In a globalized economy, Dynamic Currency Conversion (DCC) is a crucial tool for merchants navigating the complexities of cross-border transactions. In this article, we explore best practices for leveraging DCC, the benefits for merchants as well as consumers, and the latest innovations that are shaping the future of this service.
What is Dynamic Currency Conversion?
Dynamic Currency Conversion (DCC) allows international customers to pay in their local currency when making purchases online and in-store. This service provides transparency in pricing and eliminates confusion with unfamiliar currencies and exchange rates.
Allowing international shoppers to pay in their home currency creates an in-country shopping experience and simplifies the financial aspect of cross-border transactions, making it easier for customers to track and understand their expenditure.
The DCC offer presented to the customer provides all the information needed for the cardholder to make an informed choice, including the totals in both the local and foreign currency, the exchange rate to be used for conversion, and any markup added to the exchange rate. This transparency builds trust and confidence between the merchant and the consumer and fosters a positive purchase experience, potentially leading to increased customer loyalty and repeat business.
As global travel and online shopping continue to rise, the ability to cater to a diverse consumer base utilizing DCC is essential.
Merchant benefits
- Increased revenue: DCC opens up an incremental revenue stream for merchants, which can be used to help offset network cross-border fees.
- Enhanced customer experience: Providing clarity on the total cost in a familiar currency reduces cart abandonment rates and can drive customer loyalty.
- Competitive advantage: Standing out from competitors who do not offer DCC can be a significant differentiator.
Consumer benefits
- Price transparency: Customers see the exact amount they will be charged in their card billing currency, avoiding surprises on their statements.
- Convenience: Simplifies the purchasing process, making it easy for customers to understand costs and track expenditures.
- Trust and confidence: Knowing the exact conversion rate at the point of sale builds trust between the customer and the merchant.
For international shoppers, these benefits make DCC a preferred option, helping to ensure a seamless and predictable shopping experience.
DCC best practices
Below are best practices employed by larger merchants to improve Dynamic Currency Conversion performance at the point of sale:
- Drive consumer choice with a modern UI
Providing a clear and modern user interface at the point of sale (POS) helps consumers make informed choices about currency conversion. Advanced Android devices in POS systems can display larger, more immersive experiences, making the process seamless and intuitive.
- Certify and employ contactless devices
Contactless payment methods are increasingly popular and, with only limited exceptions from Mastercard, contactless payments can be integrated with DCC. Fiserv clients have reported up to a 30% improvement in volume following the rollout of contactless.1
- Use API integration for real-time conversion eligibility
Using an API integration from the POS helps ensure that the latest conversion rates and card eligibility data are used for every transaction. This eliminates the need for maintaining separate BIN tables or FX rate tables, keeping the process efficient and accurate.
- Selecting the right provider
Partnering with a reputable DCC provider is the cornerstone of a successful implementation. Merchants should seek providers with a proven track record of compliance, competitive exchange rates, and robust security measures.
- Integrating DCC into point-of-sale systems
Seamless integration of DCC into existing point-of-sale (POS) systems is essential for smooth operation. Merchants should work closely with their DCC provider to ensure that the integration process aligns with their operational workflows. Regular system updates and maintenance are crucial to address any technical issues and optimize performance.
- Employee training and support
Comprehensive training programs for employees can ensure they understand the benefits and functionalities of DCC. Well-informed staff can better communicate DCC options to customers, enhancing transparency and customer satisfaction. Ongoing support and refresher courses will make employees adept at handling any queries or issues that may arise.
- Marketing and customer education
Educating customers about the advantages of DCC through targeted marketing campaigns can drive adoption. Clear, concise information about the exchange rates, fees and benefits should be displayed at the point of sale, both in-store and online. Utilizing digital platforms, social media, and email marketing can effectively reach a broad audience.
- Monitoring and analytics
Regularly monitoring DCC transactions and analyzing data can help identify trends, areas for improvement and customer preferences. Advanced analytics tools can provide insights into conversion rates, customer behavior and transaction volumes, enabling merchants to make data-driven decisions and fine-tune their DCC offerings.
- Customer feedback mechanisms
Implementing mechanisms to gather customer feedback on their DCC experience is vital for continuous improvement. Surveys, feedback forms and direct customer interactions can provide valuable insights into areas that need enhancement. Acting on this feedback demonstrates a commitment to customer satisfaction and can drive loyalty.
What’s next for DCC?
At Fiserv, we are continually innovating to keep DCC relevant and effective. Our recent launch of DCC on Clover devices for small and medium-sized businesses (SMBs) in the U.S. has shown hit rates up to two times standard industry performance.1
Our innovative OpenFX, a cloud-native and API-based platform, offers new ways to access cutting-edge FX solutions. This platform is designed to help mitigate FX volatility, improve checkout experiences, and enhance overall performance for both online and offline transactions.
Looking ahead, we are committed to bringing new FX capabilities to merchants globally and envision a future with:
- New products to mitigate FX volatility: Providing stability and predictability in currency exchange rates.
- Better checkout experiences: Enhancing both online and offline interactions for smoother transactions.
- Easier integrations and deployments: Simplifying the implementation process for merchants.
- Overall better performance: Ensuring high efficiency and reliability in all cross-border transactions.
Conclusion
Dynamic Currency Conversion is a powerful tool for international merchants looking to improve their customer experience and increase revenue. By following best practices and leveraging the latest innovations, DCC can help businesses stay ahead in the competitive global market.
Ready to elevate your payment solutions? Contact a Carat expert today or download our DCC best practices data sheet to learn how Fiserv can help you implement DCC effectively and enhance your cross-border transactions.
Source: 1Fiserv data; individual results may vary.
