Shopping Abroad: What Currency will you Pay in?

By: Gabriella Patruno

Stores in London and New York are making it easier for visitors to shop by allowing them to pay in their home currencies including the U.S. Dollar, the British Pound and the Euro. Seven of the ten top stores along London’s Oxford Street allow customers to pay in currencies other than sterling to accommodate their diverse shoppers. Since the British Pound is stronger than the U.S. Dollar, store owners in New York are graciously accepting sterling from their overseas visitors.

This is convenient for shoppers because it avoids having to exchange currencies and paying the exchange fee. In some stores however, customers are better off paying in the local currency.

John Lewis, Selfridges, Topshop, Monsoon, Zara, Next and Oasis are some of the most popular retail stores on Oxford Street. They all give visiting customers the option to pay in British Pounds, Euros or American Dollars, but watch out for the exchange rates.

Oasis and Monsoon provide both the British Pound and the Euro amounts on their price tags. A price tag at Oasis displays £45 or €56 for a sweater. A customer can choose to pay in either currency. The current exchange rate for British Pounds to Euros is €1.17, making the true price of the sweater €52. Customers who pay in Euros at Oasis will be spending seven percent more than they should.

That seven percent is nominal compared to what people would be paying at Monsoon. Here, a dress at £70 costs Euro paying customers €110, when really it should only cost around €82. That is a whopping 34 percent price increase.

Cinzia Renatto, a visitor from Italy, is frustrated with the cash exchange fees, but she still changes her Euros for sterling. She is aware of these price discrepancies and makes sure she doesn’t fall a victim to it.

“It’s too expensive to pay for things in Euros here. I always use Pounds,” said Cinzia.

Paying in a home currency may be easier because it allows visitors to avoid cash exchange fees, but is the price of convenience worth such a drastic price increase? Emma England, a study abroad student from Texas pays in U.S dollars when she shops at Selfridges.

“The cashier asks me if I want to pay in U.S. dollars and I agree to it that way I know exactly how much I am spending,” said Emma.

Selfridges gives customers the option to pay in dollars or Euros and charges them the amount at the given exchange rate for that day. This way, customers are assured they are paying the correct amount.

Unfortunately, Americans looking to spend at Topshop won’t be as lucky. The price tags at this popular store also display U.S. dollars, but the prices are simply double the British Pound amount. A dress that costs £70 costs $140. That exchange rate is two to one, 30 percent more than the actually rate of $1.57.

The American girls found buying clothes in Topshop know about the doubled prices and are not happy about it.

“We think it’s ridiculous that they’re charging that much. We know never to pay in dollars here, it’s just not worth it,” said Mimi Fuchs from Philadelphia.

In fact, Mimi checked the prices on Topshop’s website and she says they show the same pattern. A top priced at £36 will still cost an American $72.

“I’ve also been to the Topshop in New York and it’s the same thing there. The price tags show both currencies and the American price is always double,” she said.

It seems that many people are aware of these price differences and want to know why. An anonymous Topshop fan on the social networking site Yahoo Answers, asked why Topshop’s American prices are so expensive and says he or she is discouraged from buying because of the prices.

Another anonymous poster replied with an answer. The poster states that Topshop marks up their prices 22 percent because the company has to pay fees in order to transfer funds from dollars to pounds. Also, the company must pay for shipping to the States since Topshop’s website does not charge their customers a shipping fee.

Topshop refused to comment. For now, American customers will have to pay in sterling to save.

House of Fraser and Zara allow customers to choose a currency to pay in when using a credit card. The exchange rate will be the proper rate or a little bit higher due to transfer fees. As long as the customer is aware of how much they are being charged, this is probably their best option.

John Lewis lets their customers pay in dollars and gives them the correct exchange rate as well. However, there’s still a catch. John Lewis only allows U.S. dollar payments only in $10 increments. If the price isn’t a multiple of ten, the price is rounded up and John Lewis will pay you the difference in sterling. In other words, if an item is $107, the customer must pay $110. Then the cashier will give the change back in sterling.

While most stores allow different currency payments only via credit card, Next allows customers to use cash. It will accept cash only payments in American Dollars at an exchange rate of $1.66. That rate is a bit more sympathetic to American customers than those at competing stores, but it is still a five percent rate increase. The only benefit of using American cash here is avoiding the commission fee when exchanging currencies. Even then it isn’t worth it because Next will not accept American cash payments over $100.

Fortunately for UK visitors to New York, the exchange rate from sterling to dollars is much more favorable. Which is why store owners are more willing to take British Pounds. Billy Leroy, of Billy’s Antiques and Props in NYC gets about 100 UK customers a year. He likes to collect sterling and use it to travel.

“You hop on a plane and boom, you’re all set. It’s not worth going through the hassle of exchanging the money and paying the fees,” said Leroy.

Leroy exchanges sterling at a rate of $1.40. This actually benefits British customers because they are paying 10.8 percent less than the actual exchange rate.

Accepting different currencies can benefit a city’s tourism industry by bringing in a greater array of shoppers. However, if the stores in London continue to exchange at increased rates, it may deter tourists from shopping there.

Before shopping in any country, make sure to check the exchange rate for the day. Ask the cashier about their payment options. Don’t end up paying more than you should.