Payments & settlement Travel technology glossary

Dynamic currency conversionDCC

Also called DCCpay in your home currencypoint-of-sale currency conversion

Definition

Dynamic currency conversion (DCC) is a card payment service that lets a cardholder paying abroad, or on a foreign website, pay in their own card currency instead of the merchant's local currency. The conversion is done at the point of sale by the merchant's payment provider, at a rate that usually includes a markup.

What Dynamic currency conversion means

Normally, when a card is used in a foreign currency, the merchant charges in its own currency and the cardholder's bank converts the amount later. With DCC, the payment terminal or checkout recognises a foreign card and offers to charge in the card's currency straight away. The cardholder sees the exact home-currency amount, but the exchange rate is set by the DCC provider working with the merchant's acquirer, and the merchant typically earns a share of the margin.

Card schemes require that the cardholder chooses. Visa states that merchants and ATMs must not choose on the cardholder's behalf, and that both amounts, the exchange rate and any fees or markup must be shown on screen and on the receipt. Mastercard's 2025 merchant guide says DCC cannot be preselected or made the default, offers must be neutral, and if the cardholder makes no clear choice the transaction is processed in local currency.

In the EU, Regulation (EU) 2019/518 added transparency rules. Since 19 April 2020, whoever offers currency conversion at an ATM or point of sale must show the total conversion charges as a percentage markup over the latest euro reference rates published by the European Central Bank before the payment is made. From 19 April 2021, card issuers must also send an electronic message with this information after certain cross-currency payments.

For travel sellers, DCC appears in hotels, airline and agency websites, and card terminals at airports and duty-free shops.

How Dynamic currency conversion works

DCC happens in a few seconds at the payment terminal or online checkout, before the card is authorised.

  1. Card is identifiedThe terminal or payment page reads the card's BIN and detects that its billing currency differs from the merchant's currency.
  2. Rate is quotedThe DCC provider supplies a conversion rate, including its markup, and the amount is calculated in the card's currency.
  3. Choice is shownThe cardholder sees both amounts, the rate and any markup or fees, and is offered a neutral choice between the two currencies.
  4. Payment is processedIf DCC is chosen, the transaction is authorised and settled in the card currency; otherwise it runs in local currency and the issuer converts it.
  5. Receipt and revenue shareThe receipt shows the currencies, amounts and rate, and the merchant receives its agreed share of the DCC margin.

Dynamic currency conversion in practice

Illustrative example: a traveller with a Bangladeshi card pays for a hotel stay in Dubai of AED 1,000. The terminal offers two options: pay AED 1,000, or pay BDT 34,200 using a rate that includes a 4% markup over a reference rate. If the traveller chooses BDT, the amount is fixed now, but the markup is usually higher than the conversion margin the issuing bank would apply. If the traveller chooses AED, the bank converts the amount under the card's own terms. The rate and markup are invented for illustration.

In 2015, the Australian Federal Court ordered Visa Worldwide to pay an AUD 18 million penalty after finding that rule changes in force from May to October 2010, which stopped new merchants from offering DCC, breached competition law.

Who uses it

Hotels and resortsOffer international guests the option to settle bills in their home currency and earn a share of the conversion margin.
Airlines and online travel agenciesShow prices and charge in the visitor's card currency at checkout, subject to scheme disclosure rules.
Acquirers and payment providersProvide DCC as a value-added service to merchants and share the revenue.
TravellersDecide at the terminal whether certainty of the home-currency amount is worth the extra cost.

Advantages and limitations

Advantages

  • The cardholder sees the final amount in their own currency at the time of payment.
  • Merchants earn additional income from the conversion margin without taking exchange rate risk.
  • Corporate travellers can find it simpler to reconcile expenses already shown in their home currency.
  • Disclosure rules give cardholders the information needed to compare options.

Limitations

  • DCC rates usually include a markup higher than the card issuer's own conversion cost.
  • Pressure tactics or unclear screens can push cardholders into DCC, leading to complaints and disputes.
  • Merchants must follow scheme rules on choice, disclosure, receipts and refunds or face chargebacks.
  • Refunds must be handled in the original DCC currency or rate, which adds complexity for travel businesses.

Frequently asked questions about Dynamic currency conversion

Should I pay in local currency or my home currency abroad?

In most cases paying in the local currency costs less, because the DCC rate usually includes a larger markup than your card issuer's conversion. Paying in home currency gives certainty of the amount. Compare the markup shown on screen with your card's foreign transaction fee before choosing.

Is dynamic currency conversion legal?

Yes, DCC is legal in most markets, but it is regulated by card scheme rules and, in some places, by law. Visa and Mastercard require a free, informed choice with full disclosure. In the EU, Regulation 2019/518 requires the markup over European Central Bank reference rates to be shown before payment.

Can I dispute a charge if DCC was applied without my consent?

Generally yes. Card schemes require cardholder consent for DCC, so if you were not offered a clear choice or the conversion was applied automatically, you can raise a dispute with your card issuer. Keep the receipt, which should show both currencies and the exchange rate used.

Who earns money from dynamic currency conversion?

The DCC provider sets the rate and margin, and usually shares the revenue with the merchant's acquirer and the merchant itself. The cardholder pays the markup. Because the transaction reaches the card issuer already converted, the issuer does not earn the conversion margin, although some issuers still apply their own cross-border fee.

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Sources and further reading

  1. EUR-Lex — Regulation (EU) 2019/518 on cross-border payments and currency conversion charges
  2. Visa — Dynamic currency conversion
  3. Mastercard — Dynamic Currency Conversion Performance Guide, merchant version (2025)
  4. ACCC — Visa ordered to pay $18 million penalty for anti-competitive conduct (September 2015)