Busting the myth of Mastercard having better forex rates than Visa.

[telescope]

So, first things first. While typing the title, I found similar thread already was started by our fellow member @Odugu Narasimha Rao. But, that post is not as detailed as this one. So mods please maaf kar dena bhaiyo.

Coming to the main topic. There is a polupar myth among cardheads that MC provides better exchange rate than VISA. Here, I'll post with detailed proof, explaining why VISA is better than MC.

But, let's first understand how foreign exchange works when we pay via cards:
Whenever we make a payment in foreign currency, card network (Visa, MC, JCB etc) is responsible for deciding the exchange rate of the day. It is NOT the banks that decide exchange rate. Banks decide exchange rate for prepaid forex rates such as forex prepaid card. but, for CC/DC banks DO NOT decide exchange rate.

Then how do banks earn for cc/dc transaction?
Banks impose something called forex markup charge. That is their main income. For Zero forex cards, banks bank on the volume, and if the volume is high, then banks receive a kickback from the card network for giving business to them. Also, banks earn from ATM withdraw fees/ATM balance enquiry fees etc.
Nowhere is my research with screenshots and relevant links. Note that - I am considering forex markup as 0%, as the main objective of this thread is to compare and show that VISA is better than MC.

Important links:
1. VISA Exchange Rate Calculator - https://www.visa.co.in/support/consumer/travel-support/exchange-rate-calculator.html
2. Mastercard Currency Converter Calculator - https://www.mastercard.co.in/en-in/personal/get-support/convert-currency.html

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[financewizard]

To my understanding, the perspective also matters. Like if you are going to convert from INR to other currencies, VISA is good. If you are remitting to India or converting back to INR, Mastercard is good - based on the conversion ratios.

 

[telescope]

To my understanding, the perspective also matters. Like if you are going to convert from INR to other currencies, VISA is good. If you are remitting to India or converting back to INR, Mastercard is good - based on the conversion ratios.

View attachment 66032

My research was purely spending in foreign currency, not inward remittance.

Thanks for your observation

 

[aneesh120]

I have been doing international transactions a lot and have always gotten better rates on MC

 

[helloworld]

Could you share some real time example (maybe purchase or test txn on both networks same day and reflection in bank side), I do not trust these online calculater, they may not be upto date. Going to make large intl. txn, it would lot better if you share some actual txns. TIA

 

[telescope]

Could you share some real time example (maybe purchase or test txn on both networks same day and reflection in bank side), I do not trust these online calculater, they may not be upto date. Going to make large intl. txn, it would lot better if you share some actual txns. TIA

Sorry can't do that. Every bank in the world relies on the rates provided by card network for exchange rates. If you don't believe that's your choice.

If you have niyo global app you can check with their app for exchange rates. And those exchange rates are also fetched from the Visa exchange rate link I provided above. I think scapia also has calculator, but not sure.

 

[ramirami]

I have done this exercise multiple times using the same card network supplied calculators and it's not the same result every time. Sometimes MasterCard gives better rates, sometimes Visa. Somebody needs to do this for every day for a long period to see if on an average one network provides better rates.

 

[sunit123]

These calculators are theoretical in nature and not reliable...I do a transaction of approx 12000 USD every month both inward and outward....I tested all networks.....Mastercard is the BEST in all scenarios.

 

[ramirami]

These calculators are theoretical in nature and not reliable...I do a transaction of approx 12000 USD every month both inward and outward....I tested all networks.....Mastercard is the BEST in all scenarios.

No, they are not theoretical. If you have cards that charge zero forex fees, for payments using cards, the calculated value on the settlement date matches the charged value to the paisa. It's a different story for wire transfers etc., but for card payments, they are perfectly accurate.

If your card charges fees, you have to add the correct markup (including GST on fees) to get the calculator to show accurate output.

 

[telescope]

No, they are not theoretical. If you have cards that charge zero forex fees, for payments using cards, the calculated value on the settlement date matches the charged value to the paisa. It's a different story for wire transfers etc., but for card payments, they are perfectly accurate.

If your card charges fees, you have to add the correct markup (including GST on fees) to get the calculator to show accurate output.

You are absolutely correct

 

[helloworld]

I have done this exercise multiple times using the same card network supplied calculators and it's not the same result every time. Sometimes MasterCard gives better rates, sometimes Visa. Somebody needs to do this for every day for a long period to see if on an average one network provides better rates.

this is valid point.