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Beware of the Big Bad Baht Scam!

Okay, so the title is a tad misleading, because it isn't really a scam in that someone is doing their utmost to rip you off, but I did get your attention, so now you're here, read on, as this may save you a tiny fortune…

The first time I came across this, I got caught out because I was quite simply unaware. After paying a bill in the hospital with my UK credit card, I looked down at my receipt and saw that I'd been charged in UK Pounds and not Baht.

On that receipt was also the exchange rate I'd been given, a whopping 4 Baht per GBP less than the going rate – I checked this against my bank's (UK) rate on other charges to my credit card that week.

Had I been charged in Baht, I'd have saved around 250 Baht. That's not a huge amount, but on larger purchases this would have a significant impact.

This was strange because I'd not been charged in GBP when paying for anything on my credit card before. And so I queried it…

The reception manager said the cashier should have asked me in which currency I wanted to pay before billing me. I guess she forgot on this occasion.

I put this down to a one off, but since that time the same issue has come up three more times and seems to be getting more popular.

For example, just recently I bought a new mouse from iBeat. On this occasion the lady did ask me whether I'd like to pay in GBP or Baht. I chuckled and said Baht. She chuckled too, indicating that she knew that I knew I'd pay less in Baht.

So what is this all about?

When you're in a queue and a cashier says “Baht or GBP”, the quick, natural thing is to say your own currency; it's a kind of auto-pilot thing to do. It's almost like your brain says, “Cool, I get to pay in my own currency in another country”.

But it's not cool. Because you lose out. Big-time.

When you look at your receipt, you are fooled into thinking that the exchange rate on your receipt is what you would have gotten whether you'd opted for Baht instead of your home country's currency anyway.

But that's not the case.

The exchange rate on your receipt is not what you would have gotten from your home bank once the amount was converted in your home country by your credit card provider. The amount on the receipt is the very low rate the Thai bank has given you on a conversion from Baht to your native currency.

For example, look at the receipt below from iBeat. If I had accepted my home currency, I'd have been given an exchange rate of 51.32 Baht. As it was, being in the know, I chose Baht and my credit card company converted it at 54.56 Baht to the Pound at the other end. So I paid 41.97 GBP instead of 44.62 GBP, as it says I would have done on the receipt, had I chosen to pay in GBP.

thailand scam

But here's what I am having trouble working out. Who profits from this?

Surely the shop don't make anything because the bank just pays them the price in Baht. So is it the bank that makes a profit by pocketing the difference between the exchange rate they give you and the real exchange rate in Thailand at the time of purchase, which is much higher?

Perhaps someone can enlighten me on this in the comments section.

All I know is that it doesn't pay to NOT pay in Baht. I know it's not really a scam because 9 times out of 10 you will be asked first, so it is technically a personal choice, and the cashier isn't out to fiddle you  (oo-er missus!) But I do think there is a lack of awareness about this and there ought to be more transparency.

So, when asked if you want to pay in Baht or your native currency, make sure you say Baht. And if you aren't asked, it would be worth making sure the transaction is about to processed in Baht before it goes through and can't be refunded.

**UPDATE: I was caught out again yesterday in Tesco. The reason I fell victim was because I'd been in there the day before and paid by credit card in Baht. But when I went back the next day, I paid, looked down at my receipt and the cashier had given me a rate of 53 Baht to GBP when the actual rate was 56! Below the conversion there was a 3% charge.

I immediately asked to see the manager. She apologised and said the cashier should have asked me first. But that's the point. I never have been asked in Tesco before, and therefore never had a reason to check my receipt.

So why is this suddenly happening everywhere? Are these innocent mistakes? Or does the weak Baht and falling tourist numbers have something to do with it?

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  1. Martin1 says

    As far as I know, only MasterCard offers this service.

    TTL, you are right, people should always decline use of this service, because they always charge 3 %, whereas the foreign bank usually only does a 1,5 to 1,75 % damage.
    But yeah, that damage you avoid because you have paid in e.g. GBP and not a foreign currency. In addition using that service gives you a worse exchange rate on top.
    ATM also ask you about the currency you would like to be charged in. Same applies here!
    But the ATM fees (both Thai ATM + ATM fee from your foreign bank) will be charged regardless off the currency you selected.
    Reply

  2. James says

    This is pretty common everywhere these days. But there are two things to do to beat the scam. And, to disagree with TTL, it really is a scam.First, you will always get a MUCH better exchange rate through your bank or credit card than you will letting a local bank determine the exchange rate. This is because the local bank will always apply their buy/sell spread to their advantage whereas a local currency transaction gets lumped in with all the other local currency transactions going back to your home bank and so you get a massive benefit of scale. In the US from both Chase and BOA I get very near the posted FX rate on credit card transactions (within a few 1/10s of a baht/dollar).Second, get a credit card with no foreign transaction fees. They might - might - have an annual fee but there are usually ways around this. Unfortunately, even if the transaction is in $, £, €, or Imperial Credits, it's a foreign transaction. I've been dinged before on a $ transaction, from a US company (Skype) whose headquarters are in some channel island for payment processing.My most recent transaction - 30/03/2107 hit me with a 34.37THB/$ exchange rate on a day when the posted exchange rate was 34.47. Not bad.Third (oops, I guess there's more than two), get a Thai bank account that way you can take advantage of anomalous pops in the exchange rate to save some money on transfers into the country. For example an exchange this week vs. last week would almost pay for the TransferWise fee. Once you've got some money in baht you can use the exchange rate to determine if you're better off buying with local cash/debit or using your no-annual-fee, no-foreign-transaction-fee credit card from wherever home is.
    Reply

  3. Alex Root says

    Personally I have this issue only with ATMs... Thus I use credit cards as much as I can.
    Either Visa and Mastercard exchange me, something in between -1,2~1,3% compared to XE.com EURO rates...
    Don't have a clue why is that low (maybe because they are both prepaid cards? Mystery... ).

    When I exchange cash, it's about -0,5~1,5% (starting from SuperRich down the bank with the worst ratio). Take a look to the link below to get a picture:
    https://daytodaydata.net/

    BUT when using the same credit cards and a Maestro/Cirrus debit card on ATM, they lower the actual rates to about A FREAKING -5%!!! No to mention the 200b Thai bank fee and 2euro fee from my bank...
    Therefore, I use the ATMs only in case I have no choice at the very moment.
    Try to avoid them at any cost. I use them just about 3-4 times in a year, so the loss is still mild (about 150euro total loss for 20,000b x 4 times exchange).

    Then I just use credit cards like a madman and when I leave & back from my Country, I ALWAYS take with me 9,990euros in cash (max permitted cash is 10,000euros per time). Not to mention I refill the prepaid cards to their 5,000euro limit each. 20,000euro are a plenty of money in Thailand for about 1 year, intermitted stay.
    Reply

      • Alex Root says

        Lol. To make it clear, I have a wooden safe box in my closet, which is a total BS. hahaha.
        I just had learnt from dad: put the liquid cash in places where thieves would never think about. Use their minds, instead yours.
        Anyway, living in a Lumpini condo it's pretty safe:

        1- to get in the establishment, strangers need to deposit their ID cards at the entrance (which looks like a frontier board);
        2- then in order to get in to the building, they need a magnet pass...;
        3- CCTV cameras are everywhere;
        4- private guards are everywhere as well and know you;
        5- people in the same condo get used to know each others (at least on the same floor or/and pool), so any suspicious stranger would be easily recognized.

        Anyway, you're right. I'm gonna open soon a bank account with Bangkok bank, which gave me 2 options: deposit everything normally or use 80% of it as an investment with a 1,35% profit after 10 months... well... If i'm gonna invest 800,000b it would be a 11,000b profit... a tip... lol. but better than put the money in a "improper places". hahaha. :D
        Reply

    • Martin1 says

      Alex,
      you are a bit unprecise here. You can travel with *any* cash amount inside and outside the EU!
      The point is though that one has to go to customs and declare that amount. Customs will notice and send that information to your local IRS.
      They might aks questions where has Alex that much money from?

      But: Legal is to carry as much money with you as you can/have/want. :-)
      Reply

  4. Richard says

    With a retirement visa I would #1 Like to transfer money to a Thai account from my US Checking Account. What is the simplest and cheapest way?
    #2 As in the US, both savings and checking accounts were guaranteed by the FDIC in the amount of $100,000 USD and now it is $250,000. I am told there is an amount of guaranteed like this in Thai banks (DPA) but cannot find any reference to it on any banking site. What is the correct amount one is guaranteed in Thai banks?
    Reply

  5. Martin says

    To see the big picture, if you pay in the currency your credit card is based on, you pay no foreign currency exchange costs! In my case that is a 1,5 - 1,75 % fee for paying in a foreign currency.

    But sure: 3 % is way too much! Almost all Thai banks try to rip off falangs: That, 180 THB ATM fee etc. and so on.
    Reply

  6. The Bose says

    I have traveled throughout Asia, and found that Thailand is the only country where this is a problem...

    ..which has caused me to wonder if the merchant does not stand to benefit (e.g. by receiving the foreign currency amount into their bank account at a more favorable exchange rate, etc.).
    Reply

  7. David says

    This isn't just in Thailand, it's true all over the world. And whether you get a better rate is wholly dependent on the terms set by your home bank. For US banking customers, banks and credit card companies in the US charge fees varying from 0-5% just for US debit and credit card holders making a purchase in foreign currency, on top of the roughly 0.5%-1% spread over the wholesale exchange rate (though the trend with the higher end cards now is a 0% foreign transaction fee, and only the spread). Even worse, some of the more local, regional banks in the US might actually charge a *retail* spread to their debit or credit card customers (retail spread being more like 2-5% or more). So fees could add up to as much as 7-9% in the worst cases (though granted these worst cases are rare); typical fees in the 6% above wholesale are not uncommon. For many (though not all) transactions handled in a foreign country but in US dollars, some or all of these fees are reduced. Charging in home currency for those customers ends up being a rough wash over foreign currency (maybe 1-2% on either side), but with the added benefit (especially for non-residents) of easy math :)

    In other countries, especially ones where the banking system is only moderately developed, these fees can approach 3-7% of the transaction.
    Reply

  8. Sai says

    Does this apply when paying for something online? I just recently (this morning) booked flights on airasia for some family in Thailand and at the website checkout I was asked if I wanted to pay in baht or my currency (GBP) and I clicked GBP. Now I wonder if it would have been cheaper if I paid in bahts? I have a few more flights to book so might try it the other way round next time.
    I should also probably say I used my normal bank card I use at home in England, not a Thai bank card.

    P.s. I stumbled upon your website while searching for information about opening a bank account for when I visit next year. I will only have a 30 day visa because unfortunately, even though I was born in Thailand, I have been in England since I was 6 therefore I do not have Thai identification card or residency and my Thai passport is God knows where. ?
    Reply

    • TheThailandLife says

      Hi Sai, it depends what exchange rate they give you. What I usually do when booking tickets is select Baht, then go to xe.com and see what the amount comes to in GBP. Then I switch it to GBP and see what the amount comes to and whether it is more or less than the xe.com rate.You will still be able to open a bank account, but it depends which branch you try. If you have a Thai family member to go to open it with that will probably help the process. If you have a Thai birth certificate, take that along. You can get an ID card by applying at the UK Embassy: http://www.thaiembassyuk.org.uk/?q=node/368 Contact them and tell them your situation. You can also apply for a Thai passport through them I believe.
      Reply

      • Sai says

        Hi, thanks for your reply, I will definitely look into getting a thai ID card after my holidays. I have a question and can't find a relevant page on here to ask so will do it here and it might sound a little stupid of me to ask so bare with me...
        Basically I would like to know if it is safe to use an extension cable from the UK in Thai hotel? Obviously I'll need to put the little thing with the 2 pins on the end of the plug but is it actually electrically do-able? I want to be able to use multiple sockets like charging my phone, camera ect and use hair curlers at the same time but I don't want to burn down the hotel room haha...
        Reply

  9. Chris says

    How long you been doing this for 7 years lol man you crack me up. Any CC service at Kasikorn Banking services will give you a crappy rate compared to Bangkok Bank, even going to the ATM there will be a 1-2 baht difference, never use them at all that's the simple solution! But even better why not just pay in local currency? 3% charge plus another 3-10 points on the exchange, you've lived here for so long now why are you even using a foreign bank for local transactions? Go to google and type in "flag theory" and stop wasting money. If you really care about this so much use Hawala to send your money over and put it into Bangkok Bank and use local currency, the problem your having is really your own making. *shaking my head*
    Reply

    • TheThailandLife says

      While I have an account with Bangkok Bank, which I route money to free from my PayPal account (via the US), I use a credit card for a lot of transactions because it is free for me. I don't pay any fees. The norm is to for a shop to charge in Baht and then I get a favourable exchange rate from my bank in the UK. However, more frequently shops are trying to sneakily charge in the buyer's native currency; that's what the post is about. No need to shake your head on my behalf; I'm doing just fine.
      Reply

    • TheThailandLife says

      The simple solution, Eric, is to make sure you ask to be charged in Baht as you pay. Otherwise it's a hassle to have them reverse it. If the store is keen on charging in the native currency, most cashiers will have been instructed to ask you first and let you choose, but increasingly this is not the case, so it's always best to pre-empt this situation.
      Reply

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