Dynamic Currency Conversion: The imaginary benefits

Over the past few years, I have been lucky enough to do a notable amount of international travel. Before I depart I always convert a fixed amount of ZAR to the local currency of my destination and carry my credit card as a backup. The few occurrences that I used my credit card internationally I was always explicit to paying in that countries currency (all my experiences being with USD) and there is a very good reason for this.

Every so often I import items that aren’t available here in South Africa and I have been noticing more and more online retailers pushing DCC with all its imaginary benefits.

Guaranteed overcharge

Using a recent Amazon purchase let me illustrate these unnecessary charges consumers fall prey to.

From my experience, it looks as if Amazon defaults to the currency of the credit card being used. This looks perfectly acceptable to an unsuspecting consumer till I switch the payment currency and complete some simple math.


Notice the discrepancy? The exchange rate is R0.54/US$ more expensive and this is my problem with DCC, you are almost always guaranteed a terrible exchange rate. This awful DCC exchange rate is not isolated to just Amazon but rather any vendor that offers you DCC.



Working off my numbers above had I gone with DCC I would have paid ~4% more. These additional charges can vary from 1% to almost 10% bearing in mind that when the transaction is actually charged to your card your local bank may add on additional conversion charges, usually in the region of ~3%.
In the case of Amazon.com you will be better off selecting USD as your payment currency with the same applying to transactions when abroad.

Dynamic Currency Conversion sells the facade of convenience, immediately knowing in your local currency how much something will cost you at a guaranteed exchange rate.

Money School has a fantastic video explaining the details of DCC

My opinion, DCC is an unnecessary middle man that I prefer not to encourage.