Dynamic currency conversion: how DCC works for merchants

Dynamic currency conversion (DCC) lets a customer with a card from another country pay in their own currency instead of yours. A visitor from Toronto buying a $150.00 jacket in Orlando can be charged in Canadian dollars on the spot, at a rate the DCC provider sets, rather than in US dollars that get converted on their side later. Visa and Mastercard both allow it, on terms written to protect the cardholder: the choice is theirs, the rate and any markup show up before they decide, and nobody gets to steer them.

This guide covers how DCC works at a terminal and online, what each network requires, the merchant's side of the deal (who sets the rate, who earns the markup, receipts and disputes), and when it's worth offering at all. Network rules cited are as of October 2026. Confirm the current versions with your acquirer before you switch anything on.

What is dynamic currency conversion?

It's a currency conversion offered at the moment of payment. When a card's billing currency differs from the merchant's local currency, a terminal or checkout set up for DCC can show the price in both, and the cardholder picks one. If they pick the merchant's currency, the sale runs as an ordinary foreign-card sale. If they pick their home currency, the conversion happens right there at the DCC rate, and the receipt shows a fixed amount in the currency their card is billed in.

DCC isn't a card network product. Visa's acceptance device guide says plainly that DCC is not a Visa service: merchants, ATMs and branches offer it, and acquirers or DCC agents provide it. Mastercard's 2025 DCC guide says the same about its own network, and adds that Mastercard has set standards and requirements for every acquirer, DCC service provider, merchant and ATM owner that offers it.

How does DCC work at the terminal?

From the customer's side it adds one screen. Behind it, the sequence runs like this:

1. The customer inserts or taps the card.
2. The terminal checks the card's billing currency. Visa says registered DCC merchants and ATM acquirers should confirm the correct cardholder billing currency before they start a DCC transaction.
3. The screen shows the offer: the amount in your currency and in the cardholder's, the exchange rate, and any markup or fee.
4. The cardholder chooses. Under Mastercard's guide, that choice comes before the PIN, because the PIN is the last step of the transaction.
5. The sale is authorized in the currency the cardholder picked.
6. The receipt repeats what the screen showed.

Take a made-up example. An apparel shop in Orlando rings up a $150.00 jacket for a visitor with a Canadian card. The terminal offers the sale in Canadian dollars at a DCC rate of 1.4111, which comes to CAD 211.67. If the visitor picks US dollars instead, the sale goes through as $150.00 and gets converted on their side at the rate their card uses, say 1.3760, which works out to CAD 206.40, plus any foreign transaction fee in their card agreement. On these made-up rates, choosing Canadian dollars costs the visitor CAD 5.27 more before any bank fee, about 2.6% of the sale.

That gap is what the visitor is weighing when they look at the screen, and it's why both networks care so much about what the screen says.

What do Visa and Mastercard require when you offer DCC?

Both networks start from the same idea: the cardholder decides, with the numbers in front of them. On the main points, their rules line up like this.

The Visa column comes from its acceptance device guide (version 3.3, August 2025) and its consumer page on DCC. That page says merchants must not choose on the cardholder's behalf and shouldn't use tactics such as a different font size or color to sway the decision, and it lists the details that should appear on the screen and the receipt. The device guide adds that a receipt for a DCC sale must include the same disclosures the cardholder saw before choosing. Visa also runs a global DCC Compliance Program made up of registration, certification and annual audits, so your provider should be able to show you where it stands.

Mastercard's 2025 DCC guide goes further on how the offer looks:

• Both currency options get equal prominence.
• No yes/no or accept/decline wording, and DCC can't be the only option.
• No "traffic lighting," such as red and green buttons.
• At the terminal, the DCC option can't be highlighted or preselected.
• DCC can't be applied without the cardholder's consent or when they aren't there, and automatic DCC isn't permitted.

A screen that passes both sets of rules looks almost boring: two amounts, two currency labels, one rate, and two equal buttons. That's the point.

Who sets the DCC rate, and who earns the markup?

The DCC provider sets the rate. Neither network treats DCC as its own service, so the rate on a DCC screen isn't a Visa or Mastercard number; it comes from your acquirer or the DCC agent it works with. Whatever that provider adds on top must be disclosed. Visa lists any additional fees or markup among the details the screen and receipt should show, and Mastercard's guide wants any other fee, such as commission, disclosed before the choice.

Who keeps that markup is a contract question, not a network rule. Before you sign a DCC agreement, get these answers in writing:

1. How is the exchange rate set, and how often does it change during the day?
2. What markup or fee is added, and how will it appear on the screen and receipt?
3. Does any of it come back to you, and how is that calculated and paid?
4. Who absorbs the difference if a DCC sale is refunded after the rate has moved?
5. Is the terminal software certified for DCC, and who handles the audits?

Our view: judge a DCC offer by what your customers will see, not only by what you'd earn. A screen that shows a fair rate plainly, with US dollars as an equal choice, costs you nothing in goodwill. One that nudges tourists toward the pricier option will get noticed, and some of those customers will call their bank.

How do refunds and disputes work on a DCC sale?

Refund in the currency the customer paid in. Mastercard's DCC guide says the refund must be processed in the same currency used in the original transaction. Exchange rates move between the sale and the return, so a refund of CAD 211.67 a month later may not cost you exactly the $150.00 the sale brought in. Ask your provider which rate applies to refunds, and who carries the difference. Our guide to void vs refund covers the rest of the refund process.

Disputes usually turn on one question: did the customer really choose? Visa's dispute guide includes condition 12.3, Incorrect Currency, which covers a sale processed in the wrong currency, including one where the cardholder was not advised or did not agree that DCC would occur. Mastercard's DCC guide says a cardholder who loses money because of a currency conversion has a chargeback right for that loss, and can complain to Mastercard or their card issuer when DCC was done without their consent.

Your evidence is the receipt and the terminal's record of the offer and the choice. Visa's consumer page tells cardholders that if the required details are missing, or they feel pressure to pick one currency, they should decline DCC and report the incident to their card issuer. A cashier who leans on customers creates disputes, not revenue. Our guides to chargeback reason codes and how a chargeback works explain what happens once one is filed.

Can you offer DCC online?

Yes, with a twist. Mastercard's guide allows an online checkout to preselect the DCC option, as long as the cardholder is clearly given a way to opt out during checkout and pay in the local currency. We'd read "clearly" strictly: put the opt-out on the payment step itself, not in a settings menu a shopper has to go looking for.

Online DCC is still a card-not-present sale, with the same fraud and dispute exposure as any other web order; our guide to card-not-present transactions covers that side. And it's different from listing your prices in a foreign currency from the start. That's a pricing decision you make before checkout, while DCC is a currency choice the customer makes at payment.

Should you offer dynamic currency conversion?

Only if enough of your customers carry foreign cards to make it worth the setup, and only if you're comfortable with the screen your customers will see. Here's how we'd decide:

A hotel in Las Vegas or a souvenir shop in New York City sees enough foreign cards to make the question worth asking. A hardware store in a suburb probably doesn't. Hotels have extra wrinkles, like deposits and incidentals, which our guide to hotel credit card processing walks through, and restaurants and retail shops in tourist areas face the same question at the table and the counter.

When isn't it worth it? If you'd be embarrassed to explain the rate to a customer standing at your counter, don't offer it. The networks' rules protect the cardholder, but they don't protect your reputation from a markup that feels like a trick.

How do you offer DCC the right way?

If you decide to go ahead, this checklist covers the points that cause most trouble:

1. Confirm with your acquirer or DCC provider that it's registered for DCC and that your terminal software is certified.
2. Check the offer screen yourself: both currencies, equal buttons, nothing preselected at the terminal, and no yes/no wording.
3. Make sure the screen and the receipt show both amounts with currency symbols, the exchange rate and any markup or fee.
4. Train staff to hand over the terminal and let the customer choose, and never to call one option "better" or "easier."
5. Refund DCC sales in the currency the customer paid in.
6. Keep receipts and terminal records, and check every month for disputes about the currency.
7. Look at the markup, and any share you receive, once a year.

Most of these checks live in your merchant agreement and your monthly statement. If your statement is hard to follow, our guide to reading a merchant statement explains how the fee sections are usually laid out.

Next step

If you're weighing a DCC offer, look at what your international cards already cost you first. Send a recent statement for a free statement review, and we'll break down your fees by card type. Clearo's payment processing comes with a dedicated rep, and our POS terminals take chip, tap and swipe. If you'd rather talk through a DCC contract before you sign it, contact us.