Dynamic Currency Conversion versus Multi-Currency Pricing - The Right Strategy for International Sales

21 / 01 / 2025

Explore the differences between Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP). Learn how each strategy impacts merchant revenue, customer experience, and international payment solutions. Find out which is best suited for your business model.

6 min.

girl-shopping-in-city-streets-using-dcc

Cross-border payment flows are set to reach an astounding $290 trillion by 20301. As global businesses handle cross-border transactions, they must decide how to manage multi-currency transactions in a way that promotes seamless global payments. Two leading cross-border payment solutions have emerged for merchants looking to expand internationally: Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP).

Understanding Dynamic Currency Conversion and Multi-Currency Pricing 

What is Dynamic Currency Conversion?

Dynamic Currency Conversion (DCC) allows customers to pay in their home currency while locking conversion rates instantly. This approach offers real-time currency conversion and can enhance DCC for merchants by generating extra revenue.

What is Multi-Currency Pricing? 

Multi-Currency Pricing (MCP) offers a more comprehensive approach, displaying prices in multiple currencies. Shoppers see consistent local pricing during product selection, and there are fewer unexpected multi-currency transaction fees. When choosing between DCC solutions or MCP, merchants should assess whether they expect direct revenue from DCC payment processing or prefer a smoother experience with pre-disclosed local prices.

The key difference between the cross-border payment solutions is that DCC for merchants converts at the point of sale with added fees. At the same time, MCP presents consistent local pricing throughout the shopping experience.

How Do the Pricing Strategies Work? 

Dynamic Currency Conversion - Dynamic Currency Conversion (DCC) detects foreign cards and instantly calculates exchange rates, displaying the base amount, conversion rate, and charges at checkout. DCC fees are applied at the transaction point, with merchants earning a share. Unlike traditional conversion, rates are locked in immediately, reducing uncertainty. However, rates are shown only at checkout, not during product selection.

Multi-Currency Pricing - MCP maintains fixed pricing catalogs in multiple currencies (which are visible while the customer selects products). The payments are processed in the customer's local currency while settling in the merchant's preferred currency. This system eliminates the surprise of end-moment conversion fees and ensures consistent pricing throughout the shopping experience.

Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP) - Pros and Cons for Merchants

Pros of DCC for Merchants

 Cons of DCC for Merchants

Revenue sharing from DCC fees

 DCC may be confusing for customers, unfamiliar with currency conversion

Immediate currency conversion reducing forex risk

 Higher overall DCC charges may only appeal to a limited set of customers

Simplified accounting with home currency settlement

 DCC-related charges as an unnecessary fee meant to grow merchant earnings.

Transparent point-of-sale conversion for customers

 DCC solutions may be operable in only limited geographies, reducing their appeal.

  

Pros of MCP for Merchants 

 Cons of MCP for Merchants

Higher authorization rates Complex pricing management across currencies
Better cash flow management with predictable pricing Currency risk exposure due to fixed pricing
Enhanced market expansion opportunities Technical implementation challenges from the taxation and compliance aspects
Reduced customer service inquiries and lower overall processing costs Regular price updates are needed to remain competitive

What is the Impact of DCC and MCP on Customer Experience and Satisfaction?

According to Qualtrics research, 79% of consumers3 show higher loyalty to businesses providing clear DCC options. However, DCC transaction fees and unfavorable exchange rates may lead to customer dissatisfaction if they are not implemented seamlessly. Shopify estimates that as much as 49%4 of customers may abandon their cart if they don't have local or multiple currency options. Multi-currency pricing is vital as it bridges this gap by enabling merchants to display prices in multiple currencies and more effectively cater to a diverse customer base.

Overall, both cross-border payment solutions create a more inclusive shopping environment, enhancing customer loyalty and encouraging repeat business.

Implentation Challenges and Solutions

Dynamic Currency Conversion (DCC) Challenges

DCC for merchants for cross-border transactions can require significant investment in upgraded POS terminals and payment gateway services to enable real-time currency conversion and handle higher DCC transaction fees. Merchants must also comply with consumer protection guidelines by transparently disclosing currency conversion rates, markups, and fees to avoid penalties and consumer disputes.

A lack of awareness about dynamic currency conversion fees causes additional mistrust, as many shoppers worry about unfavorable currency conversion rates. To address these concerns, merchants should train staff to explain DCC processes and benefits clearly.

Dynamic Currency Conversion (DCC) Solutions

Merchants can address these challenges by investing in modern POS systems and payment gateways that automatically calculate and display exchange rates with clear fee breakdowns. To enhance compliance, businesses should establish automated reporting tools that log DCC transactions and disclose relevant fees upfront. 

Comprehensive staff training programs will ensure employees can effectively communicate DCC benefits and options to customers, reducing disputes. Additionally, partnering with trusted DCC providers ensures seamless integration, regulatory adherence, and a positive customer experience.

Multi-Currency Pricing (MCP) Challenges

Implementing multi-currency pricing (MCP) is complex due to exchange rate fluctuations, which can impact pricing consistency and profitability. Merchants must decide between real-time pricing updates (which may confuse customers) or fixed exchange rates (which can lead to revenue losses due to market volatility).

Furthermore, regional tax compliance and financial regulations vary across jurisdictions, adding to operational complexity. Technical challenges also arise in integrating MCP across eCommerce platforms, marketplaces, and payment gateways, ensuring correct price display and transaction processing.

Multi-Currency Pricing (MCP) Solutions

To mitigate these challenges, merchants should implement automated currency conversion APIs that ensure accurate real-time price updates while offering fixed-rate options to balance stability and risk. Hedging strategies or multi-currency accounts can also help protect against unfavorable exchange rate fluctuations.

Ensuring compliance requires collaborating with financial advisors and payment processors that specialize in international transactions. Additionally, businesses should optimize their eCommerce platforms and checkout systems to dynamically display currency options based on user location while maintaining transparency in pricing structures.

Financial Consideration for Merchants

Financial Factor

DCC

MCP

Better Option

Exchange Rate Markups

Includes merchant-defined markups, potentially higher for customers.

Uses market-based exchange rates, offering competitive pricing.

MCP (more transparent pricing)

Transaction Fees

Additional DCC fees may apply shared between merchant and payment provider.

Typically lower fees, but may vary based on provider and setup.

MCP (generally lower costs)

Revenue Opportunity for Merchants

Merchants earn a share of the currency conversion fee.

No direct revenue from currency conversion.

DCC (additional revenue stream)

Risk from Exchange Rate Fluctuations

Rates are locked at the time of transaction, reducing volatility risks.

Prices may need frequent updates to reflect real-time rates, increasing exposure to fluctuations.

DCC (fixed rate at checkout)

Compliance and Regulatory Requirements

Strict regulations on fee disclosures and fair pricing practices.

Requires adherence to tax laws and multi-currency pricing regulations.

Depends on the region

Which Cross-Border Payment Solution is Suitable for which all Industries?

  • Retail and Hospitality - Traditional brick-and-mortar retail stores with high international foot traffic find DCC particularly valuable. Offering on-the-spot currency conversion enhances customer service while generating additional revenue through conversion fees.
  • Tourist and Travel Businesses - DCC is perfect for face-to-face transactions where international tourists frequently make purchases. Hotels, duty-free shops, and tourist attractions benefit most from DCC's immediate currency conversion capabilities and revenue-sharing opportunties.
  • Digital Commerce - MCP proves more effective for online businesses, offering consistent pricing across different markets. E-commerce platforms and digital marketplaces can display prices in local currencies throughout the shopping journey, reducing cart abandonment and improving conversion rments.

Choosing between DCC solutions or MCP requires careful consideration of the business model, customer base, and operational capabilities. For businesses seeking to optimize their international payment strategy, the suite of Worldline payment solutions can help you deliver a superior payment experience while unlocking new revenue streams. Contact us today to learn how we can transform your business payments.

    Worldline India Editorial Team

    Worldline India Editorial Team

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