Memorandum
- From
- Caroline Mercer via Fast Company
- Date
- Filed
- Business·5 min to read
- Re
Dynamic Currency Conversion Is Costing Travelers More as New Payment Screen Adds to the Trap
ReDynamic Currency Conversion Is Costing Travelers More as New Payment Screen Adds to the Trap
A growing payment practice known as Dynamic Currency Conversion is adding 3% to 5% to purchases made abroad, and a new second-screen confirmation step is making it easier for travelers to accidentally accept the markup.
Travelers paying with credit cards in Europe and other tourist destinations are increasingly encountering a payment practice that can quietly add hundreds of dollars to the cost of a trip. The practice, known as Dynamic Currency Conversion, or DCC, offers shoppers the option to pay in their home currency — typically U.S. dollars — rather than the local currency. While that may sound convenient, the exchange rate attached to the transaction is usually far worse than what a card network or issuing bank would apply, adding an extra 3% to 5% markup through inflated rates, according to Visa.
The problem has recently evolved in a way that makes the trap harder to avoid. In many shops and restaurants, after a customer selects the local currency on the terminal, a second screen appears asking them to confirm whether they accept or reject the conversion. According to CNN business correspondent Richard Quest, who described the issue in a thread on X, pressing «accept» on that second screen means the customer has fallen into the trap. «You have accepted the thing you wanted to reject,» Quest wrote, adding that a cashier told him most shoppers, including himself, are falling for it.
The mechanics of DCC are straightforward but easy to overlook in the moment. A diner who receives a bill of 100 euros, for example, might see the charge converted to more than $115 if they choose to pay in dollars, depending on the exchange rate, compared with roughly $110 if the charge were processed in euros. That difference does not include any foreign transaction fees the traveler's own card may impose. Choosing to pay in the local currency allows the card network and issuing bank to handle the conversion, typically at a more favorable rate, though rates vary by card and should always be double-checked.
Not all service staff are exploiting the confusion. In practice, many cashiers and waiters actively help customers avoid the markup. Some travelers report that after selecting euros, they hand the terminal back to the cashier, who then presses «reject conversion» on their behalf while showing the customer what is being done. That kind of assistance can save a traveler significant money over the course of a trip.
The issue is not confined to Europe. DCC is present and growing in tourist cities across Asia, Latin America, and other parts of the world. The newer second-screen version of the trap has not been widely reported in those regions, but its spread would not be surprising given how quickly payment terminals are updated globally. Travelers who have spent extensive time in Europe note that DCC practices there tend to be especially aggressive, making vigilance particularly important for anyone visiting the continent.
For consumers, the advice is simple and consistent. Always choose to pay in the local currency, whether that is euros, pounds, or any other national tender. Then, if a second screen appears asking whether to accept or reject a conversion, choose to reject it. Doing so generally secures the most favorable exchange rate available through the card network and can prevent a routine purchase from turning into an unnecessary expense. The savings may seem small on a single transaction, but across a vacation filled with meals, hotels, and souvenirs, the difference can amount to hundreds of dollars.
The rise of DCC reflects a broader trend in payment processing, where terminals are programmed to offer currency conversion as a default option that benefits the merchant or the terminal operator rather than the consumer. Because the markup is embedded in the exchange rate rather than presented as a separate fee, it can be difficult for travelers to notice until they review their statements after returning home. Awareness of the practice and a habit of checking each terminal screen are the most reliable defenses.
