Who earns the money from dynamic currency conversion?
The markup is shared between the DCC provider, the acquirer and often the merchant, under a commercial agreement. The card schemes and the issuer do not receive it. That is why DCC is popular in hotels, airports and tourist shops, and why PSPs and PayFacs see it as a revenue line on cross-border volume.
In detail
The markup is shared between the DCC provider, the acquirer and often the merchant, under a commercial agreement. The card schemes and the issuer do not receive it. That is why DCC is popular in hotels, airports and tourist shops, and why PSPs and PayFacs see it as a revenue line on cross-border volume.
What is dynamic currency conversion?
Dynamic currency conversion: the terminal identifies the card’s billing currency from the BIN, quotes an amount in euros at a rate chosen by the DCC provider, and the transaction is authorized and settled in euros. The issuer has nothing left to convert.
What does EU law say about currency conversion charges?
Regulation (EU) 2019/518, since codified into Regulation (EU) 2021/1230, added currency conversion rules to the cross-border payments regulation. Since 19 April 2020, anyone offering conversion at an ATM or point of sale in the EU must express the total conversion charges as a percentage markup over the latest ECB euro reference rate, show the amount in the payee’s currency and in the payer’s currency before the payment starts, and tell the payer that they can pay in the payee’s currency instead.
More detail in our #PayDecoding episode on dynamic currency conversion.