What is DCC Markup Fee?

When you use your credit or debit card abroad (or at international merchants/online vendors), you’ll sometimes be offered the choice to pay in your home currency (INR) instead of the local currency. So, what is DCC markup fee? A DCC Markup Fee is an extra cost that gets added when you choose that option i.e. when you opt for paying in INR rather than the foreign currency.

How Much is the DCC Markup Fee?

Specifically, IDFC FIRST Bank says that DCC markup fees typically range from 3 to 7% of the foreign transaction. This means if you make a purchase in USD, Euros or another currency, and choose to transact in INR via DCC, you will be paying that extra percentage as markup above the base exchange rate.

1. Essentially, the merchant or the payment processor converts the amount using an exchange rate that includes a margin (markup) over the normal interbank/wholesale rate. So you pay more, often without realising exactly how much extra you’re being charged.

2. In addition to this markup, there may also be other overseas‐transaction or foreign‐exchange fees charged by your bank or card issuer for processing international payments. These combined costs can make it quite expensive compared to letting your bank/card convert the currency later (i.e. not using DCC).

It is often best to avoid paying the markup because often, letting the bank do the conversion (i.e. pay in the local currency and let your bank apply its usual exchange + foreign‐transaction rates) turns out cheaper than accepting DCC at the point of sale, which tends to have higher markups and less favourable exchange rates.

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Hey Buddy,

If you've ever used a credit card or an ATM, you're probably aware that most transactions are subject to a fee if you've done any online shopping on a foreign website or travelled overseas. One sort of currency conversion cost is dynamic currency conversion (DCC). Most currency conversion costs are assessed by the ATM network or credit card payment processor (often Visa or MasterCard). The merchant charges DCC markup fees, usually through a service provider.

What is Dynamic Currency Conversion: Key takeaways

• You can view your international credit card transactions in your local currency at the moment of sale via a service offered by the merchant called dynamic currency conversion (DCC), also known as cardholder preferred currency (CPC) (POS).

• DCC charges more fees than your credit card payment processor does.

• DCC is a choice, and you are free to reject it.

• You are still liable for any foreign transaction fees imposed by your credit card when using DCC.

The standard foreign exchange transaction fee for MasterCard and Visa is 1%. The fee, which can range from 1.5% to 3% or even more, is added on by the majority of credit card providers as an additional percentage. As a result, this cost varies depending on the credit card company.

Every credit card issuer is required to publish or make known the costs associated with international transactions at the time of issuance. If the issuer doesn't, the cardholder must receive compensation.

However, this regulation was used in the past. Now, the credit card agreement explains every detail in detail. Therefore, before applying, it is essential to thoroughly read the entire credit card agreement. The issuer's official website also lists these crucial facts.

Every time a foreign transaction is performed with an Indian credit card, the Cross-Currency Markup is assessed. In India, credit card issuers typically charge between 3% and 5%, though this varies from bank to bank.

Additionally, rather than the "transaction date," this is applied to the "settlement date." A couple of India's top banks charge the following markup on currency conversions:

• 3.5% for HDFC Bank

• 3.5% for Axis Bank

• 2.5% at Kotak Mahindra Bank

MasterCard and Visa, two widely used payment networks, serve as the intermediaries between the retailer from where a foreign transaction is being made and the issuing bank (HDFC, SBI, Kotak Mahindra, Axis, etc.) As a result, both of these payment networks levy 1% on the issuing bank and 2% if the payment network is different when a credit card is used outside of India.

Therefore, before making any form of overseas payment using a credit card, it is crucial to study the charges.

I would like to conclude here about DCC markup fees. I hope this helps:)

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