Should I pay in local currency or my home currency abroad?
Local currency, almost always. When you choose your home currency, the merchant’s DCC provider converts at a rate with a markup that averages several percent. When you choose the local currency, your own bank converts at the scheme rate plus its fee, which is usually lower. The EU terminal must show the markup.
In detail
Local currency, almost always. When you choose your home currency, the merchant’s DCC provider converts at a rate with a markup that averages several percent. When you choose the local currency, your own bank converts at the scheme rate plus its fee, which is usually lower. The EU terminal must show the markup.
What is dynamic currency conversion?
The DCC rate is a reference rate plus a markup, split between the DCC provider, the acquirer and often the merchant, which is why hotels, airports and tourist shops like it. Visa tells cardholders that the home-currency option includes a conversion rate plus additional fees, so it can cost more than paying in the local currency.
What does EU law say about currency conversion charges?
Since 19 April 2021, the payer’s own bank must send an electronic message with its own markup after the first card payment in another EU currency, and then at least once a month per currency, unless the customer opts out. The UK kept the same text as retained law after Brexit.
More detail in our #PayDecoding episode on dynamic currency conversion.