Currency Conversion
Every time a customer with a Visa or MasterCard issued by a foreign bank makes a transaction at a merchant, a fee of approximately 3% is charged to the customer by their issuing bank. For example, say a British cardholder dines in the US and is charged $100 for a meal. That charge actually becomes $103 before it is converted to his native currency, Pounds Sterling. Currently, that additional 3% goes to the card associations (Visa/MasterCard) and the cardholder’s issuing bank, which handles the funds transfer. But DOLLARS ON THE NET^® is about to change all that.

Dynamic Currency Conversion (DCC) is a new functionality in DOLLARS ON THE NET. With DCC, merchants can make money on every foreign cardholder transaction. That means Canadian dollar cards in the U.S. or U.S. dollar cards in Canada, as well as cards from all over the world.

DOLLARS ON THE NET with DCC spins off all foreign transactions to a DCC processor that specializes in foreign currency conversions and maintains an “inventory” of foreign currency. In turn, the DCC processor, which charges the same amount for the transaction as the issuing bank does, returns a portion of the fee to the merchant.

These rebates are usually upwards of 50 basis points (1⁄2%). So in our $100 to Pounds Sterling example, the rebate to the merchant would be 1⁄2% of $100 or $.50. While that might not seem like much at first, when you consider that roughly 5% of all cards presented for payment in the U.S. are foreign currency cards, that 1⁄2% can quickly add up. Plus, if the merchant is on any coast or border of the country or if they are near a resort frequented by foreign travelers, the foreign card volume can jump to 20-30%.

Dynamic Currency Conversion as a Way to Improve Customer Service
Foreign travelers are familiar with the currency conversion fee charged by banks. However, because this fee has always been buried within the exchange rate, they can never accurately know what the exact amount will be when signing the sales slip and they can never know what amount to expect (in their native currency) on their cardholder statement.

Now, DOLLARS ON THE NET with DCC will enable merchants to offer enhanced customer service by providing, on the sales slip, text defining the amount charged in the merchant’s currency and the amount charged in the cardholder’s native currency. In the future, if the language of the cardholder is different from the language of the merchant, the information will be provided in both languages. This small difference makes a big difference in customer service.