Regulatory
DCC (Dynamic Currency Conversion)
Definition
DCC (Dynamic Currency Conversion) a service allowing cardholders to pay in their home currency rather than the merchant's currency at the point of sale. The exchange rate includes a markup (typically 2-4%) split between merchant and processor. Controversial due to unfavorable rates for consumers. Requires cardholder consent. Can increase revenue for merchants but may create customer complaints.
Related Terms
Cross-Border Fees
Additional fees applied when the card-issuing country differs from the merchant's country. Includes both interchange surcharges and scheme fees. Cross-border transactions typically cost 0.5-2% more than domestic. Can be mitigated through local acquiring in key markets. Significant cost factor for international merchants.
FX Markup
The margin added to currency conversion, expressed as a percentage above the interbank rate. Applies to cross-border transactions, multi-currency pricing, and payouts. Typical markups range from 1-3%. Some PSPs offer at-cost FX; others build significant margin into conversions. For international merchants, FX costs can exceed processing fees.
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