Dynamic Currency Conversion (DCC) [2014-2016]
 

As someone who's been unwillingly hit with Dynamic Currency Conversion (DCC), I thought we could get a thread going talking about people's experiences and best practices to avoid getting an unwanted DCC charge when using our cards abroad.

Just to be clear, DCC is not just a scam imposed on Americans by merchants outside the USA; it is international and is spreading like a cancer metastasizing through the travelling world. American merchants pull the same scam with the same lies on visitors to our shores and their credit cards also charge foreign transaction fees on them. When all is said and done, you may be paying up to 8% if victimized by this scam or agreeing with the philosophy that it is a service and good to know the exact value of something in a currency you understand.

Nice summary of dcc above. Just one minor corrction. A foeign transaction fee is imposed by many banks at least in the USA for purchases processed by a processor outside the USA. Thus for example, if you buy Aer Lingus tickets from Orbitz over the internet in a transaction that never leaves the USA, you are still nicked for the foreign transacton fee as Orbitz transmit the charge to Aer Lingus which processes its mc and visa transaction through a processor in Ireland (no surprise there) which means bingo another 3% despite the fact it is a US based transactin all the way.

And just to be clear as noted above, if the merchant refuses to do a charge the proper way with one of the lies they have readilly available, do not offer to pay cash. That is just rewarding them for their illegal attempt to derraud you. Simply cross out the amount in your currency, write dcc refused and initial that. Or if the merchant refuses to accept the charge sans your signature, just cross out the statement agreeing to be scammed and when you get home, dispute the charge. As this is a clear violation of mc/visa procedures the charge should be charged back to the merchant although if it is a small amount the bank may simply absorb the difference which may seem trivial butit's the principle of the matter and the only way to combat this scam.

Finally when checking into a hotel and renting a car outside your naitive land, watch for the scam of them inserting a phrase into what you're signing agreeing to be scammed with dcc. This can be difficult especially when they write this in the local language but it's one of the ways merchants, even some big time merchants such as Avis and Mariot, two companies who I know have pulled these shenanigans, have tried to pull this off.

This thread should be very good to hear the experiences of people being scammed by this monstrosity to help us all learn what we can do to avoid it.

Should this thread also cover DCC at ATMs?

Why not? My most recent usage at a foreign ATM made it sound like the world would end if I didn't accept. It took three prompts to reject it.

The main culprit behind the international growth of DCC are Visa and MC. Both have been pushing merchants to buy into the practice. The argument is that a merchant using DCC is better than a merchant who doesn't accept plastic at all, but it remains entirely dishonest.

Some cities/countries are worse than others. I lived in Italy and rarely saw DCC used (with the exception of hotels, which often ask... I'm looking at you, Westin Excelsior). A week in Dublin, though, was DCC central. Nearly every merchant, except Trinity's bookstore, tried to get me to use it. A coffee shop didn't give me a choice and a call to Chase got the difference refunded. I quickly learned to say "charge me in euros" as I would hand over my credit card.

Great start to the DCC thread! ^

I'm not sure mc/visa had much choice in this. After all, they make substantial income on the 1% they charge for currency exchange transaction and I believe it's 0.8% or something for allowing acces to the international interchange system even if no currency exchange is involve.d. It is or seems to be waiving of these fees is hardly ever done outside the USA and in the USA some do waive these fees, some pass along the fees and some of the near criminal banks impose an additional fee to bring it up to 3%.

But in any event, somewhere in the back of my warped mind there seems to have been some kind of agreement somewhere prohibiting mc/visa from prohibiting dcc as I remember. Now why it wouldn't apply to Amex I can't answer (although most of the Amex cards have foreign exchange fees). As far as discover, they really don't have all that much of an international presence. I hear China all the time and that may be true but very few places in Europe, for example, still take Dincers Club where supposedly Discover is interchangeable with. And aren't North American diners club cards processed through the mastercard system? So I don't think mc/visa are the culprits here.

In China Discover is processed through UnionPay and is probably more widely accepted. Similar to how it is processed through JCB in Japan. I have no idea what that means for DCC however.

Noted and logged. But I've read all sorts of threads where in China, dcc is very much practiced. So if using Discover in China, is one subjected to this scam?

Oops, you posted before before I hit submit on my edit. I have no idea.

Based on a quick Google, it appears DCC is allowed. Discover specifically warns to look for it in general.

I understand that it’s more than US cardholders traveling overseas, and that it has happened to people all over the world, including others getting hit with DCC from merchants in the US. I will correct the wiki in a bit to reflect what you said, and you can feel free to edit it too. That’s the benefit of a wiki!

Yep, I figured we could have a comprehensive thread on DCC, including both purchases at the point of sale as well as ATMs. This way we can share information, best practices, and ways to look out for the tricks that merchants and ATM operators are now trying to pull.

Thanks! I aspire to be as great as your EMV thread. :D

I didn't see this covered, so I guess I'll ask here. If one has an EMV chip and pin card, is it possible to always avoid DCC by not entering his/her pin number until they can confirm they'll be billed in the local currency?

I will answer with a definite maybe. All I can tell you that when checking into my hotel in London last year with a chip and signature card, the clerk handed me the pin pad and the first thing it asked is which currency I wished to pay in, sterling or US dollars. I assume that's the first thing that happens in a chip and pin transaction. However, it is possible for certain dishonest merchants to push the "your currency" button before handing you the pin pad. So the answer is a definite maybe.

It also won't help for transactions that don't require a verification method. For instance, many times under $25, $50, or even $100 now at some merchants in the US you don't need to sign for a receipt. If the point-of-sale terminal defaults to your card's denominated currency and the transaction completes without your interaction, you can get DCC without any authorization from you.

Don't Visa/MC require explicit authorization from the terminal?

I stayed at a hotel in Beijing last month (I won't name which because I've been in discussion with the hotel manager about the incident and he's been very receptive to my comments). Got hit with DCC when the person who was checking me out hit the USD button without asking me. Fortunately I was vigilant, and when I saw the charge come up in USD on the receipt, I made the person behind the counter reverse the charge and do it properly in RMB.

I emailed the hotel manager with several complaints about the hotel (one of which was using DCC) and he said that the hotel doesn't control the exchange rates; the Bank of China does. I suggested that they simply stop offering DCC, since the 4.1% rate they were going to charge me was much greater than the FTF charged by the worst offending banks (which charge 3%). My card happens to charge 0%.

Why would a merchant do this by default? Do they get some sort of kickback from the bank if they let the bank rip off the customer?

If you read the brochures credit card processors send to merchants enticing them to sign up, the answer to your last question is a resounding YES. Also note that when a bank has a foreign transaction fee, one gets hit with the 3% even if the charge is DCC'd so it would really be 7%.

Now sometimes, remember, there is a 16 year old kid (not so much in a hotel of course) working behind the counter and their training is such that since the vast majority of people think it's wonderful they are being billed in a currency they are familiar with or buy into it's a good exchange rate (one of the lies is that it's a good exchange rate but what they do is compare the rate not with the interbank rate but the rate posted in the bank windows for cash exchange which is usually about 10% above the interbank rate anyway). Yada yada yada. That is why I never take out my frustration on the clerk but after the clerk gives one of the lies, politely ask to see the manager. Now I don't know the situation say in China but when I ran int my problem in Ireland, the manager was the same age as the clerk but given the title manager and refused to change it saying there was noo rule in Ireland that I had to consent to be scammed. So I carried out the procedure of writing dcc declined, crossing out the USD amount and circling the euro amount. The manager asked me why I was doing that. I said because I'm going to dispute the charge when I get home as you're breaking your contract with in this case visa. As it turned out, doggone it, my bank simply refunded the 54¢ difference instead of charging it back to teach those clowns a lesson.

The reality is most people you deal with on the retail level have no idea about what's going on with this. That is the reason people in the know must continue to fight this scam because it is spreading like wildfire throughout the travelling world!

They sure do but in many cases the cashier has been trained to simply press the accept dcc button without asking and remembering the average cashier is probably some student looking to pick up a few euro or pounds or whatever for a part time job, they don't usually have a clue.

Agreed, but I'm responding to the person who was talking about a no CVM transaction automatically triggering DCC.

Banks may continue to eat the cost now, but what about if more and more people start submitting claims about being scammed by DCC? Surely it cost your bank more than 54¢ to reverse to you. If enough people start to complain, issuers can begin to change their tune. For example, how recently would you get the line of "all merchants are required by Visa/MC policy to accept all cards blah blah blah..." when you asked why the bank didn't issue cards with EMV? That's all you would hear from them about two years ago.

When I went to call about getting a new card from Chase with EMV last week, the story was completely different. The rep not only knew about EMV, but he knew the differences between chip-and-signature and chip-and-PIN. Granted this could have been one of the few who was in the know, but I doubt it.

I don't know the process as a cashier for this scenario, but I think they would have to opt for it for the terminals to be in compliance with Visa policy.

The bank probably ate the charge because it was a small amount. If it's a larger amount, say $50 on a hotel stay, they probably initiate a chargeback which might incur a fee on the merchant by his or her bank.

Hi moondog, I'll add this to the wiki. I started this thread to be more of a comprehensive discussion of DCC, but the China thread has some great information.

I experienced a rather annoying DCC scam at my wife's doctor's office in Shanghai. It was a $9k bill (neo-natal care and prepayment for hospital), and the invoice came in USD. We had previously paid in CNY at this office, but we tried every POS machine and could only get USD. I ended up using my AMEX and paying the int'l transaction fees, but I unwilling to eat the ludicrous FOREX rates offered by Bank of China and China merchant's bank. In this case, at least, the whole finance staff of the hospital claimed to be uninformed.

If it was simply a scam by the teller, it would be easy to overcome. The fact that the banks set the machines in such a way to prevent local currency transactions makes it so much worse to do business. I just stopped using merchants with DCC issues, though the staff was often unable to understand exactly why...

Why not just pay the bill, then have your CC issuer initiate a chargeback for the "overpaid" portion -- the difference between the Visa/MC rate in effect at the time and the DCC rate you were charged? That's perhaps the best way to send a message to these merchants that this behavior is unacceptable (and one that has real consequences as far as the fees they're paying to Visa/MC).

I stayed at the Parkyard Hotel in Shanghai one time and they hit me with DCC and refused to reverse it. So I just initiated a chargeback and hit them where it hurts the most: on their bottom line.

I used to play the chargeback game myself, but have long since given up because I was wasting lots of time and I don't think the merchants/acquirers actually cared (for every squeaky wheel, there are 100 other people that generate substantial bonus profits). The idea of boycotting DCC establishments is all well and good, but you'd have trouble eating in Shanghai if you maintained this policy. I usually simply pay cash or use Unionpay these days.

I agree. ^ Thanks for starting it, and for creating a detailed wiki.

Is Discover susceptible to DCC? I've heard conflicting stories. I don't have a Discover card, so I've never been in a situation to use it with a UnionPay or JCB machine.

As far as giving up on the chargeback game, it's more a matter of principle. You're right that a lot of the merchants probably don't care. Your bank certainly does though because they have to go through the chargeback process each time you file a dispute. For example, a few years ago if you called a US bank and asked about them issuing a card with an EMV chip for overseas travel they wouldn't know what you were talking about and would just repeat the line, "All merchants who accept Visa/MC have to accept all cards blah blah blah..." Now they've changed their story and specifically tout chip-and-signature as cards to facilitate things when traveling overseas.

China by far seems to be the worst DCC offender. In Taiwan I've always asked, and they've been able to accommodate DCC-free transactions. I only visited HK and Macau a few years ago before I learned about DCC, but fortunately I only got hit with DCC one time. Unfortunately, it was for my bill at the Venetian Macau so it cost me $30+. :mad:

I've heard rumors that Discover was developing its own breed of DCC, but for now Union Pay terminals do not have DCC functionality.

Regarding your point about chargebacks being annoying for my bank, you're probably right, and they are certainly far more costly than the amount of most disputes (i.e. I used to flood them with batches of 100 receipts at a time and let them figure out the differences between the DCC and spot fx rates), but it's not like BoC, HSBC, or 交行 would ever care about Charles Schwab Bank's opinion.

HK used to be far better than China (i.e. mandatory DCC was rare), but I've noticed that it is starting to spread there at an alarming rate as well, which I suppose shouldn't be too surprising because many Chinese acquirers also operate in HK.

In the China forum thread, we've posted DCC workarounds for several popular POS machines. The problem is they are continuing to "innovate" faster than us.

Given that the poster actually had to pay his wife's *doctor*, I don't think boycotting the merchant was an option in this case. I would have just given them the card and warned about chargebacks if they used DCC.

But wouldn't Visa/Mastercard threaten to pull business from ALL of said banks/merchants if they get too many chargebacks? That's what you're really after: either make them pay higher fees, or get their ability to accept CCs pulled entirely, due to being sleazy.

From what I've been reading on the China thread, the POS terminals are locked down, and a code is required to disable DCC, and there is no check the box system that is prevalent in Taiwan.

What happens if you refuse to sign the charge slip? It seems as though most people have been successful getting the charges voided, but it doesn't help end this practice if you end up paying cash. Furthermore, if you're with a group of friends, they'll think you're creating a scene and being petty over something immaterial.

Contrary to jeffjaguar's response I would answer with a resounding no. I've EMV cards from HK (still have to be signed) and still get DCCed all over China. It's not too hard for Chinese bank engineers to engineer fxcked firmware that returns a default "yes" to any DCC opt-in query so long as Visa/MC don't have a compliance program in the PRC and can't kick the big 4 or even the secondary banks out altogether.

I have experience with DCC outside of China and whilst I've encountered aggressive DCC behaviour, no country is so badly policed as the PRC in terms of DCC. Taiwan had a period of non-opt out DCC for a while in 2011 but someone stepped in and they're all good now.

Potential antitrust:
http://www.flyertalk.com/forum/china...l#post16908166
http://www.bloomberg.com/news/2013-0...cy-policy.html

I don't get it. Is the objective of antitrust law to give choice even if the alternatives are shown to be almost certainly worse?
Furthermore there's no real choice under a lot of circumstances - you get two, or one.

Interesting theory, maybe Visa/MC figured signing up more crooked banks and merchants and earning more 1% interchange is worth giving up the foreign currency translation fee.

As far as I understand MC has the 0.8% foreign transaction fee and Visa doesn't. Really adds insult upon injury for DCC transactions on MC.

I think the choice for Visa/MC is binary: all or nothing.
I've long held a theory that the Chinese Government creates very favourable conditions for DCC scamming:
- They own the local competing payment system - Unionpay - and majority stakes in most major Chinese banks too.
- They are really pushing to promote local brands - they're also doing this to the Big4 Global Accounting Firms (despite almost all the partners being HK/Mainland Chinese) http://app1.hkicpa.org.hk/APLUS/1006...20-24_Big4.pdf
- They hate Visa quite a lot, given Visa's intransigence over PRC-issued dual-coded Visa/Unionpay outside China (Visa ruled that all Visa merchants outside China must use the Visa function of the dual-coded cards). Dunno what's their attitude towards MC.

The CBRC won't bat an eyelid towards systematic DCC rort and won't police its banks to follow Visa's/MC's rules. Most banks will be allowed to tell Visa/MC - I'm gonna scam all your customers. You can pull my entire participation in Visanet if you wish but if you don't then you play by my rules.

In any case I also see this as generally China's increasing unfriendliness towards foreigners - another being the post-1 July 2013 visa restrictions. As FIEs we're finding it harder to increase investment into China too.

Chargeback - I rather not. I rather void the slip and present alternate payment (in my case in the PRC this will obviously be Unionpay).

OK, just a short explanation on my circumstances
- I live in HK and have permanent residency. This means I've access to RMB/HKD denominated Unionpay cards and RMB accounts to settle them with. I can draw cash out of RMB ATMs in HK and recently I can even put them back in again.
- I have family in Australia and in any case since I'm based in HK, my travel is mainly redemption travel with CX and its OW partners and my primary miles program is Asia Miles (though I recently added Avios for better short-haul redemptions inside Asia).

Most of my miles are from credit card spend. HK is a haven for earning miles with credit cards and I try to maximise earning from card spending for everything I have to pay.

This may result in me paying with Visa in China instead of taking the more convenient option of paying with Unionpay e.g. Unionpay cards earn RMB4/mile, but a Visa card on a promo may earn HK$1.11/mile. Of course the promos usually state the promo must be free of DCC i.e. the HK bank must earn its 1.95% foreign curerency translation fee.

But really using Visa in China is increasingly frustrating. I think for 2012 Christmas I've spent a full day in Shenzhen dining, wining and shopping without being able to pay Visa or alternatively being able to pay for it without DCC.

I tried studying and disarming card terminals, but I'm not convinced Chinese banks really have to let us opt out given the lack of policing and policy encouragement to DCC. Normally when I see DCC language my SOP is to:
- void the slip, even if it takes me 30 minutes to do so
- (really haven't done this yet) tick the merchant slip, photo the slip and dispute it

I've done a full chargeback before. But I'm finding there are fewer Visa promos applicable in China and the marchants to use them on for me to use Visa in the face of DCC.

Hi percysmith, thank you for your detailed insights. Could you go into a little more detail about Taiwan? You said there were some issues in 2011, but our trip there in June 2011 didn't yield any DCC transactions. The only place where I've ever had an issue was the Taoyuan Novotel. They insisted on placing the room deposit in USD, but the final charge slip was in TWD. I acquiesced only because it was a room deposit, not an actual charge.

All other places are either TWD exclusively or process the transaction correctly up front when I hand them my card. Usually when shopping in department stores I just tell my wife to have them charge in TWD.

Perhaps I'll do a quick summary of DCC behaviour outside China:

Taiwan and Thailand: a quote slip is generated, the terminal pauses, you tell the cashier whether to press yes or no into the terminal. If yes a DCC slip with confirmation box gets generated. If not, a DCC-free slip gets generated.

Japan: DCC virtually unheard of, but recently started with full choice given.

UK and France: appears electronically on the POS system. Cashier makes input yes or no. Sometimes they forget to ask but the POS cannot void/refund in your currency (thus locking in the profits).

Korea: akin to UK/France. Except the slip's in Korean so sometimes difficult to figure out whether you've been DCCed (or whether you even got back the card slip!).

Italy/Spain - on signature pad if signature is captured there.

Vietnam: not seen...(?)

Indonesia: illegal due to central bank restrictions (card charges must be in IDR).

Cambodia: used my USD card (see below)

Sorry no info on Australia or the US cos I've AUD and USD-denominated cards and some savings in those currencies.

Thanks for the above post. I have yet to be DCC'd in Australia in my 6 trips there over the last 3 years, but I imagine it does happen. I don't much like the credit card surcharge that some places tack on, but at least that's disclosed.

I'll be headed back to Spain in February, and so I'm wondering what the best practice is for there? Should I specify that I want to be charged in euros or refuse to sign if I've been DCC'd? I half expect places that don't do DCC will think I'm crazy for asking them to charge me in euros. "What else would we use? Pesetas?"

Just the Strathfield Eatery DCC story then.

I really didn't see much of DCC in Spain, despite what I read and even though we were carding every meal and every purchase >EUR2 (we had a 6% foreign currency spending rebate promo). It might have something with us saying "charge Euros please" before every purchase.

The only time I saw DCC was in El Engles Cortes in Gran Via Madrid, where I saw a 4% DCC rate for a split second before the cashier selected it away on the POS (cos I already said "charge Euros please").

I was there last June and December.

When I was checking into my hotel last December I noticed there was a card-not-present Global Payments deposit slip in HKD in my folio already. I asked and was assured it would not post if I presented alternate payment on check-out, which was the case.

My experience outside hotel was identical to yours - even in Everrich Duty Free. The difference in the cross-strait experience made me think Visa can enforce its rules in Taiwan but not in the PRC.