Comments on: Phillip Beck, CEO of Planet Payment, Defends Dynamic Currency Conversion (DCC)

By: scampolice

scampolice — Sat, 02 Jun 2007 03:25:36 +0000

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

By: John

John — Thu, 24 May 2007 20:56:46 +0000

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.

By: Kris

Kris — Fri, 27 Apr 2007 04:23:59 +0000

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

By: Igor

Igor — Mon, 16 Apr 2007 22:09:28 +0000

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

By: tmeister

tmeister — Mon, 18 Dec 2006 19:37:32 +0000

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.

By: luke_

luke_ — Mon, 14 Aug 2006 23:38:21 +0000

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.

By: Suze

Suze — Wed, 02 Aug 2006 15:39:03 +0000

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.

By: Anna

Anna — Sun, 30 Jul 2006 21:38:40 +0000

Jusy FYI, there is also a long Fodor's Forum discussion on this exact interview.

By: RobRoy

RobRoy — Fri, 28 Jul 2006 01:15:54 +0000

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.

By: Suze

Suze — Thu, 27 Jul 2006 04:04:55 +0000

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?!

By: JR

JR — Thu, 27 Jul 2006 00:50:27 +0000

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.

By: Jeff

Jeff — Wed, 26 Jul 2006 23:13:51 +0000

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?