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Phillip Beck, CEO of Planet Payment, Defends Dynamic Currency Conversion (DCC) by Luke Planet Payment, a leading credit card merchant services provider that enables DCC fees to be charged, contacted us in response to this post about Dynamic Currency Conversion Fees. DCC has been taking a beating in the news by consumer advocates who suggest that DCC is either a “scam” or almost never in the consumer’s better interest. Planet Payment requested that we give them the opportunity to defend the DCC service. Phillip Beck, the CEO and Chairman of Planet Payment offered to answer questions about the DCC service, and we decided to take him up on his offer. His detailed responses help explain DCC from the provider’s perspective. In the interview, Beck cites credit card issuers as responsible for compounding conversion fees. Below is the full, unedited transcript of our email interview with Mr. Beck.
What exactly is Planet Payment? How does Planet Payment relate to Dynamic Currency Conversion (DCC)? Planet Payment is a credit card data processor dedicated to supporting international commerce by helping internationally focused merchants attract more customers, increase sales and make more informed business decisions. Our primary customers are banks and other providers of credit card processing; these customers outsource their multi-currency processing to us. Dynamic Currency Conversion (DCC) is one of the Planet Payment Multi-Currency processing services our customer banks can provide to their merchants, all of which enable merchants to offer international customers the certainty and convenience of paying in their own currency. You can learn more about Planet Payment from our web-site, www.planetpayment.com. Some consumer advocates suggest that DCC is a “scam.” How would you describe DCC? With Planet Payment’s Dynamic Currency Conversion, the cost of the transaction in the merchant’s currency, the exchange rate used and the cost in the customer’s currency are all clearly disclosed right on the customer’s receipt. In addition, the conversion rate will be right around the market rate for currency conversion that day, which means the customer will pay about the same for currency conversion whether DCC is used or not. In general, Dynamic Currency Conversion is a service that enables merchants to offer consumers the choice to have their purchases translated into their home currency at the point of sale, allowing them to see the true cost of their transactions at the time of purchase rather than when their credit card bill arrives. It is a value-added service for which a fee is paid in the form of margin on the exchange rate. With FX Assured®, Planet Payment’s Best Rate Guarantee, consumers shopping at participating merchants are actually guaranteed that Planet Payment’s conversion rate will be better than the effective rate charged by that customer’s issuing bank. Typical DCC example: If you are an American and traveled to Hong Kong, you could choose to have your receipt printed in dollars – and you would see the exact amount that will appear on your credit card statement. Paying in one’s own currency allows customers to be comfortable and make truly informed buying decisions, even when dealing with unfamiliar languages and currencies. See the actual restaurant receipt example below:
In short, Planet Payment’s DCC service:
How did DCC come into existence? DCC was initially developed in Europe and the Caribbean in the early 1990s. Planet Payment has spent significant time and expense developing a best-in-class model that works through acquiring banks rather than engaging in foreign currency trading. What is the maximum DCC fee Planet Payment will add to an international transaction? Is this typical for other merchant services providers as well? The fee for DCC is determined by the acquiring bank and the merchant and, in the case of Planet Payment merchants, is generally comparable to the effective conversion fees charged by credit card issuers. The difference with DCC is the fee is shared by the DCC provider, its processing partners and the merchant, instead of the issuer. Again, the cardholder will pay about the same for currency conversion whether DCC is used or not. Some merchants offer Planet Payment’s FX Assured service, which guarantees consumers that the exchange rate used is better than the effective rate charged by that customer’s card provider. The service is backed by Planet Payment’s Best Rate Guarantee – our promise to refund 150% of the cost difference if the customer’s credit card provider would have charged a lower effective rate for the same transaction, giving international consumers the convenience and certainty of DCC combined with a guaranteed best conversion rate. What are the benefits of DCC? DCC supports international commerce by making foreign prices easy-to-understand, non-intimidating and transparent. It allows international customers to pay how they want to pay, meaning a person’s currency preferences travel with them, regardless of their location. DCC helps merchants market their products more effectively to their international customers and improve their service to these customers. As global travel and commerce continue to grow, DCC technology allows consumers and vendors to conduct transactions in a way that is convenient for both. DCC gives consumers– who already expect to pay in their own currency when conducting online transactions – the same convenient service when shopping in brick and mortar locations around the world. If the DCC option is selected, will Visa or MasterCard charge another fee for the same transaction? How about the bank issuing the credit card? Visa and MasterCard recognize the consumer benefit of DCC and generally do not charge an extra fee if DCC is used in foreign transactions. On the other hand, certain credit card issuers do insist on charging such a fee, even though those issuers provide no special service on a DCC transaction, and consumers can be hurt by those issuers. Planet Payment hopes that in the future all issuers will support consumer choice by discontinuing the practice of double-charging to collect fees on services they do not perform, such as DCC. Consumers can avoid this double-charge by checking their issuer’s policy on DCC and carrying cards that do not charge a fee for any international purchase, whether DCC is used or not. Do Visa and MasterCard treat DCC the same? What is the difference? Visa and MasterCard have both approved DCC as a service, and both have passed similar regulations regarding how DCC is offered to the customer. In sum, both Visa and MasterCard require that the customer “opt-in” or consent to the DCC process, and both require certain disclosure on transaction receipts, although the actual verbiage required by Visa and MasterCard does vary slightly. Visa, in its publicly available documentation, has stated that DCC, when performed correctly, is a valuable service. Consider the following excerpt from Visa’s Rules for Merchant Acceptance:
What exactly does the credit card company do to “earn” the fees they charge for DCC purchases? Do they incur an actual expense for DCC? If by “credit card company” you mean a credit card issuing bank, then they do not perform the conversion on a DCC transaction, so they provide no special service; nor with respect to Visa transactions do they incur any “international” expense for customers using DCC. A transaction conducted using DCC appears to the credit issuer as a transaction conducted in the currency in which the card was issued. What can the credit card consumer do to discourage credit card companies from charging additional fees after the DCC option has been selected? I would advise credit card consumers to:
13 Comments to "Phillip Beck, CEO of Planet Payment, Defends Dynamic Currency Conversion (DCC)"
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July 26, 2006 
Comments (13)
The CEO several times used the term “comparable” rates…in my experience merchants pulling the dcc scam, and as far as I am concerned, it is a scam, use a rate about 5% above interbank….now I use a credit card from Capital One which doesn’t even charge the 1% visa/mc conversion rate so if I allow a merchant to sucker me into this scam, I throw 5% down the drain…even with those near criminal banks that add 2% to the 1% visa/mc charge (and Chase now adds 2.5%) you still do better allowing the bank to do the conversion.
And in addition the CEO does not reply to what happens in those cases when a customer does not want the scam…when the customer is told by the merchant such lies as the US dollar amount (or whatever the customer’s currency is) is only an estimate, the charge is goiong through in euro (or whatever), visa/mc require this, my country’s laws require this, the terminal does it automatically and I have no control over it….why do merchants lie? And what is the CEO doing to make sure merchants understand, the dcc scam is optional. If you want to pay a surcharge to have the merchant do the conversion, fine; but if you want the charge written up properly in local currency, why is the customer being hassled by merchants?
Jeff, you accuse Beck of not making a reply but above he says that if the rate is worse than your credit card rate they will then refund 150% of the difference. So it stands to reason that if you got charged 5% higher with DCC than you should get refunded 7%. Beck makes a compelling case that I will consider.
I have a question or two though about this. Above Visa says “When preformed correctly, DCC provides transperance for cardholders.” WHat happens if it is not absolutely done right? What does this mean?
My second qustion is that Beck does not answer the question about what other merchant services charge for DCC. Is Planet Payment the only provider to use DCC? He also doesn’t say what the maximum fee is. I think Planet Payment sounds pretty fine but how do I know if I am being charged by Planet Payment? Jeff, maybe you were charged by somebody else than Planet Payment.
I think the credit card issuer is really the scam because they charge me again. I think everybody agrees on this.
In my personal experience DCC has not been as good a value as just going without. I have no idea what merchant provider made the transactions.
When you say ‘comperable’ what does that mean? What percentage fee do you charge?!
Above you claim that Visa and MasterCard do not charge an extra fee for using DCC. But Visa says on their website that they charge 1% extra for foreign transactions of any kind. I think they call it an ISA fee or something. MasterCard charges also charges .8% for all foreign transactions. This, to me, qualifies as a double charge. They may not charge for DCC specifically, but they charge for any foreign transaction which includes DCC. Someone please correct me if I am wrong.
Jusy FYI, there is also a long Fodor’s Forum discussion on this exact interview.
I read this interview again and the more I read it, the more it sounds like marketing. You should not have allowed this to be published because it helps them market their product or service.
I can see where you are coming from, but our goal isn’t to promote Dynamic Currency Conversion. Rather, our goal is to provide the most comprehensive DCC resource on the Internet. Between this and other posts about DCC on this site we hope that consumers understand DCC, what their rights are pertaining to DCC, what they can to do avoid it and when it might be to their advantage to use it. I found Mr. Beck’s perspective on DCC valuable because it highlights some of the tensions between DCC service providers and credit card issuers who compound DCC fees after DCC has been performed.
150% refund of the difference…hah, that’s if you have the time to track them down and complain about it. Most of us would be too tired/busy after such trip to foreign land, much less remember the exchange rates during the trip for comparison when the cc bill arrives. Let say if I was scammed into going with DCC, and found out that cost me an extra 10 or 20 USD, Personally I would bite the cost and learn the lesson than spend more time on email or more money on long-distance call to the foreign merchants or Planet-Payment or any other DCC providers trying to sort it out.
Hi All,
It looks like key to understanding the DCC issue is through understanding the economics of it (this is the topic of a research piece I’m working on). Does anyone actually know what is the relationship between DCC providers (Planet Payment, Fexco, etc) and the merchant acquirers? If the company is offering a DCC service to merchants, does it mean that it also has to be their acquirer? Any answers that shed light on these questions are much appreciated
Hi Igor,
I understand that the DCC provider and merchant acquirer does not necessarily need to be the same company. For example, I think DCC provider Euroconex/Nova (ultimately owned by US Bancorp)are a major acquirer, but there are also independednt DCC players which do not provide acquiring services.
Would really be interested to read your research piece on this, is it available online?
Thanks
I can assure you that DCC is a scam and that the only reason why it is marketed is for the financial gain of Planet. The processor sets the rates over and above the interchange rate provided by the bankcard association and if the Independent Sales Organization recieves aquiring status then they can receive more favorable rates and can then qualify with their own bin number which must be underwritten by a bankcard assn. member. The truth be told that the processor will stand to make a huge surcharge over and above the interchange rate and in addition to this surcharge any international transaction will be assessed an additional percentage above the qualified interchange rate and additional fees will be assessed by the bank underwriting the bin. The bank and the processor in this case are in complete partnership in scamming the consumer for as much as possible and the poor merchant who doesn’t understand the surcharges over and above the processors rate are caught holding the bag. The only winners of DCC are the merchant processors selling it and the banks which underwrite the merchant transactions. DCC product is a tremendous windfall for a merchant processor because it allows them to add a significant surcharge and because margins are eroding within the payment processing industry it is the perfect product to introduce to market segments like hotels which are driven by international tourism especially in NY and well traveled intl routes like Wash DC. The DCC product is truly a legal scam and merchants and consumers should take a buyer beware appraoch for companies like Planet are practicing the art of deception to the letter of the law and the only losers here are the merchants and the consumers and the winners are Planet and the underwriting bank.
I read this whole track and while some people are trying to find some rationale out of the Beck interview there really is none. Unfortunately it is a clever scheme designed to fit within legal bounds to make money (commission) out of unsepsecting customers. One side is that , If i bought GBP 5000 piece of furniture in the UK then what Beck says is that the merchant translates that to $10K (at roughly 1gbp=2USD) – come on is there any value in this? One can just do a mental conversion or pull the calculator on your cellphone and do the conversion. But if you are a moron who does not want to do that then you desreves to be stuck with the stupid fee. The other side of that though is that you dont necessarily have to be a moron to get sucked in. I am sure the merchant presents it not from the standpoint that ‘sir or mam do you mind if we just make this bill in USD so that you dont have to see all the funny numbers and complicatons on your credit card statement’ and most people probablyl think sure what can be the harm in this. this is where the scam element comes in. the question is does the merchant say that if we do this conversion you will be charged 3% and that you have the option to decline.
I started reviewing the issue of foreign fees due to an upcoming trip abroad. I found that the captial one card does not charge transaction fees but can allow 0-5% DCC fees. I have yet to use the card for the transaction but i hope the card does not somehow automatically add teh dcc fee. Warren Buffet said do not use credit cards – good advice but for most people it is the most conveninent way to complete transactions and it is not fair if middleman resort to commissioning on completely valueless services
Just returned from a trip from Hong Kong and China
In HK, all the charges are in HK $, thus avoiding the 3% Dynamic exchange fee. The only one that charge Dynamic exchange fee is Bank of China subsidiary that process Visa CC transactions.
In China, things gets really bad. Each time I ask to be charged in RMB, it came out to be in US$. After protest, it still come up with a statement saying that I was offer to reject the US$ option (which I did not). The bank say all I have to do is to cross out the option line and all the fine prints and I will be fine and will be in RMB. When I came home and check my statements, it all had the 3% Dynamic Exchange rated added onto my Schwab Credit card.
It is a big scam by Bank of China.. Be careful when you use credit card in China.
All my charges including Shangri-la are in US $ even I crossed out all the options in the US$ option, also wrote big sign as RMB. Is you want, I can eMail you the credit card slips.