Exploring Dynamic Currency Conversion (DCC): a useful tool for travelers?

When travelers make purchases abroad, they inevitably face the challenge of the exchange rate. Traditionally, this exchange rate is determined by the card-issuing bank, and is often opaque to the consumer, meaning that surprises can arise when reviewing account or card statements.

However, Dynamic Currency Conversion (DCC) offers an alternative that allows travelers to know in advance the exchange rate they will be charged when making a purchase abroad, as it is converted directly at the merchant’s terminal. Although this option may appear to be a transparent and convenient solution, it is essential to carefully examine its details to determine if it really benefits consumers or if it simply represents an additional commercial strategy.

How does DCC work?

From the merchant’s point of view:

• Presentation of the option: When a customer makes a purchase with a credit or debit card in a foreign currency, the merchant’s payment terminal or dataphone detects the currency in which the customer’s card was issued and, if it supports DCC, presents the option to pay in the customer’s local currency or in the currency of the card.

• Conversion calculation: If the customer chooses to pay in his local currency, the merchant’s dataphone calculates the amount in the foreign currency and applies the exchange rate offered by the DCC provider, which is usually the merchant’s acquiring bank. This exchange rate usually includes an exchange rate.

• Amount display: Once the conversion is done, the payment terminal displays the final amount of the transaction to the customer in their local currency, along with the conversion detail and any additional charges that may apply.

• Authorization and processing: Once the customer confirms the transaction, the payment terminal processes the transaction using the merchant’s local currency. The transaction is sent to the acquiring bank and then to the customer’s issuing bank for authorization and settlement.

From the user’s point of view:

• Choice of currency: When making a purchase abroad with a credit or debit card, the user has the option to pay in the local currency of the country or in his own currency, if the merchant offers DCC.

• Selection of the local currency: Selection of local currency: If the user chooses to pay in his own currency, he selects this option at the merchant’s payment terminal or dataphone.

• Confirmation of the amount: The payment terminal shows the user the final amount of the transaction in their local currency, along with the conversion detail and any additional charges that may apply. The user reviews this information before confirming the transaction. The DCC is available on traditional physical card transactions and also on payment platforms such as Google Pay and Apple Pay.

• Authorization and confirmation: Once the user confirms the transaction, it is processed using the merchant’s local currency. The user receives a confirmation of the transaction on their card and the amount is reflected in their bank account in their local currency.

In short, the DCC allows the merchant to offer the customer the option to pay in their own currency, giving clarity to that currency exchange and offering the user the option to accept it or not. A solution that has multiple advantages.

What are the advantages of DCC?

Transparency on the amount

DCC provides consumers with greater transparency on the actual transaction amount in their local currency, allowing them to easily understand how much they are spending in terms familiar to their usual currency.

Control and familiarity

By seeing the exact amount they will be charged in their local currency at the time of purchase, consumers can feel more confident and comfortable when transacting abroad.

Potential for increased sales

By offering CDD, you can attract more international customers by offering them a more familiar and transparent way to transact in your store.

Additional revenue generation

Because there is an exchange rate, there is a profit on the part of the CDD provider, and the CDD provider often shares some of that revenue with the merchant to enhance the use of CDD.

Tips for consumers

Compare and evaluate

Before deciding on DCC, travelers should compare the exchange rates offered by this service with their card issuer’s exchange rates and evaluate whether it is really beneficial to them.

Choose wisely

If the exchange rate offered by DCC is not favorable or if additional fees apply, consumers always have the option to pay in the local currency and let their card issuer perform the conversion.

DCC, one more tool to increase traveler satisfaction

For travelers, Dynamic Currency Conversion (DCC) represents a significant step forward in simplifying financial transactions during their adventures abroad. In addition, it offers an opportunity to enhance the shopping experience of your international customers by providing transparency and convenience when transacting at your merchant. By implementing DCC effectively and transparently, you can not only meet the needs of your customers, but also generate additional revenue for your business.