Majuki - I agree with card processor, merchant and customer.

Visa/MC: The cynical side of me thinks Visa/MC tacitly approves this. They lose on the 1% foriegn currency conversion charge and currency spread, but the charge is not very high and the spread is very thin (vis-a-viz Unionpay or even retail banks). But they gain higher merchant acceptance and increase local interchange (.18% http://en.wikipedia.org/wiki/Interchange_fee).

Furthermore there is a network effect to increasing merchant acceptance - the more merchants accept V/MC abroad, the harder it is for cardholders to avoid them while travelling if they become more aware of its potential to cost them more.

Card issuer: depending on fee structure, they are pretty negative. At least for here in HK where they were happily collecting 0.95% bank foreign currency conversion fee in addition to V/MC's 1% until DCC came about. Now they are dealing with more and more DCC cases (as more and more cardholder becomes aware they're being scammed, esp in HK given our proximity to China without being part of it for credit card purposes).

I think issuers in HK will like to have DCC switched off either for their cards if not system-wide. They've been doing all sorts of overseas spend promos which explicitly exclude DCC - gets us in HK to fight DCC collectively.