DYNAMIC CURRENCY CONVERSION (DCC)
Have you noticed that when you’re shopping abroad or on a foreign website with your Credit Card or Debit card/Debit card-i, the merchant may ask which currency you would prefer to pay in - Malaysian Ringgit (RM) or in the foreign country’s local currency? If you have opted to pay in RM, then you have opted for the Dynamic Currency Conversion service.
The Dynamic Currency Conversion (DCC) is a service provided by merchants (including overseas based websites) and ATMs to help convert your transaction from foreign currency to RM on the spot during your payment or cash withdrawal at the ATM.
Customers typically choose DCC for the convenience as the exchange rate, markup charge by the merchant and the final transaction amount in RM is calculated and make known to the customer on the spot. However, the markup charge by merchants which is layered as part of the currency exchange rate is often higher than the markup charge by the bank if you have opted for a foreign currency transaction instead.
To help you understand better on the differences between a DCC transaction and a foreign currency transaction, here is a comparison:
|
Dynamic Currency Conversion (DCC) |
Foreign Currency |
|---|---|---|
Payment is made at the overseas merchants in: |
Malaysian Ringgit (RM) |
Currency of the country you are visiting or country of overseas based online merchant |
Conversion rate |
Determine on the spot by the overseas merchant or online store, including any markup charges. |
Determine by VISA/Mastercard based on the date it is processed. |
Fee imposed by the Bank |
1% DCC fee on the RM amount representing fees imposed by VISA / Mastercard. | i. 1% transaction fee charged by VISA/Mastercard; and ii. 1% foreign exchange conversion mark-up imposed by the Bank (Not applicable to I’m Credit Card.) |
Pros |
Know exactly how much you’re being charged in RM which is displayed on the merchant receipt or charge slip, each time you make a purchase. This can come in handy if you’re trying to keep to a budget while overseas. | i. Acceptable at every merchant who accepts VISA/Mastercard. ii. Exchange rate is determine by VISA/Mastercard, which is on par with the international exchange rate. |
Cons |
The RM amount charged to your account may be higher, compared to paying in Foreign Currency as exchange rate used by the foreign merchant may be higher than exchange rate of the day by VISA/Mastercard plus any markup. | At the point of purchase, you would not know the exact amount you will be charged in RM as this will only be shown in your next monthly credit card/current account/current account-i/savings account/savings account-i statements respectively. |