Do a google search on dynamic currency conversion and you will find some of the literaure credit card processors give to perspective merchants regarding this scam. What happens is the credit card processor and the merchant divy up the difference depending on volume...yes the merchant does profit although on the merchant's side of the ledger, the credit card charge is received in local currency. The merchant then gets a stipend representing the volume of suckers he can entice into this. One of the come on's a few years ago was if you do the dcc transaction with us and don't pay a fee to your bank for currency conversion (of course the fee was buried in the much higher rate used by the merchant which is set by his credit card processor). Visa/mc and the banks countered that by imposing a fee on all foreign transaction in many cases, the same 3% they used only for foreign currency transaction. And that appears even on many charges you think are domestic in nature. For example, buy an Aer Lingus ticket at Orbitz or any US travel agency. A domestic transaction , right? Wrong. Aer Lingus processes its visa/mc charges through an Irish bank so you get nailed by many banks with an extra 3% charge despite the fact the charge was made in the US in US dollars. Happens all the time and is certainly something the FTC should put a stop to pronto, but they won't.