Should you pay in AUD or the local currency?
Always choose the local currency.
Always choose the local currency. Paying in Australian dollars hands the exchange rate to the merchant’s payment processor instead of Visa or Mastercard, and the ACCC warns it may be the more expensive option.
Euros in Italy, yen in Japan, baht in Thailand - every terminal, every ATM, every time. It is the single highest-value habit an Australian traveller can have, and it costs nothing to adopt.
What is dynamic currency conversion?
Dynamic currency conversion is a service that converts an overseas card transaction into your home currency at the point of sale, at a rate set by the merchant’s payment processor rather than your card network. When a terminal recognises an Australian card, it can offer to bill you in Australian dollars. Being quoted a familiar number feels like a kindness. It is a product, and somebody is paid for it.
What does paying in Australian dollars cost?
Pressing AUD moves the conversion away from your card network and gives it to the merchant’s processor, which sets the rate wherever it likes. You are no longer getting the Visa or Mastercard wholesale rate. You are getting a rate chosen by a company that earns more the worse it is, and the markup is shared between the processor, the merchant and the terminal operator.
The ACCC states it plainly: choosing to pay in Australian dollars may be the more expensive option, and your card issuer may still charge its international transaction fee anyway. That is the part most people miss. Paying in Australian dollars does not make the transaction domestic. You can pay the conversion markup and the around 3% fee, on the same purchase.
The same lunch, two ways
A EUR 20 lunch in Rome. Choose euros and your card network converts at its wholesale rate, and your bank adds its foreign transaction fee if it charges one. Choose Australian dollars and the terminal converts at a rate it picked, then your bank may add its fee to that. The screen shows you a number in dollars either way. Only one of them was set by somebody with no stake in the answer.
Why is dynamic currency conversion legal?
Because you agree to it. Both card schemes require that the choice is put to the cardholder rather than applied for them, and that the rate and the margin are disclosed on screen before you accept. Everything about the transaction is above board. The problem is that it is presented at the exact moment you are least likely to read carefully, in the friendliest possible terms.
Where you will be offered dynamic currency conversion
- Shop and restaurant terminals. The screen asks which currency before you tap.
- ATMs. Often the most aggressive, with conversion pre-selected and declining hidden behind a button marked "continue without conversion". More on ATM fees.
- Overseas websites. Some detect an Australian card at checkout and offer dollars. Same mechanism, same answer.
- Hotel checkout. Where the amounts are largest and a percentage hurts most.
What to do if you picked the wrong currency
Ask the merchant to void the transaction and run it again in local currency before you walk away. Once it settles it is hard to unwind, because you did agree to the rate on screen. At an ATM, cancel and start again rather than accepting a rate you did not want.
If you were never given the choice, that is different. Visa requires that merchants and ATMs let the cardholder accept or decline the conversion and must not choose on their behalf, and that they do not use things like font size or colour to push the decision. Mastercard requires the choice be put before the cardholder enters their PIN. If a terminal converted without asking, or the local-currency option was hidden, contact your card issuer with the receipt. Working out what you were actually charged.
Frequently asked questions
Is dynamic currency conversion the same as a foreign transaction fee?
No, and you can pay both on one purchase. Dynamic currency conversion is a markup on the exchange rate, applied by the merchant's payment processor because you chose to be billed in Australian dollars. A foreign transaction fee is a percentage your own Australian bank adds because the transaction was processed overseas. Declining the conversion removes the first. Only changing accounts removes the second.
If I decline the conversion, do I get a worse rate?
No. Declining hands the conversion to Visa or Mastercard, which use their own wholesale rate - the benchmark every other option is measured against. The screen may show the local-currency option without an Australian dollar figure, which makes it feel like the uncertain choice. It is the cheaper one.
Does this apply to overseas websites as well as shops?
Yes. Some overseas sites detect an Australian card at checkout and offer to bill you in Australian dollars, using the same mechanism. Choose the site's own currency. The same applies to airline websites, which are among the most persistent about offering it on international bookings.
What if the country uses US dollars, like Cambodia?
Pay in the currency the price is quoted in, which in Cambodia is usually US dollars. The rule is not "always use the local national currency" but "never let the terminal convert for you" - you want your card network doing the conversion from whatever currency the merchant charges in, rather than a processor picking its own rate.
More on travel money
Start from the top: travel money cards by destination, or read the overview in travel money for Australians.
Last reviewed 3 September 2026. Account fees and conditions change without notice, and the accounts that waive a fee today may not tomorrow. Confirm anything that matters against the product disclosure statement and the sources below.
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