A shop abroad may offer to charge your card in the local currency or in your home currency. Choosing home currency lets the merchant’s conversion service set the exchange rate. This service is called dynamic currency conversion, or DCC. Visa explains that its price includes an exchange rate and additional fees.
Paying in local currency leaves conversion to your card’s arrangements. That avoids accepting the merchant’s DCC rate, but your card issuer may still charge for foreign transactions. Check those charges before your trip so you can assess the choice at the counter.
Who converts the payment?
With DCC, the terminal shows a converted home-currency amount before you agree. Visa requires merchants offering it to display both currency amounts, the conversion rate and any added fee or markup. You should receive a choice; the merchant should not select a currency for you.[1]
When a merchant or ATM converts a Mastercard transaction, Mastercard says its own conversion rates do not apply. If Mastercard handles conversion, the rate generally relates to authorization time, with processing time used in some cases. Its calculator is indicative, and your bank may use different rates or add fees.[2]
Ask your issuer two separate questions: “What conversion rate and fees apply if I pay in local currency?” and “Do you charge a foreign-transaction fee if an overseas merchant bills me in my home currency?” The second answer prevents you from assuming a home-currency price removes every card charge.
Compare the full card cost
| Option | Calculation | Cost |
|---|---|---|
| Merchant converts to USD | DCC price shown by merchant | 112.00 USD |
| Card converts, with assumed 3% fee | 100 × 1.08 × 1.03 | 111.24 USD |
| Card converts, with no such fee | 100 × 1.08 | 108.00 USD |
In this example, local-currency payment costs 0.76 USD less with the 3% card fee, or 4 USD less without it. The DCC row assumes your issuer adds no further fee to that payment. Actual conversion rates and card charges could change which option is cheaper.
Our currency converter gives a rough sense of a foreign price. For a Mastercard payment, its currency calculator lets you include your bank’s fee in an estimate. Ask your issuer which rate it uses and what charges it adds. The amount on your statement may differ from the estimate.[2]
At the terminal or cash machine
- Read the currency and amount before confirming. If you want your card’s conversion, select the local currency rather than the offered home-currency conversion.
- If the DCC rate or markup is missing, ask to see it. Visa recommends declining DCC if required details are absent or you feel pressured.
- Keep the receipt and check the currency you agreed to against the transaction shown by your issuer.
Visa says declining DCC should not prevent the purchase or cash withdrawal. At an ATM, also check its separate withdrawal fee. Mastercard explains that the ATM operator and your card issuer can each impose charges, so declining conversion does not remove every withdrawal cost.[1][3]
If the merchant selected a currency without your agreement, ask for correction before leaving. If it remains unresolved, contact the card issuer using the number on your card and keep the receipt available.[3]
Sources
How ForexRates writes and updates articles