There have been several threads on, or relating to, this topic during the past year+, but I'm starting this new one in order to consolidate the discussion in a forum that is likely to reach as wide an audience as possible.

First, here are some of the other threads:

http://www.flyertalk.com/forum/starw...-currency.html
http://www.flyertalk.com/forum/china...-dcc-scam.html
http://www.flyertalk.com/forum/other...d-illegal.html

For anyone that isn't familiar with DCC, it refers to the practice in which merchants are permitted to give foreign customers a choice of transaction currencies, typically: 1) local currency; and 2) home country currency.

When you "select" anything other than local currency, you end up paying a premium over Visa's exchange rate. In my case, this amounted to 3.23% (average/ transaction) during a recent trip to China.

I use the "select" term loosely because, in many cases, there isn't a practical way to opt out of DCC. (A common theme in the above threads is, "I never allow merchants to charge me in USD.") I'll give you 3 examples: 1) business dinner in which you don't want to look cheap; 2) charges for close in transportation; and 3) merchant incompetence. #3 is especially difficult to overcome, and typically not worth the hassle (i.e. you might end up wasting 30 minutes for the sake of principle... and $1.50).

In essence, I've found that DCC is effectively impossible to avoid 20% of the time when it is offered, and ~40% of the merchants I encountered during my recent trip offered it. What's more, the latter number appears to be growing at an alarming rate (up from ~30% last October; data collected in Shanghai and Beijing on both trips). In aggregate, 8% of my transactions were affected.

Instead of signing my DCC receipts, I wrote "DECLINE" in the signature field and proceeded to take up the case with FIA Card Services upon my return to the US. This proved to be much more difficult (and time consuming) than I had envisioned. While there is a dispute mechanism in the books, I gather that it is so rarely used that the FIA people had no clue about it. For that matter, they weren't aware of DCC either. The process was so annoying that I gave up after my first 3 phone calls, but a bit of encouragement from Mountain Trader prompted me to finish it off.

Closing points:
-since the amount of money at issue is small in most individual cases, the vast majority of people will continue to accept this practice (on the off chance that they are aware of it in the first place)
-more and more merchants will gravitate towards it as a source of free revenue
-if people like us make a stink, we might be able to affect some sort of change
-anyone who's contemplating a dispute is welcome to email me; I'll provide you with a letter template, complete with embedded spreadsheet