In today's globalized world, it's easier than ever for customers to shop from anywhere in the world. This has led to a rise in international e-commerce, where businesses can reach a wider customer base and increase their sales.

However, one of the challenges of international e-commerce is currency conversion. When a customer from one country purchases from a merchant in another country, the price needs to be converted from the merchant's currency to the customer's currency. This can be done in a number of ways, but one of the most common methods is Dynamic Currency Conversion (DCC).

What is Dynamic Currency Conversion?

DCC is a service that allows customers to see the price of a product in their own currency at the checkout stage. This can be helpful for customers who are unfamiliar with foreign currencies or who are not comfortable with using a credit card in a foreign currency.

However, DCC is not without its drawbacks. In order to provide customers with a guaranteed exchange rate, DCC typically includes a markup above the current market exchange rates. This markup can be as high as 10%, which means that customers may end up paying more for their purchases than they would if the currency conversion was handled at a later date.

How Does DCC Lead to Chargebacks?

There are two main ways that DCC can lead to chargebacks:

• Misinformed consent: Merchants are required to give customers a clear and informed choice about whether or not to use DCC. If a customer is not given this choice, or if they are not properly informed about the markup and fees associated with DCC, they may file a chargeback on the grounds that they did not consent to the transaction.
• Friendly fraud: In some cases, customers may regret their decision to use DCC after seeing the high markup on their statement. They may then contact their bank and falsely claim that they did not agree to the transaction. This is known as friendly fraud.

How Can Merchants Avoid DCC Disputes?

There are a number of things that merchants can do to avoid DCC disputes:

• Follow the card network guidelines: The card networks have clear guidelines on how merchants should inform customers about DCC. Merchants should make sure that they are following these guidelines to avoid chargebacks.
• Give customers a clear choice: Merchants should always give customers a clear and informed choice about whether or not to use DCC. This means that customers should be told about the markup and fees associated with DCC, and they should be given the opportunity to decline DCC if they choose to do so.
• Document consent: Merchants should keep records of the transactions that they process using DCC. This documentation should include evidence that the customer was given a clear choice and agreed to use DCC.

Conclusion

DCC can be a valuable tool for merchants who want to make it easier for customers to shop from their international websites. However, it is important to use DCC responsibly to avoid chargebacks. By following the card network guidelines and giving customers a clear choice, merchants can help to ensure that DCC is a positive experience for both parties.