Indian travellers venturing overseas are falling prey to a clever financial trap that's costing them significantly more than necessary on their international purchases and ATM withdrawals. The culprit? Dynamic Currency Conversion (DCC), a service that might seem convenient but comes with hidden costs that can quickly add up.
What Exactly is Dynamic Currency Conversion?
DCC is a service offered by merchants and ATM operators abroad that gives Indian travellers the option to pay in Indian rupees instead of the local currency. While this might appear helpful – seeing familiar rupee amounts rather than foreign numbers – this convenience comes at a steep price.
The Hidden Cost of 'Convenience'
When you choose to pay in rupees through DCC, the merchant or ATM operator applies their own exchange rate, which typically includes a substantial markup of 3-5% above the actual market rate. This hidden fee is in addition to any standard foreign transaction charges your bank might levy.
Here's how it works against you:
- You're offered payment in rupees at a POS terminal or ATM
- The displayed exchange rate includes a significant hidden markup
- You end up paying more than if you'd chosen local currency
- The extra cost is often not clearly disclosed
Why Always Choose Local Currency Abroad
Financial experts unanimously recommend that Indian travellers always opt to pay in the local currency of the country they're visiting. This ensures that your home bank handles the currency conversion at more competitive rates, saving you substantial amounts on each transaction.
Protecting Yourself from DCC Traps
- Always select local currency at POS terminals and ATMs abroad
- Be wary of persuasive merchants who might push rupee payments
- Check your transaction receipts carefully for DCC mentions
- Understand your bank's foreign transaction fees beforehand
- Consider travel-friendly credit cards with lower foreign markup
The Regulatory Landscape
While the Reserve Bank of India has implemented measures to enhance transparency, including requiring explicit customer consent for DCC, many travellers still report being misled or not fully understanding the implications of their currency choice at the payment terminal.
As international travel from India continues to surge post-pandemic, being aware of Dynamic Currency Conversion and making informed choices at payment terminals can save Indian travellers significant money, ensuring their travel budget stretches further for experiences that truly matter.
