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FlyerTalk Forums Expert How-Tos and Guides
Jan 18, 2014, 10:10 pm by emilio911What is it?
Dynamic Currency Conversion (DCC) is a "service" some merchants and ATM operators offer that will charge a cardholder in the native currency of the card rather than the local currency. A more complete definition and examples are available via this Wikipedia article on DCC. While sold as a convenience to cardholders traveling outside of their home country, it is a pure profit play by the merchants. You may end up paying a fee of up to 8% over the purchase price for accepting DCC. Always decline DCC and asked to be billed in the local currency!
Where will I see it?
You can be hit with DCC anywhere there is a difference between your debit or credit card's denominated currency and the currency of the location where you're trying to use the card. The most common example will be at a merchant overseas, but now some ATMs are offering the service too. While many US cardholders complain about getting tricked into accepting DCC overseas, some merchants in the US have started to use DCC as well.
What is the issue?
Unless you're the merchant or ATM operator, there isn't much benefit to using DCC. Some customers say they prefer knowing exactly how much they'll be charged in their home currency or may not know the exchange rate of the place where they are visiting. For example, if you are in Prague for two days and you don't know how much the Czech Koruna is worth relative to the US Dollar, you might feel more comfortable knowing that you're buying an item for $205.00 versus 4000 CZK. However, the real exchange rate as of January 18, 2014 would place 4000 CZK at $197.18. You just paid an extra $7.82 for the "convenience" of knowing how much you'd be charged!
DCC often charges about a 4% premium over the true exchange rate. The problems don't stop there since many US banks still charge a 3% foreign transaction fee (FTF) for purchases made outside of the US. Not only would you get hit with the $205.00 charge, you could also find yourself facing a total charge of $211.15 if your card has a 3% FTF.
This is a pure money grab from the merchants, and it's billed as an easy way to squeeze additional revenue out of the transaction. Numerous [1, 2] articles have talked about DCC duping many consumers. Discover even has a warning about being tricked into DCC when using a card abroad.
For example, this FlyerTalk member reported that Avis charged his Saudi credit card in Saudi riyals instead of USD for a car rental in Florida without his consent. This has also been a trend for hotels, particularly large chains as indicated here and here.
DCC is simply not worth it for the consumer. Unless you like paying a convenience fee of up to 5% of the total transaction just to know how much you will be billed, you should always decline DCC and ask to be billed in local currency when handing over your card.
Furthermore, it is in your interest to obtain a card that has a 0% FTF. FlyerTalk member kebosabi maintains a fairly comprehensive spreadsheet of EMV-enabled cards ideal for overseas travel, many of which offer a low or 0% FTF as a feature. There is also a wiki at FlyerGuide of various FTF of debit and credit cards.
What can I do to avoid DCC?
American Express currently does not support DCC on its network, so you are safe from DCC if using an American Express card. However, Visa and MasterCard card networks can support DCC, so be vigilant when purchasing abroad with a Visa or MasterCard branded card. There have been reports of being charged DCC with a Discover card in China [citation needed], but primarily the issue is happening with Visa and MasterCard cards.
Before handing your card to the merchant, always specify clearly that you want to be charged in the local currency and that you do not want DCC. For some transactions, you retain control of your card as you dip it into a chip reader and can view on a screen to select which currency you want to use for the transaction. Always select the local currencyto get the best exchange rate. Do not select the card's native currency!
Similarly, for ATM withdrawals, make sure you decline any kind of conversions. Some good examples of what to look for when using an ATM overseas are here and here. You're probably coming off of a long flight and fatigued, but educating yourself beforehand can save you from getting ripped off. The user interfaces on almost all of these ATMs are set up to encourage you to take the bait, and you have to be extremely vigilant not to fall for it.
If you are doing a PIN-based transaction, you should have the opportunity to review the total amount and denomination of the transaction before entering your PIN. If you are doing a signature transaction and the merchant has processed your transaction with DCC, cross out the amount and write "DCC refused" on the receipt. Do not sign the receipt, and demand that the merchant reverse the transaction and run it in the local currency. If no verification is required due to a small purchase amount, ask the merchant to reverse the charge and repeat the transaction using local currency. If all else fails, file a dispute with your card issuer when you return home. Even if it's immaterial, the banks will get the message like they did with EMV.
Some merchants will claim that their systems have to bill you in your native currency. This is a complete lie. But just like a mag stripe only card, this is battle where you have to be prepared. Don't settle for merchants claiming that "it has to be done this way" or "pay cash if you don't want this". Be prepared to walk away, and, if you must complete the transaction, write "DCC refused & merchant didn't give a choice" on the receipt and cross out the amount. Let the merchant know that you will be filing a dispute with your bank.
Disabling DCC
Disabling DCC on ANZ terminals in Australia
ANZ markets DCC as Customer Preferred Currency (CPC). Terminal operators can contact ANZ Merchant Services at 1800 039 025 to have this feature disabled. Currently, your Visa or MasterCard will be subjected to DCC if denominated in: CAD, CHF, DKK, EUR, GBP, HKD, JPY, MYR, NOK, NZD, SEK, SGD, THB, USD, or ZAR. All DCC transactions on ANZ will cause a 2.5% markup. Steps to avoid DCC:
- Insert, swipe, or tap your payment card
- Have the cashier select credit (CR)
- The terminal will display CREDIT ACCOUNT
- If applicable, enter your PIN
- The terminal will display PROCESSING \ PLEASE WAIT
- The terminal will display EXCH <exchange rate> \ <currency> <amount> \ ACCEPT RATE? \ ENTER=YES CLR=NO
- Instruct the cashier to press the yellow CLEAR (CLR) button (If entering a PIN, you can retain the terminal to perform this step yourself. If entering a signature, you can ask for the terminal to control this process, not indicating that it's a chip-and-signature card.)
- The transaction should now process without DCC
If you see a signature slip with DCC verbiage and a checkbox indicating a currency selection, kindly ask the merchant to void the transaction. If it's a PIN-based transaction, you have an additional opportunity to cancel the transaction because it will ask for your PIN a second time. For instance, if you see "EUR 17.29 KEY PIN" refuse to enter your PIN and start again.
Disabling DCC in China
There are many reports of forced DCC in China, and there is a great thread [closed to new posts] on DCC in China on the the China Destinations forum.
Disabling DCC on Bankcomm terminals in Beijing http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #19
jair101's DCC instructions of March 2011 http://www.etveg.com/misc/DCC_China.pdf
Disabling DCC in Eurozone and UK
DCC offered in tourist traps (Harrods Knightsbridge/Galleries Lafayette Montparnesse/El Cortes Ingles Grand Via Madrid)
Unlike the rest of the world, Visa Europe does not require merchants to collect a ticked box on the slip (presumably because merchants there don't keep signed slips under Chip-and-PIN)
El Cortes Ingles collects a signature electronically and the DCC selection is made on the signature pad - the choice is respected.
Harrods and GL rely on cashier input in the POS for the currency choice - the cashier may forget to ask. The POS do not offer voiding (only refunds), but since you're given a slip to sign the best thing to do is to deface it before signing and submit chargeback request to issuer bank on return home.
There may be smaller merchants who also collect DCC but I seemed to have pre-empted most of them by saying "charge Euros (Pounds) please"
In Spain all merchants by law are required to provide you with a complaint form called an hoja de reclamaciones if requested. The form has two carbon copies. The customer retains one copy as a record of the complaint. The merchant maintains another copy, and the third is sent to the local consumer protection bureau. Merchants are also required to post a sign conspicuously informing the customer of the right to complain (usually in Spanish and English). Do not accept the lie that they don't have any forms. This is illegal, and you are able to call the police if the merchant refuses to provide you with this official form. It's interesting to see merchants start to squirm when you know the rules, and most merchants will start to be accommodating after you mention it. (Please still fill out the form even if the merchant cooperates after mentioning it because these are likely the merchants who won't otherwise change their behavior.)
Disabling DCC in Hong Kong and Macau
Hong Kong and Macau can get as non-compliant as China, possibly because many acquirers have cross-border operations and know they can get away with non-compliant firmware and procedures.
In practice, if you are given a DCC slip, and the cashier has not taken a choice before giving you your copy, the slip will be processed in your home currency - be prepared to dispute.
Unable to disable Global Payments DCC in Hong Kong instance #1, instance #2
Unable to disable DBS DCC in Fortress Electronics HK
Unable to disable BoC DCC in Free Duty HK
Disabling DCC in Japan and Korea
Japan's just starting out http://www.flyertalk.com/forum/japan...ing-japan.html and http://www.hongkongcard.com/forum/fo...p?id=3939&p=17 #168 but there are no reports I know of where cardholders are compelled to use DCC against their will.
Korea is also not much affected by DCC but where offered, trying to opt out is harder than Japan due to the language barrier (both verbal and written)
http://www.hongkongcard.com/forum/fo...hp?id=4303&p=3 #23
http://www.hongkongcard.com/forum/fo...p?id=12272&p=2 #11
Disabling DCC in the Maldives
Disabling DCC on Global Payment terminals in the Maldives
Disabling DCC in Thailand and Taiwan
DCC present but generally not an issue. Cashier will generate quote slip is usually generated and pass to cardholder. When cardholder refuses, a verbage-free slip denominated in THB/TWD will be produced.
Certain Taiwan hotels may take deposits in cardholder currency. But these are only pre-authorisations and can be voided in full for TWD-only final checkout payments.
Disabling DCC on Websites
Airbnb - (Since the "loophole" seem not to work anymore, please report if you chargeback the DCC.
)
Hotwire - You need to select your preferred currency before making a search.
PayPal - The instructions to stop the DCC on a recurring charge are here.
I got duped by DCC already before I found this thread. Is there anything I can do?
If you've been hit with DCC and the merchant did not follow the Visa/MC rules, you should file a dispute with your card issuer. Even if the transaction is a small amount, it's worth it to dispute the charge on principle. Do not let merchants get away with this scam uncontested!
If you were not clearly given a choice of currencies and did not specifically communicate a preference to be billed in your card's native currency - if you did not accept DCC - then you have recourse when filing a dispute with your card issuer. The Visa Product and Service Rules clearly state (p 339):
- Merchants that offer DCC must be compliant with the regulations
- Inform the cardholder that DCC is optional
- Not impose any additional requirements to use local currency
- Not use any language or procedures that may cause the cardholder to choose DCC by default
- Not convert a transaction in the local currency to the card's billing currency after the transaction has completed
- Ensure that the cardholder expressly agrees to DCC
You can even use terminology from Visa Product and Service Rules when filing the dispute, giving Reason Code 76: Incorrect Currency or Transaction Code. Reason Code 76 is used when the transaction was processed with an incorrect transaction code, or an incorrect currency code, or one of the following:
- Merchant did not deposit a transaction receipt in the country where the transaction occurred
- Cardholder was not advised that Dynamic Currency Conversion (DCC) would occur
- Cardholder was refused the choice of paying in the merchants local currency
- Merchant processed a credit refund and did not process a reversal or adjustment within 30 calendar days for a transaction receipt processed in error
MasterCard's rules also clearly state that the POI Currency Conversion must be decided by both the merchant and customer. When filing a dispute with a MasterCard, list chargeback Reason Code 4846 from the MasterCard Chargeback Guide, which covers POI currency conversion disputes in the following circumstances:
- The cardholder states that he or she was not given the opportunity to choose the desired currency in which the transactions was completed or did not agree to the currency of the transaction, or
- POI currency conversion took place into a currency that is not the cardholder's billing currency, or
- POI currency conversion took place when the goods or services were priced in the cardholder's billing currency, or
- POI currency conversion took place when cash was disbursed in the cardholdeer's billing currency.
You do have a choice of currencies. Exercise that choice!
Do not get taken by surprise when faced with DCC, and know your options. As Visa/MC purport, you do have a choice of currencies, but you need to make that choice heard! Don't be complacent in this sneaky tactic by some merchants to pad revenues.
Before going to a different country, get educated. Understand the exchange rate relative to your native currency. Know how to recognize when the merchant is trying to force DCC on the transaction, and pull out all of the stops to make sure it doesn't happen to you.
If you have a chip-and-PIN credit card, it's easier to control the transaction to try to prevent DCC. With chip-and-signature, if you get an uncooperative merchant, deface the merchant's copy of the receipt. Write LOCAL OPTION NOT OFFERED, cross out the DCC currency amount, and sign the receipt.
This will give additional evidence when filing a dispute to get the DCC charges refunded. When filing the dispute, you can use the Visa Exchange Rate Calculator or MasterCard's Currency Conversion Tool to determine the Visa or MasterCard exchange rate on the date the transaction posted to your credit card. Compare this to the DCC value to figure out the amount by which the merchant overcharged you. Don't forget to add in any Foreign Transaction Fee if your card has one. (If it does, you should really consider finding a card for use overseas without a FTF.)
Example Images (click for a larger image)
Hotel receipts in China, the Netherlands, and Dubai respectively:
Purchase receipts in China and Korea:
Cancelled translation in Hong Kong:
Novotel in Shenzen:
I'm thinking Visa and MC give a reasonable conversion rate, and earn a reasonable 1% on top of that.
Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
Quote:
Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
1% is reasonable, but DCC's markup of the typical 3-5% is not.Originally Posted by zyxlsy
I'm thinking Visa and MC give a reasonable conversion rate, and earn a reasonable 1% on top of that.Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
Quote:
Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
I think the underlying core is whether the fees are justified or not. With actual in-person based currency exchanges, the fees you can make sense of because of the need to recover labor cost, rent for the store space, non-real time currency exchange rates, the risks involved with security, as well as the cost to bring in and store foreign currencies. Originally Posted by zyxlsy
I'm thinking Visa and MC give a reasonable conversion rate, and earn a reasonable 1% on top of that.Let's be honest here, no one can convert currencies for free, right? If you go to a bank to convert, it's gonna be much higher than 1%.
And, some CCs are eating up that 1%, so we have the best deal in oversee spending.
But with credit cards, everything is electronic and in real time these days so there really is no justification for such high fees.
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There are still opportunities for arbitrage, and you have to find a willing buyer/seller for the currency. I contend that there is still overhead with currency conversion, but DCC is a pure profit grab from the merchants and acquirers.Originally Posted by kebosabi
But with credit cards, everything is electronic and in real time these days so there really is no justification for such high fees.
Quote:
But with credit cards, everything is electronic and in real time these days so there really is no justification for such high fees.
Most banking fees have little, if anything, to do with the cost of providing the service. They are set based on what the market will bear. Originally Posted by kebosabi
I think the underlying core is whether the fees are justified or not. With actual in-person based currency exchanges, the fees you can make sense of because of the need to recover labor cost, rent for the store space, non-real time currency exchange rates, the risks involved with security, as well as the cost to bring in and store foreign currencies. But with credit cards, everything is electronic and in real time these days so there really is no justification for such high fees.
The same is often true in other industries as well.
Quote:
The same is often true in other industries as well.
In this case, it's largely due to consumer ignorance of or indifference toward the better options that may be available.Originally Posted by cbn42
Most banking fees have little, if anything, to do with the cost of providing the service. They are set based on what the market will bear. The same is often true in other industries as well.
Quote:
Exactly. However, if you go to a Travelex, 3% to 5% is what you expect to see.Originally Posted by Majuki
1% is reasonable, but DCC's markup of the typical 3-5% is not.
I am shocked people still go to those places to exchange money...
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That's why it's only 1%, which is really not so high. Even the UnionPay, which boasts non FTF, charges around 0.5% implicitly in their distorted exchange rates.Originally Posted by kebosabi
But with credit cards, everything is electronic and in real time these days so there really is no justification for such high fees.
My opinion is "not looking like much doesn't mean there isn't". Let's face it, most banks do business online as well, but can you get the interbank rate with them if you exchange money using their online banking?
I've really not seen any rates better than Visa/MC rates.
Quote:
Kudos.Originally Posted by Majuki
There are still opportunities for arbitrage, and you have to find a willing buyer/seller for the currency. I contend that there is still overhead with currency conversion, but DCC is a pure profit grab from the merchants and acquirers.
I think DCC is comparable to money exchange booths, in terms of markup percentage. This way they think they have some justifications...
Only savvy travelers know how to use no FTF Visa/MC debit cards to withdraw money oversees to get the best rates, and only savvy travelers know how to use no FTF CCs (while avoiding DCC) to get the most rewarding oversees spending as well. We care about how to beat the game.
Those who don't know, will just contribute to DCC/money exchange market. The fact that there are these don't knowers, is no shocking to me at all...
DCC Policy for Accor Hotels?
Has anyone had any recent experience with Accor Hotels, particularly Novotel? I reserved a room next week Thursday at the Taoyuan Novotel, and I don't trust the pricing information that the website gives. The website says that the pricing information (defaults to USD) is for informational purposes only and that the charges would be billed based on the hotel's local currency. However, I know that this particular hotel offers the option of DCC, so I didn't want to get snared with DCC by prepaying the room. (I usually don't do prepaid rooms anyway since the flexibility is nice.)
My strategy here was to book the fully flexible room rate and use an AmEx Platinum (no FTF fee/possibility of DCC) to guarantee the reservation. Upon check-in I'll again use the AmEx Platinum for the room authorization hold. When I check out, I'll use my Chase Sapphire Preferred and request local currency. Thoughts on this process? Am I being overly paranoid?
My strategy here was to book the fully flexible room rate and use an AmEx Platinum (no FTF fee/possibility of DCC) to guarantee the reservation. Upon check-in I'll again use the AmEx Platinum for the room authorization hold. When I check out, I'll use my Chase Sapphire Preferred and request local currency. Thoughts on this process? Am I being overly paranoid?
Not all Accor hotels require card hold - French ones don't for instance.
However British ones do. I remember using my AE to hold, and asking them if I can check out with a MC (which had a promo at the time). The receptionist said fine, AE not charged at the time, and charged my stay to the MC on checkout. No charge on AE.
However British ones do. I remember using my AE to hold, and asking them if I can check out with a MC (which had a promo at the time). The receptionist said fine, AE not charged at the time, and charged my stay to the MC on checkout. No charge on AE.
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However British ones do. I remember using my AE to hold, and asking them if I can check out with a MC (which had a promo at the time). The receptionist said fine, AE not charged at the time, and charged my stay to the MC on checkout. No charge on AE.
The Taoyuan Novotel has required a hold upon check-in every time I've stayed there. They did it in USD on my Chase card last time - the first time I had become hyper aware of DCC. They assured me that it was only an authorization hold and would fall off of my card without being charged, which it did. I'll probably follow your lead and present the Visa at checkout but use AE upon check-in for the hold.Originally Posted by percysmith
Not all Accor hotels require card hold - French ones don't for instance.However British ones do. I remember using my AE to hold, and asking them if I can check out with a MC (which had a promo at the time). The receptionist said fine, AE not charged at the time, and charged my stay to the MC on checkout. No charge on AE.
I always thought Indonesia can't have DCC cos the BNI didn't allow it.
However I got the first quote slip today (a 3.2% scalp to the idr/hkd oanda rate), even though even by the merchant slip there was no verbage. Nor on the cardholder slip.
So I assume a Bangkok-style DCC system is in place here - I don't mind that.
I assume the cashier made an idr input for me or the default is to idr.
Nothing more effective to wake me up from a 5:30 start on a Sunday morning.
However I got the first quote slip today (a 3.2% scalp to the idr/hkd oanda rate), even though even by the merchant slip there was no verbage. Nor on the cardholder slip.
So I assume a Bangkok-style DCC system is in place here - I don't mind that.
I assume the cashier made an idr input for me or the default is to idr.
Nothing more effective to wake me up from a 5:30 start on a Sunday morning.
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I know what you mean there. Whenever I see the DCC language I get a surge of adrenaline. So this system was the quote checkbox like in Taiwan?Originally Posted by percysmith
Nothing more effective to wake me up from a 5:30 start on a Sunday morning.
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For the other times I was asked if I wanted to pay in USD, which I declined and asked to pay in GBP. No pushback except for the 2 referenced earlier. I need to check my card statement to ensure no unexpected issues, but everything seemed to go fine.Originally Posted by Majuki
I'm glad you were able to avoid the scam. In the other cases, did you offer proactively to the cashier that you wanted to be charged in GBP, or did some merchants actually give you the choice? How much pushback did you get with except the one who said it would offer you a better rate/no fees?
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Originally Posted by Majuki
I know what you mean there. Whenever I see the DCC language I get a surge of adrenaline. So this system was the quote checkbox like in Taiwan?
No other encounters with DCC.
First report in Taiwan...
We arrived late Thursday evening at around 11pm local time to the Taoyuan Novotel. I noticed a number of folios at check-in, and they all did DCC on the room authorization hold of the equivalent of 7000 NTD in USD with the [X] box checked. Knowing from experience that they automatically select DCC here for the authorization hold, I used my AmEx Platinum as planned. I noticed two things on the receipt:
The first is that (S) indicates that the card was swiped, not an EMV transaction? I was too tired to notice whether or not the receptionist swiped the card. The second is the transaction type says "PREAUTH". I assume the DCC rules and choices still apply for this transaction type, but the receptionists at this hotel have always told me in the past that DCC doesn't matter in this case because it's a hold only. However, in the case this charge were to post, it would be a transaction with DCC applied.
I used my Chase Sapphire Preferred at checkout and requested to be billed in NTD:
This time the receptionist did an EMV transaction, and you can see (C) after the card number. (I've redacted all but the last four digits, my name, and authorization code.) Since I had indicated I wanted NTD, the receptionist had already printed out the above receipt and handed me the quote/signature slip to sign plus the above receipt in tandem. To cover my bases, I still checked the [X] NTD box before signing.
A couple of things to note here. First, Chase is showing a pending transaction in the amount of 192.03, the DCC rate. I think the above receipt indicates that I am in fact safe from DCC even though the pending transaction is the DCC amount, right? It's just like a car rental or hotel authorization hold might be higher than the final posted charge.
Finally, there is a nice 4.8% DCC fee markup on the exchange rate. It makes you wonder how many people fall for DCC without realizing it.
EDIT: I just noticed that the pending charge is for "Novotel Hotels DCC". It's even in the title!
We arrived late Thursday evening at around 11pm local time to the Taoyuan Novotel. I noticed a number of folios at check-in, and they all did DCC on the room authorization hold of the equivalent of 7000 NTD in USD with the [X] box checked. Knowing from experience that they automatically select DCC here for the authorization hold, I used my AmEx Platinum as planned. I noticed two things on the receipt:
The first is that (S) indicates that the card was swiped, not an EMV transaction? I was too tired to notice whether or not the receptionist swiped the card. The second is the transaction type says "PREAUTH". I assume the DCC rules and choices still apply for this transaction type, but the receptionists at this hotel have always told me in the past that DCC doesn't matter in this case because it's a hold only. However, in the case this charge were to post, it would be a transaction with DCC applied.
I used my Chase Sapphire Preferred at checkout and requested to be billed in NTD:
This time the receptionist did an EMV transaction, and you can see (C) after the card number. (I've redacted all but the last four digits, my name, and authorization code.) Since I had indicated I wanted NTD, the receptionist had already printed out the above receipt and handed me the quote/signature slip to sign plus the above receipt in tandem. To cover my bases, I still checked the [X] NTD box before signing.
A couple of things to note here. First, Chase is showing a pending transaction in the amount of 192.03, the DCC rate. I think the above receipt indicates that I am in fact safe from DCC even though the pending transaction is the DCC amount, right? It's just like a car rental or hotel authorization hold might be higher than the final posted charge.
Finally, there is a nice 4.8% DCC fee markup on the exchange rate. It makes you wonder how many people fall for DCC without realizing it.
EDIT: I just noticed that the pending charge is for "Novotel Hotels DCC". It's even in the title!