A card purchase abroad is converted at a rate the cardholder never chose and cannot see at the point of sale. Understanding how that rate is produced explains most of the discrepancies people notice later.
A published rate, not a live one
Each network sets a conversion rate for every currency pair it handles, typically once per processing day. Every transaction settling that day uses the same rate.
The rate is derived from wholesale currency markets, so it sits close to the interbank level. It is not identical, because the network takes a small buffer against intraday movement.
A single daily rate means that two identical purchases made hours apart convert at the same figure. The market may have moved considerably in between.
Why authorisation and settlement differ
When a card is presented, the merchant seeks authorisation, which reserves the amount but does not move money. Settlement happens later, often the next business day and sometimes several days later.
Conversion occurs at settlement, so the applicable rate is the one in force then. A pending transaction shown in the app is an estimate.
Hotels, car hire and other businesses that authorise an amount and bill a different one later amplify this. The reserved figure and the final charge are separate events.
How the merchant's currency choice enters
Merchants abroad frequently offer to bill in the cardholder's home currency instead of their own. Accepting means the conversion is performed by the merchant's provider rather than the network.
That provider sets its own rate and keeps the margin, which is generally wider than the network's. The convenience of seeing a familiar currency is paid for in the rate.
Declining the offer sends the transaction through in local currency and lets the network convert it. Disclosure requirements around this choice differ by jurisdiction and have been tightened in several.
What the issuer adds afterwards
The network delivers a converted amount to the issuer, which may then add its own margin before billing. The customer sees the combined figure.
Comparing a statement against the published network rate for the settlement date isolates the issuer's share. Networks publish these rates, so the calculation is possible after the fact.
Refunds are converted separately at the rate applying when the refund settles. A returned purchase rarely credits back the exact amount debited, which is a currency effect rather than an error.
Why the differences are small but persistent
Each component is a fraction of the transaction, which makes any individual purchase look unremarkable. Across a trip or a year of subscriptions the total becomes visible.
The cardholder controls only two of the variables: which card is used and whether the merchant's currency offer is accepted. The network rate and the settlement date are not negotiable.
For larger transactions the difference between conversion methods is worth checking in advance. The choice is made at the terminal and cannot be reversed afterwards.