But now Australia has mandated that businesses can't charge unreasonable surcharges beyond the cost of doing business, which is about 1% for Visa/MC and 2% for AmEx. (I imagine large retailers are well below these amounts.) DCC as of now is unregulated. While the exchange rate isn't as bad as Travelex at the airport, it's almost never better than the Visa/MC rate. I would think Visa and MC would be opposed to DCC for similar reasons as surcharges because if customers knew they were getting ripped off they'd be far more likely to pay cash, especially for small purchases. A meal at your local fast food place that's charging 1% surcharge on top of the 4-5% DCC? No thanks. Visa/MC don't want price discrimination based on form of payment. They want the price to be the same as cash price.

The reason the DCC scam works more consistently than a surcharge is due to customer ignorance. If people are told, "I'm going to charge you 3% to use a credit card," many switch to cash for small purchases. Just take a look at how many people pay the cash price in NJ at gas stations. With DCC, many customers and some merchants are unaware of the process. Customers might think it's "cool" that they're charged in their home currency, but they don't know they're getting duped on the exchange rate. If merchants were required to list the exchange rate compared to the Visa/MC rate then I think far fewer people would fall victim to DCC.