WHAT ARE CROSS-BORDER TRANSACTIONS?
Cross-border transactions are payments made with bank cards outside the Republic of Moldova. These refer not only to operations carried out with the physical presence of the card (cash withdrawals at ATMs, payment for purchases in stores via payment terminals (POS), but also to purchases made online through foreign websites.
How are card transactions executed abroad?
Transactions take place in two stages: authorization of funds and the actual settlement of funds from the account.
Authorization
This is the temporary blocking of funds in your account when making card transactions.
When you pay for goods using your card, at this stage the merchant's bank receives your card details, requests the blocking of the required amount, and transmits this data via the VISA payment system to ProCredit Bank.
The bank verifies the card and account details (card validity, presence of any blocks, availability of sufficient funds) and confirms the authorization if everything is in order and the required amount is available in the account.
If there are any restrictions on the card or insufficient funds — the bank will decline the authorization and the transaction will not be completed.
If the authorization is successful, the payment amount is blocked in the account and the payment is considered completed. The blocking of funds simply means that you cannot use that amount, although the actual debit from the card account has not yet taken place. For that, the merchant needs to perform the settlement operation.
Settlement
This is the actual debit of funds from the current account, which occurs after ProCredit Bank receives confirmation from the merchant’s bank to complete the purchase. As a rule, this happens within a few days (maximum — 30 days) after authorization and blocking of funds. At the same time, interbank settlement also takes place.
How does currency conversion work when performing cross-border card transactions?
Three currencies are involved in the conversion process:
Principles of payment conversion in the international payment system
The transaction currency is compared with the VISA system currency (USD), and if they do not match, conversion is carried out using the VISA exchange rate. VISA conversion rates can be found by following the link.
The VISA reference currency (USD) is then compared with the client’s account currency. If they do not match, a second conversion is performed — using the bank’s commercial rate. The ProCredit Bank exchange rate for card transactions is displayed on the homepage.
The settlement of funds from the client’s account does not take place at the moment of purchase but a few days later. Therefore, the final amount debited from your account may be higher or lower than the blocked amount, depending on the exchange rate applied at the time of settlement.
If the currencies match, no conversion takes place.