It might sound complicated, but dynamic currency conversion is something most of us have already experienced at some point – as a customer or from a business perspective.
Whether you’re already offering dynamic currency conversion and want to understand it better, or are totally new to it, read on for our complete guide to find out more.
Dynamic currency conversion – also known as DCC – lets travellers make a debit or credit card purchase in a foreign country using their native currency (rather than the local currency). So, a Brit on holiday in Greece can pay in pound sterling rather than euros.
The dynamic currency conversion feature can also apply to ATM withdrawals.
Whether they’ve bought a holiday souvenir in Spain, or shopped online on a US-based website, most UK consumers are aware that credit and debit card providers usually charge a fee for transactions or cash withdrawals made abroad. These are known as currency conversion fees, which dynamic currency conversion is one example of.
While most currency conversion fees are charged to the customer by their bank or credit card provider, dynamic currency conversion fees are charged by the merchant or retailer instead.
The option of whether or not to use dynamic currency conversion is usually posed as a question to the cardholder.
For example, a British holidaymaker in Thailand will be asked on the POS terminal or ATM screen whether they want to pay or withdraw cash in pounds (using dynamic currency conversion) or Thai baht (without using dynamic currency conversion).
If they choose pound sterling, they’ll see how much they’re going to be charged there and then. If they choose the local currency, they’ll need to check their online banking or next statement to see how what they’ve paid converts into pounds.
Dynamic currency conversion is optional, and customers have the right to decline and pay in the local currency instead.
While there aren’t necessarily many cons to dynamic currency conversion for retailers and merchants, there are for your customers.
The fees a cardholder will pay if they choose to use dynamic currency conversion are usually higher overall, because they often include an extra markup that leaves customers more out of pocket than if they’d paid in the local currency.
Plus, customers won’t know whether they’ve been charged any additional foreign transaction fees by their credit or debit card provider (and what these are) until after the transaction.
This is why travellers are often advised to pay in local currency, rather than their own.
As a retailer or merchant, you must remember that despite the benefits of dynamic currency conversion, it’s ultimately up to the cardholder whether they choose to pay in their currency or the local one.
There’s no need to learn how to use any new technology, as your card payment system automatically detects international cards for you. It will then give your customers the option to use your dynamic currency conversion option to pay.
What you can do is make sure your staff are trained on dynamic currency conversion and understand how to take customers through it.
Businesses have the option to install a card payment system that allows dynamic currency conversion. If you want your international customers to be able to see and pay for purchases in their native currency, get in touch with us today and find out more about dynamic currency conversion.