Because banks earn a nice profit on all your foreign spend (nowhere as bad as that scammy DCC but still a good margin), they tend to offer lucrative overseas spend bonuses to entice you to use your plastic overseas.
For example, DBS Altitude offers 2 miles per $1 on overseas spend (Potentially 3 if you have the AMEX version and are within the first 6 months of card membership), UOB PRVI Miles offers 2.4 miles per $1 and Citibank earns 2 miles per $1.
However, there are some cases where you think you’ve clocked something in foreign currency, but it really books as local. Here is the general rule
Foreign currency payments processed by Singapore-based payment processors do not qualify for overseas spend bonuses
That’s a bit wordy, so let’s go through some examples
Example 1: Foreign Currency Payments by SG-registered Paypal accounts
Suppose I make a US$500 payment to a merchant in the USA using my SG-registered Paypal account. Seems pretty straightforward right?
But SG-registered paypal account payments will be processed through a payment processor located in Singapore. Therefore, when you use your account to pay in foreign currency, you only earn the local spend figure. If USD$500 becomes S$700 after conversion and your card offers 1.2 miles local, 2 miles overseas, you’d earn 840 miles instead of 1,400. Quite a big difference!
Paypal does count as online spend for purposes of maxing out the $2,000 per month on the DBS Woman’s World card, but after you hit this cap you should then look on the basis of which card gives the best miles per local spend.
Example 2: Foreign Currency Payments made to a travel agency
I read online of someone’s account of dealing with the Singapore office of a Japanese tour company. The tour company quoted him in JPY, the final invoice was in JPY and his card receipt when he signed showed JPY, but he earned only local spend. Further investigation revealed that the transaction, although done in JPY, went through a Singapore-based payment processor.
The 2.4 mile question here is- how do I know where a payment processor is based? The answer is, you don’t. Short of calling up the bank to ask them (and even then they might not know), you’ll be hard pressed to know ex ante whether or not your foreign spending will come through.
Of course, this only affects online spending, because spending done physically overseas is not going to run into these issues. I think a good rule of thumb is to look at whether the merchant has a SG-based operation. Paypal for example, has one. Amazon does not. So foreign currency spend on Amazon will go via its US payment processor and thereby earn you a bonus.
You can avoid all this drama by simply putting your online spend (or at least the first $2k of it) on the DBS Woman’s World card.
Anyone has any other instances of no FCY bonus awarded to report?
EDIT: I’ve since clarified that this issue only impacts UOB cards. DBS policy is that Paypal transactions done in FCY will enjoy the overseas spending rate.