Dynamic Currency Conversion – DCC – is the technology developed to convert foreign cardholder credit card sales into their local
country’s currency at the point of sale.
Currently, when a foreign Visa or MasterCard cardholder purchases goods and services from a U.S. based merchant, the value of the
sale is processed in the posted U.S. dollar amount and then converted to the cardholder’s local currency at the time of billing by
the card issuing bank. Foreign issuing banks normally surcharge the transaction between three to five percent for converting the
sale amount and for hedging against the currency fluctuations during the period the sale and the statement. For example, a German
citizen with a credit card issued by a local bank – like Deutche Bank – who is visiting the United States and uses their card to
purchase a meal at a restaurant for $100, would sign a sales receipt showing that amount in dollars, but upon receiving their card
statement, would be billed in the comparable value of Euros computed at the time of the billing statement (say, 85) plus the 3 to 5
percent surcharge for a total of up to 89.25.
A merchant utilizing a DCC enabled merchant account would show the sales amount in Euros using a “best rate” real-time conversion
table to convert that $100 dollar sale into Euros. An agreed upon conversion rate – say 3% - can then be added and posted to the sale.
This process is also referred to as Acquirer Side Currency Conversion since the conversion is happening before the transaction is sent
to the cardholder’s issuing bank for statementing. In this scenario, the issuing bank receives the transaction in Euros and simply
passes the value on.
The benefit to the cardholder is that he or she is able to accept the sale in his/her local currency at the point of sale and so is
assured that the there will be no change in the value of that sale amount when they receive their bankcard statement. In addition,
foreign businesspersons are able to immediately remit expense reports upon returning to their offices without having to wait for
statements to arrive. And finally, in many cases, having the transaction converted at the point of sale will save the cardholder
money as many issuers surcharge more than the three percent that is typically charged for a DCC sale.
Merchants who offer this new multicurrency option present themselves with the sophistication of catering to the international
marketplace and will attract new clientele as a result. In addition, they can participate in this totally new revenue stream that
is available on a DCC transaction – without having to invest a dime to become enabled. For those retail merchants that cater to
foreign citizens – like gift shops, restaurants, and hotels in US resort and travel destinations, this could mean a considerable
amount of DCC candidate activity thereby adding profits that they would otherwise never realize. Online merchants will also benefit
from DCC entitlement, as foreign cardholders will prefer to do business with web-based merchants that can offer them the comfort of
knowing the exact sale amount in their local currency.
Our DCC partner, Mtrex, has spent three years developing the real-time multicurrency conversion process complete with the web-based
interfaces for merchants to manage and understand the transaction data, chargeback process, and revenue stream. For more information on how to
enable your company to provide DCC to your customers, please contact us at email@example.com.