Dynamic Currency Conversion (DCC)

Dynamic Currency Conversion (DCC) is a service offered in the payments industry that allows customers to make purchases in their own currency when using a payment card abroad. It provides customers with the option to have the transaction amount converted into their home currency at the point of sale, rather than being charged in the local currency of the merchant’s country.

Here’s how Dynamic Currency Conversion typically works:

1. Customer Initiation: When a customer makes a payment with their payment card in a foreign country, the payment terminal or point-of-sale system recognizes the card as eligible for Dynamic Currency Conversion.
2. Currency Conversion Offer: The terminal or system displays a prompt to the customer, offering them the choice to pay in the local currency or have the transaction amount converted into their home currency. The offer usually includes the converted amount and the applicable exchange rate.
3. Customer Decision: The customer can then decide whether to accept the conversion offer or decline it. If they choose to accept, the transaction amount is converted into their home currency based on the current exchange rate provided by the payment processor or acquiring bank.
4. Transaction Authorization: After the customer’s decision, the transaction proceeds, and the authorization request is sent to the issuing bank or card network for approval.
5. Billing and Settlement: The customer’s card is billed with the converted amount in their home currency. The acquiring bank or payment processor settles the transaction with the merchant, deducting any fees or commission associated with the Dynamic Currency Conversion service.

Dynamic Currency Conversion aims to provide convenience and transparency to customers by allowing them to see the familiar currency and know the exact amount they will be charged in their home currency at the time of the transaction. It helps customers in avoiding any potential uncertainty related to foreign exchange rates or conversion fees.

It’s important to note that while Dynamic Currency Conversion can be beneficial for customers who prefer to see transactions in their home currency, it may come with additional fees or less favorable exchange rates compared to other currency conversion methods. Customers should carefully consider the conversion rates and fees associated with DCC before making a decision.

Furthermore, merchants interested in offering Dynamic Currency Conversion as a service to their customers need to work with payment service providers or acquiring banks that support this feature. Merchants should inquire about the terms, fees, and technical requirements associated with enabling DCC for their business.