Dynamic Currency Conversion

It’s easier than ever to shop in a truly global marketplace. If customers can’t travel in person to an international shopping destination, they can simply order what they want online. The only catch is that conversion still needs to take place between the customer’s and the merchant’s respective currencies, which makes it hard to tell exactly how much is being spent.

Dynamic Currency Conversion is a service that handles this at the point of sale, but when customers don’t understand the true costs of DCC, disputes and chargebacks often follow. Why is Dynamic Currency Conversion a common source of chargebacks, and how can merchants use it safely?

New call-to-actionFrom a consumer perspective, there aren’t many barriers to international commerce these days, especially when e-commerce platforms are there to smooth out any friction that language, time zones, and culture might cause. One of the few sticking points that remains is currency—while Europe is (almost) all in on the Euro, most other countries are still using their own currencies.

Whether or not you have a firm understanding of the market forces that cause exchange rates to fluctuate, the effect on the ground is easy enough to understand: the consumer will spend more or less of their own money on a product depending on the exchange rate in effect when currency conversion takes place.

Dynamic Currency Conversion offers consumers an immediate, locked-in exchange rate, but it in no way ensures that they’ll get the most favorable rate. The service may also come with fees attached. When cardholders review their bank statement and get sticker shock from a DCC transaction, they may decide to dispute the transaction with their bank and ask for a chargeback.

DCC may result in both legitimate and fraudulent chargebacks, depending on whether or not the cardholder was able to make a fully informed choice about whether or not to use DCC at the time of sale.

What Is Dynamic Currency Conversion?

DCC is a service offered by acquiring banks that merchants implement at the point of sale. When a customer chooses to use DCC, their currency is immediately converted to the merchant’s currency while the transaction is taking place, allowing the customer to see exactly how much they’re going to be charged in their own currency.

In order to provide immediate guaranteed rates, DCC usually includes a markup above the current market exchange rates, as well as a service fee.

If DCC is not used, the currency conversion will be handled by the credit card network at a later time. The customer has no way of knowing exactly when the conversion will take place, but it should use current market rates and will not include a markup, although the network will charge their own currency conversion fees.

The advantage of DCC is that it gives the customer a known, locked-on exchange rate that will show them exactly how much they are spending while the transaction is underway. The downside is that with the markup and fees, DCC usually ends up being more expensive than just letting the credit card network handle the conversion at market rates. Per the card networks, DCC must be offered only as an optional service—the customer should always be given a clear and informed choice about whether or not to use it.

How Can Dynamic Currency Conversion Lead to Chargebacks?

The card networks themselves do not offer DCC services, but they do allow their acquirers to offer it, provided they follow guidelines designed to ensure that the customer knows exactly what they’re getting into and has a positive experience with the service.

One of the clearest rules is that the customer must be given the choice of whether or not to use DCC and cannot be forced or coerced into using it. One of the ways card networks like Visa and Mastercard enforce this rule is by giving customers chargeback rights when DCC is used without their express consent. These chargebacks will typically be coded as processing errors.

Learn How To Fight Them The Smart WaySometimes, cardholders experience buyer’s remorse when they realize they could have gotten a much better exchange rate if they hadn’t used DCC, so they’ll contact their bank and falsely claim that they didn’t agree to it.

This may look like a valid processing error chargeback when it first arrives, but it’s actually friendly fraud. If your transaction data shows that the cardholder was given the option of whether or not to use DCC and did in fact choose it, you should be able to fight the chargeback by representing the transaction with that evidence.

What Can Merchants Do to Avoid Dynamic Currency Conversion Disputes?

The best way to prevent DCC chargebacks is to review the card network guidelines that lay out exactly when and how to inform your customers about the DCC option. If you’re operating in a card-present environment, make sure that all staff members who work the sales counter know how to handle foreign currency transactions.

In e-commerce and other card-not-present settings, don’t use DCC as a default option or apply it automatically. Make customers read the disclaimers and affirmatively choose it.

When DCC is offered, make sure that your checkout software or point-of-sale terminal records the fact that the customer was given the option of using DCC and chose to do so.

These records can be used as evidence to fight friendly fraud chargebacks based on false claims about DCC.


Every e-commerce merchant knows that your next customer could come from anywhere, and if you aren’t willing to work with international currencies and other aspects of a global customer base, you could be missing out on a lot of sales.

It may make sense to offer DCC as an option for customers who want immediate clarity and surety about how much money they’re spending before they check out, but merchants should never pressure a customer to use DCC, or choose it for them, in order to expedite a transaction. That’s a pathway to certain chargebacks.

By being flexible and informative about their currency conversion options, merchants can work with most international customers without putting themselves at unnecessary risk.

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