DCC Charges on Credit Card Transactions
Most transactions nowadays require a fee. This is valid for using an ATM or credit card. Dynamic currency conversion (DCC) is one type of currency conversion expense. The majority of currency conversion fees are determined by the credit card payment processor (usually Visa or MasterCard) or the ATM network. DCC markup fees are levied by the merchant, typically via a service provider.
Key Features of Dynamic Currency Conversion
The features of dynamic currency conversion (DCC) are given below -
- Dynamic currency conversion (DCC), often referred to as cardholder preferred currency (CPC) (POS), is a feature provided by the merchant that allows you to view your foreign credit card transactions in your local currency at the time of sale.
- DCC is an option, that you can choose to avail or not to avail.
- Compared to your credit card payment processor, DCC charges higher fees.
- When using DCC, you are responsible for any foreign transaction fees levied by your credit card.
What does DCC Markup Fees Mean?
For MasterCard and Visa, the typical foreign exchange transaction fee is 1%. Most credit card companies add on the cost as an extra percentage, and it can vary from 1.5% to 3% or even more. This means that the price varies according on the credit card provider. At the time of issuance, all credit card issuers are required to publish or disclose the fees related to overseas transactions. Should the issuer fail to do so, payment must be made to the cardholder.
This rule was in use in the past, though. The credit card agreement now provides a detailed explanation of every detail. Consequently, it is imperative that you read the credit card agreement in its entirety before applying. These important details are also listed on the issuer's official website. The Cross-Currency Markup is applied each time an Indian credit card is used for a foreign transaction. Credit card providers in India usually impose fees ranging from 3% to 5%, although specific fees may differ among banks.
Two popular payment networks, MasterCard and Visa, act as a middleman between the issuing bank (HDFC, SBI, Kotak Mahindra, Axis, etc.) and the shop from which a foreign transaction is being made. Therefore, when a credit card is used outside of India, both of these payment networks charge 1% to the issuing bank and 2% if the payment network is different.
FAQs on DCC Charges on Credit Card Transactions
- How may the DCC markup cost be avoided?
Select to Pay in Local Currency: Always select to have your credit card charged in the local currency while making purchases overseas. In the event that you choose DCC, the transaction will be converted into your local currency by the local merchant's bank, frequently at a bad exchange rate.
- Why does the DCC fee apply to me?
The debit or credit card processor, such as Visa or Mastercard, usually charges currency conversion costs, which amount to around 1% of the total transaction value. The service provider for a merchant that handles the exchange rate and any extra costs typically sets DCC.
- What is the DCC fee that ICICI Bank charges?
Starting on February 5, 2024, any foreign transaction made in Indian currency at an overseas location or with Indian-based merchants who are registered in another country would be subject to a 1% DCC fee plus taxes.
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