To disclose up front I work in the credit card industry and have DCC clients.

DDC is where the credit card machine identifies your card as foreign and can offer you a choice of paying in the local currency (euro for example), or in your issuing/card currency (dollars).

Typically a bank/credit card issuer will add a comission of 1%-3% to your foreign currency purchase, which will be converted by the Visa or MasterCard network at a "interbank" rate. Typically this is very close to the rate you'll see on the TV or in the newspapers.

Some banks/issuers charge more than the 3%, since it's buried in the conversion rate they use, rather than as an extra charge.

Purchase of EUR100 = USD120 (at interbank rates - 1=1.20)
Visa charge the bank USD121.20 for the transaction (rate now 1=1.2120)
Bank charges you USD124.83 (at 3% more) rate now 1.2483

all the customer sees is the new conversion rate (1.2483) rather than 1.2120+fee.
(I am not talking about ATM or cash advance related fees as that is really messy).

DCC shop offers you (a) EUR100 or (b) USD123.79

Unless you know the exact exchange rate for the day plus you own bank's commission rates, you don't know if you're getting a good deal. On the other hand DCC does allow you to manage the transactions/balance better on your account.

A shrewd customer will have a good idea if the DCC rate is competitive, the same as if you went and bought foreign currency from a bureau de change.

You should be aware that you have the right to not accept the DCC process, and pay for the transaction in the local currency. The Visa and MasterCard rules state you have this choice.

My 2 euro cent... now offered as US$03.5!

Aidan