Credit cards are the second most popular means of settling payments in Switzerland, after cash. They take first place as a means of payment for online shopping.
Credit card payment on the Internet
Around 25% of participants in the moneyland.ch payment method survey stated that they always use credit cards to pay for online purchases. Another 40% frequently use credit cards for this type of purchase, 21% occasionally, 9% rarely and 5% never use credit card to pay for online purchases.
For the sake of comparison: Only 8% of survey participants always use credit cards to pay at Swiss brick-and-mortar merchants. 20% rarely use credit cards for this type of purchase, and 17% never pay by credit card.
But many people are not aware of the hidden costs of using credit cards to pay online. This is especially true for consumers who make purchases from foreign online merchants. Additionally, some Swiss online merchants add a surcharge when you pay by credit card (find more information about credit card surcharges here).
Foreign transaction fees when paying online
When you pay for purchases from foreign merchants like Amazon in a foreign currency, you pay foreign currency exchange fees. These include both the foreign transaction fee which is charged by the credit card issuer, and the spread between the buy and sell prices for currencies. Foreign transaction fees vary depending on which credit card you use. These are clearly shown in the interactive credit card comparison on moneyland.ch. You can learn more about credit card foreign transaction fees here.
Dynamic currency conversion
You should always be wary about paying for purchases from foreign online merchants in Swiss francs. Many Swiss credit card issuers now charge foreign transaction fees for purchases made in Swiss francs, when the purchase is transacted outside of Switzerland (at a foreign online store, for example). When cards charge a foreign transaction fee for Swiss franc transactions outside of Switzerland, this is clearly stated on the information pages of credit cards included in the moneyland.ch credit card comparison.
Card issuers justify these fees with the higher fees charged by Visa and Mastercard for international purchases and the higher risk of credit card fraud when paying outside of Switzerland.
The foreign transaction fees for purchases from foreign merchants paid in Swiss francs are one of the reasons why you should avoid dynamic currency conversion (DCC). When dynamic currency conversion is used, prices are listed in Swiss francs. However, in most cases a very unfavorable exchange rate is used. If you card has a foreign transaction fee for purchases from foreign merchants paid in Swiss francs, that fee adds to the total cost. Some online merchants like Amazon let you pay in Swiss francs instead of euro, but using this option is normally a bad deal for Swiss consumers.
Foreign transaction fees on websites with Swiss domains
Aside from dynamic currency conversion, there are other traps through which online shoppers may pay foreign transaction fees for Swiss franc transactions. Websites which do not use the “.ch” domain and those which use a “.ch” domain (like amazon.ch) but reroute to a foreign merchant (like amazon.de).
Even online merchants with a “.ch” domain are not foolproof. Some foreign merchants operate “.ch” websites although the company itself sits outside of Switzerland. In the case of big name foreign merchants which operate “.ch” online stores (like zalando.ch), Swiss banks tend to be accommodating and some waive foreign transaction fees.
Taking a quick look at the terms and conditions of online merchants to determine whether the merchant is based in Switzerland or abroad is recommended. If you are not sure, ask your credit card issuer about the fees you can expect to pay when buying from the merchant in question. Your IP address is not used to determine foreign transaction fees. You can use your credit card to pay at Swiss merchants in Swiss francs regardless of where you are at the time.
Fees at Swiss online shops by credit card issuer
When asked by moneyland.ch, Swisscard explained that foreign transaction fees can apply to purchases in Swiss francs from some online stores with “.ch” domains. The merchant’s domicile is determined by the merchant ID and not by the web domain. If a merchant has a foreign merchant ID, foreign transaction fee will normally apply.
Bonuscard credit card users may also pay fees. Bonuscard maintains a list of “.ch” websites which are exempt from foreign transaction fees. When you use your card to pay at online merchants which are not included in the list, you may pay foreign transaction fees. According to bonus card, customers can request a refund of foreign transaction fees in this specific case.
The location in which the online merchant is domiciled is also important for UBS credit card holders. If the merchant is domiciled abroad, UBS charges foreign transaction fees for transactions in Swiss francs. UBS waives fees in select cases.
Cornèrcard too charges foreign transaction fees for purchases from “.ch” online stores when the merchant is domiciled outside of Switzerland. However, Cornèrcard makes a number of exceptions for popular websites like zalando.ch and even amazon.de, for which foreign transaction fee are waived.
Viseca generally charges foreign transaction fees based on where the transaction is processed (normally the location of the merchant in question). So the location in which a merchant is domiciled is important to Viseca card users as well. Viseca waives its foreign transaction fee for certain online stores with a “.ch” domain but a foreign domicile.
Postfinance is one of the few issuers which does not yet charge a foreign transaction fee for Swiss franc transactions to foreign merchants.