I never understood the exact mechanisms behind this. I’m in Thailand right now. I have a savings account with euros at bank A. I want to withdraw Thai Baht from an atm of bank B. I get the option to withdraw with or without conversion. With conversion is more expensive, so I’m advised to go for without conversion.
Since I don’t have thai baht in my savings, I’m guessing at some point my euros always needs to be converted to baht. Who pays for the conversion in which cases? Why would the ‘with conversion’ option be more expensive? Why would I ever even pick the ‘with conversion’ option?
In: Economics
The bank offering to convert will always rip you off. That’s the whole point.
Anyway, there’s a wholesale (interbank) rate that banks use to calculate the conversion (plus a fee which is usually around 3%). I’m pretty sure this is handled through the ATM network that allows communication from your bank to the ATM (ie Cirrus, Plus, etc.)
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