Buying Duty-Free

On my way up north for the holidays, I stopped by a “duty-free” store in the Guadalajara airport.  “Duty free” is in quotes because I find that their prices, often given in dollars, are usually higher than what you can find at places in town after including taxes.  I would have preferred a non-stop flight home, but the stopover proved to be fortunate, as this particular shop had a few bottles of the tequila that I like, which was already sold out (forever!) in stores in Mexico City.  After haggling for a minute (yes, they’ll sometimes cut you a discount if you ask), I chose to purchase a few bottles.  

While paying, the cashier offered me the choice of pesos or dollars, a choice that would have otherwise been completely innocuous except that prices were in dollars and they offered an exchange rate that was much better (or worse, depending on your view) to the official bank rate.  For example, they offered me 11.9 pesos to the dollar if I paid for the $88 tequila, discounted to $80, in pesos.  My credit card company, however, gives me (almost) the bank rate, which, at the time, was nearly 13.25 pesos to the dollar.  Something seemed really amiss about this, but I made them show me the math: they multiplied $80 by 11.9 to find the price in pesos.  Then I divided by 13.25 to find what my bank would charge me… and found that I could get the $88 “duty-free” tequila for $71.  It would be cheaper to pay in pesos!

I didn’t believe that this was possible, but I chose to pay in pesos just to try it out.  After signing the receipt, I realized that they had run the transaction in dollars ($80).  And when I pointed this out, the cashier apologized and said that the error couldn’t be reversed.  They also said that it’s better to pay in dollars because my “bank rate could change at any time.”  Their attempt at logic failed; however, I was also running late for my flight.  I can only assume that the cashier was lazy, not competent, had explained the system to me incorrectly, or believed that if I were to pay in pesos it would lower their commission.  Ah, well!

So, lessons for the next time I buy duty-free:

  • Ask for an additional discount… one never knows!
  • Look up the bank rate and learn what the credit card will charge
  • If the offered price is dollars, consider asking to pay in the local currency
  • Be better at math than the cashier
  • Check the receipt before signing!

That said, it also helps to do a little shopping before you go to the airport… as prices in town (with duty) may be lower than “duty-free” and you may also have the opportunity to refund the VAT/IVA.

 

San Francisco, CA

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One Response

  1. Thats why I always carry pesos!

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