Choosing DCC Providers

Coverage: When you evaluate DCC service providers, it is very important that you consider the number of foreign currencies they support. The more currencies that are supported, the more transactionsTransactions transactions Interactions where value is exchanged for goods or services. that will be eligible for DCC processing. That means more revenue you will earn on DCC conversions.

How is the exchange rate determined? Ideally, the DCC service provider will use a well-known, published wholesale interbank exchange rate, ensuring highly competitive rates that are not normally available to consumers. Many providers use an arbitrary, undisclosed basis for exchange rate determination. If the base exchange rate is inflated, your customers will pay more and your sales will ultimately decline due to customer dissatisfaction. First Data uses only a published wholesale interbank rate, which ensures that the consumer is receiving a highly competitive rate. 

Does the DCC service provider offer exchange rate guarantees protecting both the merchantMerchant merchant An individual or business that accepts payments in exchange for goods or services. and the cardholderCardholder cardholder The person or business to whom a payment card is issued. from currency fluctuation risks? Guarantees vary among providers of DCC services. Many DCC providers do not offer any guarantee to the merchant or the cardholder. Look for more than a verbal guarantee—ensure that the service has a guarantee contractually built into it. 

What is the DCC service provider’s core business? Be wary if its only line of business is DCC. It may be seeking out higher profits from this service that will ultimately come at a cost to your customers. 

Will DCC increase the merchant’s interchange feesInterchange Fees interchange-fees Fees paid by the merchant’s acquirer to the cardholder’s issuer for transaction processing.? Many solutions in the market will result in the merchant paying additional interchange and assessment costs. This is a result of DCC providers calculating these fees based on the converted amount. First Data’s DCC solution calculates fees on the original U.S. dollar amount prior to conversion, which ensures that the merchant does not pay any additional interchange or assessment fees. Be aware that bundled pricing within DCC can disguise these increases by building the increase into the bundled price. 

Does the DCC provider utilize a treasury service as the backbone of the product? Many DCC providers offer a solution that does not include a treasury service provider. Without a treasury provider, the consumer and the merchant will likely incur additional expenses and/or hidden fees. In the currency conversion process, it is important to understand that without a treasury partner, the solution is nothing more than an exchange rate provisioning service. Using a treasury partner provides the consumer with protection and offers the merchant a guarantee ensuring that costs will not increase, that the funding they expect will be received, and that any risk associated with currency exchange will reside with the provider. 

Is the DCC service provider also your payment processorProcessor processor A company authorized to process credit and debit card transactions between acquirers and issuers., or is it a third party? Merchants must take into account that DCC comprises not only currency conversion on a transactional basis—it also includes funding. When choosing a DCC provider, it is imperative that you investigate the candidates’ backgrounds, especially their fiscal responsibility and financial stability. The company you select will have a direct responsibility for a major part of your current cash flow and funding. Conflicts can easily arise when the job of processing credit card transactions is split among two or more companies—so it may be desirable to use a turnkey provider that can handle both your DCC transactions and your core processing.