Dynamic currency conversion: letting foreign cardholders pay in their own currency.

The short answer

• DCC is a choice, never a default. Visa says the cardholder must expressly agree. Mastercard says that without an explicit choice, the sale goes through in the local currency.
• The cardholder sees the numbers first. Both amounts, the exchange rate and any markup or fee come before the choice.
• Paying in CAD is always allowed. A merchant cannot add steps or conditions for a customer who wants to pay in Canadian dollars.
• It is not a Visa or Mastercard service. Both networks say the merchant and its acquirer offer it, and neither lets you present it as theirs.
• Getting it wrong leads to disputes. A cardholder who was not offered the choice can dispute the charge through their card issuer.

What DCC is

When a visitor pays in Canadian dollars, their card issuer converts the amount at its own rate. With DCC, the conversion happens at the counter or checkout instead. The acquirer, the company that processes your card payments, sets that rate. Mastercard describes it this way: the issuer converts if the cardholder picks the local currency, and the acquirer converts if they pick their card's currency.

DCC only applies to cross-border payments, where the card was issued in another currency. A Canadian dollar card has nothing to convert.

How it works at a terminal and online

1. The card is presented, and the system reads the card's home currency.
2. The screen shows the CAD price, the converted price, the exchange rate and the markup.
3. The cardholder chooses CAD or their own currency on the screen.
4. The payment goes through in the chosen currency, before any PIN is entered.
5. The receipt shows both amounts, the rate and a statement that the cardholder had a choice.

In a store, Visa requires the DCC details to appear only on a customer-facing screen or handheld terminal. The cardholder must agree by using that screen themselves. Mastercard's guide also allows a printed advice slip or a verbal offer at a staffed counter. For Visa cards, plan on the screen.

Online, Visa applies its DCC rules whenever a store uses the card number to decide whether to offer conversion. Mastercard says the checkout must show every required detail before the currency choice, and give a clear way to opt out and pay in the local currency.

What the cardholder must see

Mastercard also bans steering. That means no "yes or no" buttons, no red and green colours, no pre-selected DCC option, and no second screen after the customer picks the local currency. It also says the information must be in English or the cardholder's own language.

Refunds follow the original sale. Mastercard says a DCC refund must be a reversal, or a credit in the same currency and amount, or a credit at the same exchange rate.

Who tends to look at DCC

DCC only matters when a real share of your sales are on foreign cards. Businesses that often see them include:

• hotels, tour operators and attractions that serve visitors from abroad;
• luxury and duty-free retail where tourists make large purchases;
• shops and restaurants in border towns with many US cardholders;
• online stores whose customers pay with US-issued cards.

Hotels and car rentals carry extra risk. Mastercard's guide gives the example of a hotel that ignored a guest's currency choice and converted the bill later in the back office. That breaks the rules.

Your statement shows how many of your sales are foreign cards. That is the first number to check.

DCC, multi-currency pricing or a USD account

Disputes and compliance

Visa lets an issuer dispute a payment when DCC happened and the cardholder did not expressly agree, or was refused the choice to pay in the local currency. Mastercard gives issuers a chargeback right for the same problems, and for losses from a refund in the wrong currency. Visa can also audit acquirers and their merchants and fine the acquirer for DCC breaches. See chargeback.

Outside Canada, the European Union goes further. Its rules require the DCC markup to be shown as a percentage over the European Central Bank's reference rate. This is EU law and does not apply in Canada.

Where CleverPays fits

Visa and Mastercard write the DCC rules. The card issuer converts the amount when the cardholder declines DCC. Your acquirer, or its DCC service provider, sets the DCC rate and must register the service with the networks. You, the merchant, present the offer fairly and train your staff. Questions about consumer law go to your lawyer or acquirer.

We can review your statement and show how many of your payments are on foreign cards. If DCC fits, we can set it up where your provider and terminal support it, connect it to your checkout, and test the screens and receipts with you. We can also train your staff on the disclosure and the choice. We stay your contact after launch, in English and French.

Common questions