Tuesday, September 13, 2016

Dynamic Currency Conversion… Just Say No!

Have you ever been asked “Would you like that in dollars or euros?”  Or perhaps a “yes” or “no” box pops up on the point of sale machine asking if you would like to choose your home currency.  This is called Dynamic Currency Conversion or DCC and it is becoming the norm in many countries worldwide.  At first, it sounds like a good idea, but for the consumer it is very expensive and should be avoided at all costs!

On the other hand, it is very good for the merchant because they make a huge commission for offering this service.  In most cases the cardholder will be hit with a 7% markup above the current bank exchange rate. Take a look at this UK MasterCard website promoting DCC for its merchants.  Here you can clearly see that DCC benefits the merchant, and MasterCard makes up some lame reasons as to how it benefits customers.

photo credit: http://howtogeek.com
Often the choice of accepting DCC is presented in a matter-of-fact manner, giving no indication that it is a bad (or good) idea.  But don’t blame the cashier, unless they are the owner of the shop, they are probably required to offer the pitch in a certain manner and tone of voice, such as, “Would you like that in dollars or sterling?”  This, coupled with a stately British accent is bound to sway some travelers to accept the idea.  However, it is never a good idea to convert your transaction with DCC into your home currency.

With today’s regulations, merchants are required to notify the cardholder that DCC is available and there is a choice.  Originally, the merchant was not required to notify the cardholder that DCC was being applied.  The customers would simply make the purchase, get a sales receipt in the local currency and the DCC would be applied afterward in the “back office.”  The cardholder would not know this had occurred until they received their credit card statement. Initiated by Visa and MasterCard, this practice is now forbidden and all credit card companies impose penalties on merchants who fail to comply.

In order to get around the back-office DCC regulation, merchants will sometimes automatically select DCC without the cardholder having a chance to accept or deny.  The conversion will show on the sales slip and an unsuspecting customer may walk out the door none the wiser.  If questioned by the cardholder, the cashier may claim their point of sale (POS) machine automatically converts to the card’s home currency.  This too is incorrect and if detected, the cardholder should immediately request that the sale be reversed or voided and run again in the local currency.  However, this could be difficult, especially if working against a language barrier.

Tips to help you make the best of your travel dollar

- Notify your bank and credit card company when you will be traveling outside your normal spending area.  This is important when traveling at home or abroad. Most banks will put a travel exception on the account so that your spending will be approved while traveling.  If you do not notify your bank or credit card company, you will be denied access to your funds.

- Always refuse DCC, no matter how tempting the comfort of working in your home currency. Following this simple rule will cut at least 5-7% off your purchase before ever leaving the checkout counter.  DCC in not ever required so don’t feel obligated to accept it, even if the merchant selects DCC without your knowledge. If this happens, the cardholder should immediately request that the sale be reversed or voided and run again in the local currency.  

- Use a credit card that has no foreign transaction fees.  Most credit cards issued in the USA charge fees up to 3% for transactions originating outside the USA.  This applies to both point of sales and online transactions.  So, it only makes sense to find a credit card that carries no fees for foreign transactions. I’ve found that many American Express cards have no foreign transaction fees.  I use the Barclay Arrival Plus World Elite MasterCard which offers no foreign transaction fees, true Chip and Pin capabilities, and lots of benefits in the form of travel rewards.

- Don’t use non-bank ATM’s.  You’ll often find these stand-alone machines in small convenience stores, at gas stations and roadside auto stops. These machines are owned and controlled by the local merchant, not a bank.  The owners of these ATM’s are free to mask the DCC options any way they like, and you can bet it will be to their liking, not yours.  Steer clear of these machines, but if you must use them, be sure to read all the screens carefully and opt out of DCC.  Sometimes you will see messages such as “lock-in your rate” or “guarantee your conversion”. Others may post messages such as “press yes for dollars”.  Double check everything and always opt out of anything that looks like DCC.  Alternatively, you can always cancel the entire transaction before you enter your final “yes.”

- Always check your printed receipt.  Somewhere at the bottom you’ll find the cost in the local currency.  If USD is mentioned anywhere on the receipt, then you’ve been had by the DCC con game.

- Download a currency converter app to get up-to-the-minute exchange rates.  I like an app put out by OANDA.  It is available for Apple and Android.  Look for the name “Currency.”


Dynamic Currency Conversion (DCC) is a service offered to credit cardholders that offers to convert a foreign transaction at the point of sale into the home currency of the cardholder.  This is never a good idea for the consumer because it comes with inflated exchange rates that benefit the merchant.  An unsuspecting cardholder can lose up to 7% by opting in to this feature. Since DCC works against the purchaser, never say you would like your purchases to be converted to dollars.


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Do you want to learn more about traveling to Europe? There is a wealth of information and special discount pricing on my tours at http://davidmcguffin.com/.

David McGuffin is Founder and CEO of David McGuffin’s Exploring Europe, Inc., based in Middleburg, Florida. You can connect with him on  Twitter,  Facebook,  Google+,  LinkedIn and YouTube. David spends his time in Europe organizing and leading small group and independent tours to European destinations. In business since 2001, David has provided exceptional travel opportunities to several thousand satisfied customers. You can find out more about David and his European tours at his website, http://davidmcguffin.com.


  1. Seven percent is a lot to lose by not paying attention. Great tip!

  2. Apparently, bank robbery isn't a crime when the bank card issuer robs its customers. Thanks for the tips on how to avoid getting fleeced by the unnecessary bank card fees when traveling abroad.

  3. Wow, converting your money. who knew that it could cost so much in conversion fees. Now I know.

  4. eToro is the #1 forex broker for new and established traders.


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