David later complained to Air New Zealand and the bank, the card's provider. He said the transaction should have been processed using the pounds sterling on his travel card, not New Zealand dollars. 

The bank said the transaction was processed in New Zealand dollars because the merchant had used DCC. This had detected that his card didn't have sufficient New Zealand dollars for the purchase, so it selected another currency with sufficient funds – pounds sterling – and converted that, making the purchase more expensive. 

The bank confirmed that the retailer should have told David which currencies he had enough of on his card to complete the purchase and allowed him to make a choice. By not doing so, the merchant had breached Visa and Mastercard rules. But by completing the transaction, David had accepted the use of DCC. The bank said it had no control over the retailer’s processes and couldn’t dispute the transaction.

Our investigation

David complained to us that he:

• expected the bank to accept some responsibility for the merchant's failure to follow DCC rules because it was a party to OneSmart
• was concerned the card was marketed as a secure way to take money overseas because money was automatically taken from the correct currency wallet, but that wasn’t the case in every situation
• considered there was a flaw in the contactless, or tap-and-go, system that affected other people and wanted to warn others of the potential consequences.

We looked at OneSmart's terms and conditions and whether they adequately disclosed DCC and its impact on the cost of OneSmart transactions, particularly tap-and-go transactions. We found several areas where disclosure could be improved and wrote to the bank recommending changes to highlight the potential pitfalls of DCC. The bank replied that it was already making amendments to highlight retailers’ responsibilities.

Outcome

We outlined the changes afoot to OneSmart's terms and conditions, and David withdrew his complaint.