In mid-March, the dog took an early vacation to return to Beijing via Hong Kong, and since it was a connecting flight, he needed to stay in a hotel overnight while waiting for the next day's flight back to Beijing in Hong Kong, so he used a credit card to check in. After returning to Beijing, it wasn't until last night that he sorted out his credit card consumption receipts in recent days, and only when he saw the purchase order of the hotel in Hong Kong, he found that he was unfortunately affected by the hotel's DCC (dynamic currency conversion fee), but this result is not unexpected.
When he asked the dog about the situation, he told him that when he checked into the hotel, the front desk attendant did ask him what currency he wanted to pay, but because he didn't know anything about DCC and didn't understand the meaning and role of DCC, he casually said that he would pay in US dollars instead of choosing the local local currency to pay in Hong Kong dollars, and as a result, he fell into the pit of DCC in one step.
Although he understands the truth of DCC very well, it is the first time he has encountered it in person, so he took the opportunity to tell the dog the principle of DCC, especially when he uses the card in daily life, he should pay special attention to the DCC "trap". I just took advantage of this incident to write this article to make a popular science of "DCC trap" for readers with personal experience.
DCC stands for Dynamic Currency Conversion, which translates to "Dynamic Currency Conversion". On the surface, the manifestation of DCC is that when the institution where the merchant has set up the acquiring machine accepts the foreign card acquiring consumption, the cardholder can not only choose the local currency of the region to pay and settle, but also choose the foreign card currency for payment and settlement. However, credit card users who are not familiar with the business will not feel the impact of the DCC problem.
The credit cards of various card associations that are commonly used use the local currency when paying in the local currency region (such as the RMB credit card issued in China), and the local currency when trading in the non-local currency area (the RMB credit card issued in China to other currency regions) is used for transactions, and the bank accounts when converting to the local currency and crediting the bill, and only needs to bear the currency exchange rate once (even if the credit card originally had the currency conversion fee of the card network, but in recent years, it has been exempted). After using it in Canada, only one exchange of Canadian dollars against Chinese yuan is required to be credited to the bill.
After using a U.S. dollar-denominated credit card in Canada, you first need to convert Canadian dollars to U.S. dollars and then convert them into RMB for accounting, while Canadian dollar-denominated credit cards save one currency exchange. Conversely, if you use a Canadian dollar card to use it in a non-Canadian dollar area, you still need to convert it twice.
After knowing that DCC is a "trap", consumers may not be too calm, and the situation of DCC is that in any currency area, it is settled in US dollars, so that the exchange between the local payment currency and the accounting currency is forced to increase the conversion of the payment currency to the US dollar. Although it is ostensibly the exchange rate between the payment currency and the settlement dollar, the exchange rate of the DCC amount is 3-5% higher than the card network exchange rate, unlike the automatic conversion of the exchange rate of ordinary card networks.
Taking the dog's payment this time as an example, the exchange rate of the Hong Kong dollar against the US dollar was overcharged by 5% for no reason, which feels like the current situation reflected in Mr. Ye Shengtao's short story "Overcharged Three or Five Buckets", which is why it is a shameless disaster for credit card users to encounter DCC with a card.
According to the photos of the cashiers of Japanese merchants provided by Lu Jinhua, a "payment expert", I can see that Japanese merchants are very realistic, and they place the machines that can be used for DCC swiping cards separately, and clearly inform cardholders to choose by themselves.
If DCC is seen as a "trap" in the use of credit cards, how can it be avoided?
DCC is not made by card associations, and only V/MC credit cards will be encountered, and American Express and China UnionPay credit cards will not be affected by DCC, so it is all V/MC credit card users around the world who are deeply affected by DCC.
The initiative of whether to choose DCC lies in the merchant, although some merchants let users choose whether to DCC, but the vast majority of users may not know what DCC, the dog's encounter is a typical case, and it happens to take advantage of this matter to give him a popularization of card knowledge, in fact, in the DCC process, V/MC has also become a "backstabber".
To avoid DCC, ask the cashier to settle in your local currency when using a V/MC credit card. If you see that there is a DCC situation in the purchase order, ask the cashier to reverse the original transaction and make a new payment in the local currency. However, this requirement is almost impossible for ordinary consumers to truly understand DCC and avoid falling into the "trap".
For credit card users who have been working or studying abroad for a long time, it is best to apply for a credit card issued by a domestic bank in the local currency, such as a Japanese yen card in Japan, a Canadian dollar card in Canada, and a British pound card in the United Kingdom. If you don't have a credit card in your local currency, you can apply for a credit card from a local bank to avoid additional fees caused by multiple currency conversions.
Pay attention to "Lao Dong Chat Card", there is the knowledge of credit cards, as well as in-depth comments and analysis from the independent perspective of the credit card industry, as well as the history and culture of credit cards!