Dynamic Currency Conversion (usually abbreviated ‘DCC’) is a process whereby the amount of a Visa or mastercard transaction is converted by a merchant or ATM to the currency of the payment card’s country of issue at the point of sale.

Only if you decline DCC, the currency conversion will be executed by your card issuing bank institute. Take DKB AG for example, which comes with very good FX rates and conditions. When using your DKB VISA card (EUR) in order to withdraw cash at a non-€ ATM abroad, you pay 0% FX fees. You can check DKB’s FX rates at First Data.

However, if you choose to accept DCC, you’ll get really bad conversion rates, independent from your own institute’s FX conditions. Therefore, try to avoid DCC at all costs!

This is how DCC could be presented to you at an ATM

The photo above was taken in Munich on April 25th in 2018. For testing purposes, the ATM (which is operated by Euronet in EUR currency) was fed with a GBP credit card.  As you can see, you are offered two options: Either accept DCC (right button), or decline DCC (left button). The options dialogue on the screen was designed in a way to make most people (who are right-handed) push the button on the right side – and therefore choose DCC.

If you accept DCC, you’ll pay way to much – hidden costs of which most people are unaware. Additional markups on the exchange rate are common – up to 15% or even more! Therefore, as a rule of thumb: Be vigilant, read the options dialogues on the screen attentively and always decline DCC!

The ATM issuers will trickfully design their ATM options dialogue, so the average customer will ‘choose’ Dynamic Currency Conversion. For example, after declining DCC, another options dialogue might appear on the screen, asking you again whether you are really sure you don’t want DCC. This time, however, the buttons will be arranged differently (inversed from left to right). Being vigilant can save you lots of hard-earned money!

The screenshot above shows you the FX rates you would have gotten on that same April 25th day if you had used your DKB VISA Card – while declining DCC. Now, do the maths, and calculate how much percent DCC would have cost you in that specific case. You will be surprised!

DCC at merchants / Points of Sale

Apart from ATMs, DCC might also be offered an merchants, for example in supermarkets or in restaurants. You should stick to the same rule: Decline DCC at all costs!

Some merchants won’t even let you choose DCC. They just apply it, without your consent. Therefore, explicitely ask to pay in local currency before processing your card payment. According to VISA and mastercard scheme rules, merchants always need to let you choose whether to apply DCC or not. File a complaint at mastercard/VISA whenever a merchant forced or tricked you into DCC. Carefully check your bill; do not sign it if it turns out that DCC was applied without your consent.

The bill should show the local currency. If it doesn’t, DCC was applied.

Why you should be aware of DCC

If you are unaware of DCC, you will probably get ripped off most times you withdraw cash or pay in foreign currencies. That’s not very smart, is it?

You don’t care about paying a few percents on top of each bill? It’s just peanuts, so why bother? If you have thoughts like these, just picture the following: You are paying a 100 € restaurant bill (in a currency different to your card’s currency). By choosing DCC, you’ll pay an additional 10% on top of your bill. That is, you pay a total of 110 €.

Now ask yourself: What do I get for the 10 € I payed on top? How many hours of hard work does it take me to earn 10 €?

Any further questions? No? Good. In the future, watch out for DCC and avoid it! Take your time reading the ATM options menue and studying  your merchant’s bill.

Being aware of the DCC rip-off can save you lots of money, which could be wisely invested instead. Always keep that in mind. Over a long period of time, these smaller amounts might sum up to a huge amount of money. You could spend it for nice, useful things.