For international travelers, a new pact between a Citigroup Hong Kong unit and Planet Payment Inc. should take the mystery out of currency exchange rates on a purchase-by-purchase basis.
Consumers traveling to Hong Kong or Macau willing to fork over a few extra bucks now may have their purchases converted into their local currencies under Planet Payment's agreement with merchant acquirer Citibank (Hong Kong) Ltd. Planet Payment, of New York, announced the deal June 18.
Four of the region's top six acquirers, including Bank of East Asia, now support Planet Payment's Pay in Your Currency service, Scott Goldthwaite, Planet Payment's senior vice president for product management and marketing, tells PaymentsSource.
When using the service, customers of participating merchants see on the receipt or payment terminal the sale cost in the local currency and in their own, plus whatever fees apply to convert the payment to one's home currency. They check or click the option to choose.
"The consumers know right there what will show up in their statement at the end of the month, and when shopping in their own currency it makes the shopping experience easier for them," he says.
The process complies with the rules Visa Inc. and MasterCard Worldwide set for dynamic currency conversion regarding pricing disclosure and transparency. Acquirers set their own conversion rates, but typically they charge is 3% to 4.5% of the sale, Goldthwaite says.
Hong Kong and Macau represent major travel and tourism destinations, and the expectation is that many travelers from those countries would prefer to pay in their local Honk Kong dollars or Macau pataca, Goldthwaite says.
In a report, Visa says Hong Kong's tourism industry last year reached a record high of 41.9 million arrivals. And according to the Hong Kong Tourism Board, tourists spent a historic high of HK$253 billion (US$32.6 billion) in 2011, up 20.5% from a year earlier (see report).
Macau tourist arrivals rose 12.2% last year, to 28 million from a year earlier, according to the Macau Government Tourist Office. Some 25 million of them were from Greater China. Visitors' spending totaled US$25.3 billion from January to September, up 34% year over year, the agency said.
Goldthwaite declined to say typically what percentage of shoppers at participating merchants pay to convert payments to their own local currency. Planet Payment is limited in the information it can release because of plans to go public in the coming months, he says.
This month, Planet Payment also announced a deal with Cardinal Commerce Inc. to support its 3-D Secure service Cardinal Centinel (see story).
Looking ahead, Planet Payment may also target Australia and Western Europe, Goldthwaite says. Other providers of dynamic currency conversion internationally – in particular Europe – include Fintrax Group, FexCo Merchant Services and Pure Commerce.
Competition also is picking up domestically. Among the biggest competitors in the U.S. is First Data Corp., which in May began promoting the service on two fronts in hopes of securing more North American retailers (see story).