Originally Posted by
percysmith
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.
I agree that the issuer could be negative depending on whether or not the issuer charges a foreign currency conversion fee or a foreign transaction fee. Most, if not all, issuers in the US have switched to FTFs for those cards that have them, so you get nicked with the fee whether or not you accept DCC. I know you have indicated that your HK cards impose a conversion fee rather than a transaction fee, so I think they would have more of an incentive to file a chargeback than issuers who charge a FTF.
It's still unclear on the Visa/MC side. Does the option of DCC really increase merchant acceptance? As people become more aware of DCC or realize that using a card would cost 3-7% more over cash, wouldn't this steer people toward using cash for purchases, opposite of what Visa/MC want?
It's similar to gas stations here in some states that allow cash "discounts" over credit prices. With the current price of fuel one pays about 3% more for the credit price. This is particularly common in New Jersey where all stations are full service, and I see most people paying cash for fuel. The mentality is cash is cheaper than credit/debit. That mentality could spread to overseas purchases which is exactly what Visa/MC don't want.