Multi-Currency Pricing vs DCC: Selling in Foreign Currencies

The three options

Charging in your own currency is the simplest. The issuer converts the amount for its cardholder, and Visa's rules require issuers to disclose the fees they may charge on international transactions and the exchange rate method they use. Multi-Currency Pricing is defined in Visa's rules as a transaction in which the merchant displays prices in one or more currencies other than its local currency, the transaction is completed in one of those displayed currencies, and no DCC takes place. DCC is different: the customer is offered, at the point of payment, the choice to have the amount converted into their card's billing currency by the merchant or its provider. The choice changes who sets the rate, what the receipt must say and which dispute rights apply.

What Visa requires for Multi-Currency Pricing

Visa's section on MCP says the acquirer must ensure that its merchants do not misrepresent, explicitly or implicitly, that the MCP service is a Visa service, and that the transaction currency is one of the foreign currencies displayed. If the merchant's local currency is also displayed, the merchant must let the cardholder pay in it, must not impose extra requirements for paying in it, and must not use language or procedures, such as pre-selecting a currency, that may cause the cardholder to pick MCP by default.

What Visa requires for DCC

An acquirer must be registered and certified for DCC under Visa's DCC Guide before processing DCC, and DCC must not be offered on cards enabled with the Visa Multi-Currency Solution or on travel prepaid cards. A merchant offering DCC must tell the cardholder it is optional, avoid pre-selecting it, make sure the cardholder expressly agrees, offer it in the cardholder's billing currency, impose no extra hurdles for paying in local currency, and not convert an approved local-currency amount afterwards. In a card-present sale, the DCC information must be shown only on a customer-facing screen or handheld device, and the cardholder must agree by interacting with that device. An online merchant that uses the card number to decide whether to convert the price must follow all the DCC rules.

What a DCC receipt must show

Visa's receipt table for DCC transactions lists the amount in the merchant's local currency and in the transaction currency, with currency symbols; the words "Transaction Currency", "Transaction Amount", "Transaction Charged" or "Amount Charged" next to the amount; the conversion rate; any commission, fee, markup or margin over a wholesale or government-mandated rate; a statement, easily visible, that the cardholder was offered a choice of currencies and expressly agrees; and a statement that the merchant conducts the DCC. For any receipt, Visa requires the currency symbol when the transaction currency is not the local currency of the transaction country.

Currency disputes

Visa Dispute Condition 12.3, Incorrect Currency, covers two situations: the transaction currency differs from the currency sent through VisaNet, or DCC occurred and the cardholder did not expressly agree to it or was refused the choice of paying in the merchant's local currency. The dispute applies to the whole transaction amount. If the acquirer cannot show the cardholder expressly agreed to DCC, Visa's rules let it respond for the pre-conversion local-currency amount, excluding DCC fees or commissions, or present the transaction again. Keep the terminal or checkout record showing the customer's choice.

Settlement currency and reference rates

Visa's rules require the acquirer to clear the exact amount in the transaction currency the cardholder authorized. Which currencies your provider can settle to you, and into which bank accounts, is a question for your agreement, so ask for it in writing before you display prices in a new currency. To judge any conversion you are offered, compare it with a public reference. The Federal Reserve's H.10 release publishes rates in currency units per US dollar, and the Bank of Canada publishes daily average rates each business day by 16:30 ET, which it describes as indicative only.

Refunds when currencies differ

Visa requires refunds to go back to the card used for the purchase where possible. When a sale was priced in a foreign currency and your settlement converted it, a refund processed weeks later may convert at a different rate, so the amount leaving your account can differ from the amount that arrived. Decide in advance how you will handle that, put it in your refund policy, and record both amounts in your books.

A worked example

Illustrative example only, with made-up round numbers and a made-up rate. A Toronto shop sells a jacket for 140 Canadian dollars to a visitor with a US card. Option one: charge CAD 140 and the issuer converts. Option two: the website shows USD 100 as a selectable price with no default, and charges USD 100. Option three: at the terminal, the customer is offered CAD 140 or USD 105 including a disclosed margin, and taps to choose. Only option three is DCC, and only option three needs the full DCC receipt and proof of the customer's choice.