DCC vs Non-DCC: What They Mean for International Payments
10 min read
When an online retailer starts receiving orders from customers overseas, say a shopper in France buying from an Indian skincare brand the checkout experience suddenly becomes more complex. The customer wants to pay in a familiar currency, the merchant wants the transaction to clear smoothly, and the payment network needs to calculate the right exchange value. This is where cross-border rules surface in the background, even if the merchant has never dealt with them before.
International payments work differently from domestic card transactions because they involve cross-border networks, foreign exchange conversion, and additional issuer/acquirer checks. When a customer uses a card issued outside the merchant’s country whether online or in-store the payment amount must be converted from the merchant’s local currency to the customer’s home currency.
This is where merchants and customers encounter two choices in the payment flow:
Dynamic Currency Conversion/DCC and Non Dynamic Currency Conversion/Non-DCC.
Both options complete the payment successfully, but they differ in who performs the FX conversion, how the rate is calculated, and what the customer ultimately pays. Understanding the difference is essential for merchants serving global shoppers, travel-heavy regions, or international eCommerce traffic so they can offer a transparent, cost-effective checkout experience.
What Is Dynamic Currency Conversion?
Dynamic Currency Conversion is a payment feature that lets an international customer complete a transaction in their own currency instead of the merchant’s currency at the moment of payment.
It appears when the system detects that the customer’s card was issued in a different country. Rather than charging the customer in the merchant’s local currency (for example, INR in India or EUR in Europe), the payment terminal or online checkout gives the customer an option to pay in the currency they are most familiar with.
How Does Dynamic Currency Conversion Work?
1. Customer uses an international card:
The card network identifies that the card’s currency differs from the merchant’s currency.
2. The system presents two choices:
Pay in the merchant’s currency
Pay in the customer’s home currency
3. If the customer chooses DCC
The payment provider immediately converts the transaction amount into the customer’s currency using their own exchange rate.
The exact amount the customer will be charged is shown on the screen right at checkout.
4. The transaction completes in the customer’s currency
This means the customer’s bank does not handle the conversion later.
Why Do Businesses Offer Dynamic Currency Conversion?
Give international customers more clarity at the moment of payment
DCC allows customers to instantly see the exact amount they’ll be charged in their own currency before they confirm the transaction. This transparency reduces hesitation and helps build trust, especially for first-time buyers purchasing from foreign merchants.
Reduce uncertainty around how much will be charged on their bank statement
Without DCC, the final amount depends on the card issuer’s FX rate on the day of settlement which customers may not know upfront. DCC eliminates this ambiguity by locking in a visible rate at checkout, so customers know what to expect later on their statement.
Offer a sense of familiarity by showing prices in the customer’s home currency
Foreign exchange can feel intimidating for many shoppers. Displaying prices in the customer’s native currency makes the purchase feel simpler and more predictable, encouraging them to complete the payment rather than abandon the transaction due to confusion.
Create an additional revenue stream for acquirers and service providers through markup on FX rates
The FX conversion used in DCC includes a service markup. While this does not benefit the merchant directly, acquirers and processors offering DCC often receive a share of this markup, making it financially attractive for them to provide the option.
For merchants in travel-heavy locations such as hotels, airports, retail chains, tourist attractions, DCC can simplify pricing conversations for foreign visitors
Businesses serving large volumes of international customers often face repeated questions about “how much this will cost in my currency.” With DCC, staff can present a final, home-currency amount right at the terminal, helping avoid confusion and speeding up checkout interactions.
What Is Non-Dynamic Currency Conversion?
Non-Dynamic Currency Conversion is the standard way international card payments are processed. In this model, the customer pays in the merchant’s local currency, and the customer’s issuing bank handles the currency conversion later when the transaction is posted to the cardholder’s statement.
Non-DCC is the default flow for most international transactions across physical stores and online checkouts. Unlike DCC, it does not convert the amount at the point of sale. Instead, it allows the customer’s own bank to do the conversion using its standard foreign exchange rate.
How Does Non-Dynamic Currency Conversion Work?
1. The customer pays in the merchant’s currency:
No conversion happens during the transaction. For example, a US cardholder in India pays in INR.
2. The transaction is sent to the customer’s issuing bank:
The merchant and acquirer do not perform any currency conversion.
3. The customer’s bank converts the amount to the home currency
The FX conversion happens later, usually at a more competitive and regulated rate.
4. The customer sees the final amount on their bank statement:
This includes the bank’s exchange rate and applicable fees, if any.
Why Do Businesses Offer Non-Dynamic Currency Conversion?
Non-DCC is widely considered the more customer-friendly option because it:
Uses more competitive FX rates from the cardholder’s bank
When a transaction is processed without DCC, the currency conversion is handled by the customer’s issuing bank. Banks typically offer more competitive and regulated FX rates compared to DCC providers, resulting in a fairer conversion for the customer.
Usually results in lower total cost for the customer
Because Non-DCC avoids the additional service markup commonly added during DCC transactions, customers often end up paying less overall. This is especially true for frequent travelers or international shoppers who are already aware of typical bank conversion fees.
Avoids on-spot markup fees applied by DCC service providers
DCC providers apply a markup at the terminal or online checkout, which can significantly inflate the exchange rate. Non-DCC bypasses this step entirely, eliminating the extra fees that catch many customers off guard during foreign purchases.
Maintains a transparent and predictable checkout experience
With Non-DCC, the customer isn’t pushed to make a split-second decision about conversion fees at checkout. The transaction simply goes through in the merchant’s local currency, and the bank processes the conversion later using its standard rates. This keeps the experience straightforward and prevents confusion, making it the default choice for many seasoned international buyers.
For businesses, offering Non-DCC helps build trust, reduces disputes related to FX markups, and aligns with global consumer protection guidelines.
What Is The Difference Between DCC and Non-DCC?
Business Aspect
DCC
Non-DCC
Currency the Customer Is Charged In
Customer’s home currency
Merchant’s local currency
Who Initiates the Charge
Payment gateway/acquirer initiates the charge in the customer’s currency after converting the amount
Payment gateway/acquirer initiates the charge in the merchant’s currency
Who Performs Currency Conversion
Payment gateway or acquirer converts the amount before sending it to the issuer
Customer’s issuing bank converts the amount after receiving the transaction
Role of the Payment Gateway
Gateway identifies foreign cards, presents DCC option, performs conversion using configured rates, and submits the transaction in the customer’s currency
Gateway processes the transaction normally in the merchant’s currency without presenting currency options
When the Conversion Happens
At checkout, before the transaction is completed
After the transaction is submitted, during settlement by the issuing bank
Rate Source
FX rate provided by the DCC service or acquirer
FX rate determined by the issuing bank
Information Shown at Checkout
Final amount visible to the customer in their home currency
Amount shown in merchant’s currency; conversion visible later on the bank statement
Customer Interaction
Customer chooses between merchant currency and home currency
No customer selection; standard card payment flow
How the Charge Appears on the Customer’s Statement
Shows the charged amount directly in the customer’s currency
Shows converted amount based on bank’s rate and timing
Merchant Payout Currency
Merchant always receives payout in their local currency (gateway handles any currency mismatch internally)
Merchant receives payout in their local currency as per normal settlement rules
Operational Setup
Requires DCC to be enabled through acquirer or gateway configuration
Standard setup; no additional configuration required
Applicability Across Channels
Available in POS terminals and supported eCommerce gateways
Default option across all online and offline international payments
Record Keeping
Settlement records show customer’s currency for the transaction; merchant statement shows local currency received
All records show the merchant’s currency until conversion by the issuing bank reflects on customer records
How To Accept International Payments With A Payment Gateway?
Accepting international payments through a payment gateway follows the same core steps as domestic transactions, but with an additional layer of currency handling. When a customer pays with a card issued outside the merchant’s country, the payment gateway automatically detects that the transaction is cross-border and triggers the appropriate flow either DCC or Non-DCC depending on the configurations enabled for the merchant and the preferences shown to the customer.
1. Payment Gateway Identifies the Card as International
When a foreign card is used at checkout, the payment gateway reads card network data to determine the card’s issuing country and currency.This step allows the gateway to understand whether DCC should be offered or if the transaction should continue as a standard Non-DCC charge.
2. Payment Gateway Determines Whether DCC Is Available
If the merchant’s account is enabled for Dynamic Currency Conversion, the payment gateway presents the customer with an additional option. If DCC is not enabled, the gateway automatically proceeds with a Non-DCC flow. The system makes this decision in real time based on preset configurations.
3. Customer Chooses Their Preferred Currency (Only When DCC Is Enabled)
If DCC is turned on and the card qualifies:
The gateway shows both amounts, one in the merchant’s local currency and one converted to the customer’s home currency.
The customer chooses which currency they want to be charged in.
If the merchant is not enabled for DCC, this step is skipped and the transaction continues in the merchant’s currency.
4. Payment Gateway Processes the Transaction Based on the Selected Currency
Once the customer confirms their option (or in Non-DCC, once the default flow continues), the payment gateway finalizes the charge:
If the customer selected DCC:
The gateway performs the currency conversion immediately, applies the FX rate configured by the acquirer or DCC service, and submits the charge to the issuing bank in the customer’s home currency.
If the customer proceeds with Non-DCC:
The gateway sends the charge to the issuing bank in the merchant’s currency, without doing any conversion.
In both cases, the transaction is authorized through the card network as usual.
5. Settlement and Payout to the Merchant
Regardless of whether DCC or Non-DCC was used, the merchant always receives settlement in their own local currency. The payment gateway and acquirer handle any required conversions behind the scenes so the merchant’s accounting remains consistent.
6. How the Charge Appears to the Customer
Once the transaction is completed:
In a DCC charge, the customer sees the final amount in their home currency at checkout and on their bank statement.
In a Non-DCC charge, the customer sees the merchant’s currency at checkout, and their bank later converts the charge before posting it on the statement.
7. Unified Experience for the Merchant
From the merchant’s perspective, accepting international payments is seamless with a payment gateway. The gateway:
Detects international cards
Determines whether DCC applies
Manages all conversion logic
Handles the currency submitted to the issuer
Ensures settlement is delivered in the merchant’s currency
All of this happens automatically, ensuring international transactions flow smoothly without additional operational effort.
Conclusion
For merchants, the real advantage lies in offering a checkout that adapts automatically to every international card. PhonePe PG simplifies this with built-in support for both DCC and Non-DCC flows, consistent settlement in the merchant’s currency, and automated reconciliation. The result is a frictionless cross-border experience that builds trust and keeps operations simple. As global demand continues to rise, PhonePe Payment Gateway equips your business with a payment stack that’s ready for the world.
