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Avoid ATM bandits in Spain - 17 July 2008

Brits traveling to Spain this summer are being warned to keep their wits about them if they decided to get cash from an ATM, and stay alert to losing their money to an unexpected foe. According to a new system of presenting choices to the customer, tourists and property owners alike could be ‘mugged’ by the ATM for an exchange rate that leaves them out of pocket, and lets the banks run off with the profit.

Confusing new messages are being put onto ATM machines to offer clients the use of DCC, or Dynamic Currency Conversion, and according to The Guardian, the system will almost always result in the bank making money from the customer. The system, which is already in place in many shops and restaurants, allows users the option of paying for goods in Sterling. While an attractive way of keeping track of spending while overseas, the exchange rate used is poor and there are high transaction costs which are funnelled back to the retailer.

Following a trial period with Santander, DCC is being introduced to Spanish ATMs with messages that could confuse users into pressing the button to be charged in Sterling and losing out to the banks. According to regulations, the screen on the ATM will flash up a message informing the customer they can be charged in GBP, and will inform them of the mark-up, exchange rate used and commission. This will be followed by a message saying: ‘Press yes for GBP, no for EUR’.

Advice from the banks and building societies is that customers should press ‘no’. While Santander and other banks in Spain say they are just offering the choice to consumers that is demanded, many UK banking institutions are campaigning against the introduction of DCC. In tests carried out on the same machine at the same time in Spain, the difference in transaction cost between pressing ‘yes’ and ‘no’ was as little as €0.17 on a €70 withdrawal, but when this is multiplied by the number of transactions that are carried out daily through ATMs it is clear someone is making a tidy profit.

According to the literature on the websites of the companies supplying DCC capability to retailers, the system helps them to generate ‘a new revenue stream’.

Of course, nothing illegal is being done here, and no money is being taken from customers without their consent, but people need to be aware of the poor rate and charges they are subject to when using the ATM system in Spain. Needless to say, Spain is not the only country that adds charges to its ATM machines for overseas users, and DCC is not the only additional transaction charge that is levied to overseas users. Both Nationwide and Abbey offer cards which have no foreign exchange fees.

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