A card terminal abroad frequently offers a choice between paying in the local currency and paying in the card's home currency. The second option is almost always more expensive.
Who sets the rate is the whole question
Paying in the local currency means the amount reaches the card network unchanged, and the network converts it using its own wholesale rate at settlement.
Paying in the home currency means the conversion happens at the terminal, using a rate chosen by the merchant's payment provider rather than by the network.
That provider has no competitive pressure at the moment of the transaction, because the customer is standing at a till with a card already inserted and no alternative quote available.
The margin is built into the displayed rate
The terminal usually presents the exchange rate and sometimes states the markup, which satisfies disclosure requirements without making the comparison easy.
A shopper has no way to check the wholesale rate at that moment, so the disclosure is technically complete and practically useless.
The margin applied is typically several times what a card network's own conversion would cost, and it is charged on the whole transaction rather than as a flat fee.
Why the offer is framed as a convenience
The screen presents the home-currency option as certainty: the customer sees exactly what will appear on the statement, with no exchange rate to worry about later.
That certainty is real but small, since network rates move very little over the day or two before settlement.
The framing works because it converts an unfamiliar decision into a reassuring one, which is why the option is offered by default rather than on request.
The same mechanism appears at cash machines
Withdrawing cash abroad produces an identical prompt, and the same logic applies. Declining conversion sends the transaction to the network in the local currency.
Independent machines in tourist areas often combine the conversion offer with their own withdrawal fee, and the two together can be substantial on a small withdrawal.
Machines attached to established banks generally apply fewer of their own charges, though the card issuer's fees still apply on top.
What to do at the terminal
The rule is simple and holds nearly everywhere: choose the local currency, and let the card network handle the conversion.
The card's own foreign transaction fee, if the account carries one, still applies either way, so the choice at the till is separate from the choice of card.
Some cards convert at the network rate with no additional fee, and for frequent travel that difference across a whole trip is larger than most other savings available.