Over the past few weeks we’ve been eagerly contacting popular Dynamic Currency Conversion (DCC) services with the purpose of getting a better perspective of how DCC works and how it might be of benefit when traveling. We are aiming to have each profiled company answer three central questions: What is the typical currency conversion fee care holders should expect to pay when using your DCC service? What is your service area? What are the competitive advantages for choosing your DCC service over alternative currency conversion methods?

To lead us off, we got a detailed response from FEXCO, a global payments company headquartered in Kerry, Ireland, with operations in Ireland, the UK, Spain, Malta, Australia and the USA. The company was established in 1981 and offers a range of Global Consumer Payments, Global Corporate Payments and Business Services. Through its services, FEXCO moves over 4.5 billion pounds annually to consumers and companies in more than 150 countries worldwide.

Our questions to FEXCO are in bold font below:
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When making purchases internationally with a credit card, consumers need to be aware of three things:

1. The exchange rate in the country that they are visiting.
2. The “foreign transaction fee” that their credit card company will charge for making an international purchase.
3. How to handle “dynamic currency conversion” options that the merchant might offer.

This site has devoted considerable attention to all these topics, but recently an email from a reader exposed a blind spot in our coverage. In her email she basically asks “Who are the major dynamic currency conversion providers, what rates do they charge and is there any reason to pick one over another?”. These are very good questions, and they demonstrate a fair amount of research to even know to ask them.
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Converting money while traveling internationally is a task that almost every international traveler faces. The number of ways to convert money are increasing, but so is the number of entities looking to take a fee for the transaction. Several years ago, many travel advisors would indiscriminately advocate using credit cards to make purchases in a foreign currency. This was because many credit card issuers generally charged conversion fees that were much lower than could be achieved at foreign currency exchange booths. Additionally, the fees were near what could have been achieved at a bank, and when using a credit card the traveler would never be left with unneeded foreign currency at the end of a trip. At the end of the day, travelers got decent exchange rates, credit card issuers earned modest fees and nearly everyone was happy.
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Nationwide Building Society, a leading financial services provider in the UK, recently took the time to offer the following detailed comments about Dynamic Currency Conversion (DCC). There has been increasing news coverage on DCC in recent months as financial institutions, travel advisers and DCC service providers debate the value of DCC to consumers. While some travel advisors have resorted to asserting that DCC is more scam than service, DCC service providers suggest that DCC offers consumers transparency about conversion fees at the point of sale. These providers aptly point out that it is often credit card issuers who charge fees after DCC has been preformed that ends up costing consumers extra money. By itself the actual fee incurred by just the DCC transaction is on par with the fees charged by issuing banks for currency conversion.

Nationwide stands out in the UK as the only high street financial organization that does not charge fees for using their cards abroad (see below). Their perspective on DCC is valuable not only to residents of the UK, but is relevant to travelers of any origin who encounter DCC. Much of Nationwide’s advice about how to handle DCC can be applied no matter who issues the credit card or debit card being used. Below are some of Nationwide’s comments about DCC and recommendations on how to handle this service.
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If you’ve used a credit card internationally the past few years, odds are good you’ve paid your credit card issuer a foreign transaction fee. What you may not know is that you may have also paid a foreign transaction fee to several other entities along the way. Additionally, you probably have no idea how much you paid in fees or who actually got the money. This was the subject of a recent lawsuit. Though the lawsuit was settled, and exact details have yet to emerge, the lawsuit will likely require more transparent disclosure of fees on credit card statements. Unfortunately the lawsuit does nothing to curb the number of middlemen who take a cut of the fee.
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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.
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