $108.75 for a $90 dinner tab until you get home and see your credit card statement so you have to be on your toes at the register.

Oh, and by the way the exchange scam inflates the amount you pay for taxes and tips and converts the excess directly into profit for the business…it doesn’t even go to the poor waiter who’s going to have to face your wrath when you catch the rip-off.

Insist that if the price is listed in colones the charge to your credit card appears in colones.

As far as I know, businesses are only pulling this scam on credit card transactions.  There’s technically no reason they couldn’t charge extra on cash transaction as well.  However, I think things might get ugly when people started noticing…”what do you mean you want another $10? The two drinks were $10 each and I gave you a $20…”

Also keep in mind that charges in dollars are not automatically a scam.  If the price of a pizza is listed as $22 and the restaurant runs your credit card for $22 then that just means they do business in dollars.  This isn’t uncommon because the colon is devaluing and somewhat unstable.