How Dynamic Currency Conversion Affects Hotel Payments for International Guests
Tags: hotelpaymentsolutions, paymentsinhospitality, hospitalitypaymentsolutions, hospitalitypaymentsystem
Published: 2023-11-02 07:11:22



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Cross-border transactions are increasing at an unprecedented rate. Digital payments that facilitate omnichannel and swift payment options, massive internet penetration, wide-spread smart phone availability and affordability, all have contributed to the rise in global trade and commerce.  

E-commerce portals can onboard customers anywhere around the world with minimal effort and at very low cost. A merchant in Seattle can easily sell his merchandise across continents and receive money directly to his bank account in much less time than ever before, all thanks to the giant technological leaps we have made in the past couple decades. 

Nonetheless, despite the disruptive changes, there are a few challenges that merchants still face that need to be addressed.  One of the most critical ones among them is the foreign exchange or currency exchange related problems. 

Tackling cross-border transactions and its concomitant challenges were quite a daunting task up until a few years ago. But recent technological innovations have helped to ease these drawbacks significantly and enhance the experience of customers at each touch point. Dynamic Currency Conversion is one of the intuitive solutions that is being increasingly used to avert checkout friction.  

## Dynamic Currency Conversion 

DCC or Dynamic Currency Conversion is a financial service offered by hotels to customers so that they can make payments and complete international transactions easily in their currency. 

It is highly consequential service that can have high impact on customer experience and since a lot of hotel’s business, repeat sales value, and reputation depends on customer experience, it further underscores the role DCC plays in the hospitality ecosystem.  

This blog will explore in detail how DCC has revolutionized international payments. 

## 
How DCC works 

A financial service that enables international guests to settle transactions in the currency of their choice, rather than the regional currency of the destination they are visiting. The consequence of this service is tremendous. DCC has revolutionized international payments and cross-border transactions. 

## DCC works in two simple steps: 

**Authorization **

When card details are entered at a hotel, an authorization request is triggered to the card issuer bank. This request will have details about the amount due in both the currency of the customer as well as the country where the purchase is made.  

**Conversion **

If the customer has chosen DCC, then the payment system will automatically calculate the exchange rate and show the amount due in the customer’s home currency. (The final amount also includes the conversion fee).   

Now that we are aware of what DCC is and how it works, let’s weigh its pros and cons. 

## Advantages of DCC
 

**Higher convenience **

There is scant doubt that for an international customer, being able to see transaction amount in their own currency is very helpful, especially for a traveler who is not very familiar with foreign currency or the dynamics of exchange rates. Also, when they see the amount due in their own currency, it helps them to assess the worth of the purchase and then take an informed decision about the purchase so that they may not repent later.  

**Better Reliability **

DCC offers a certain degree of certainty as the amount an end user will be charged is calculated based on the exchange rate at the time of payment processing.  

## Drawbacks of DCC
 

**Unfavorable exchange rates **

DCC comes with conversion charges and the end customer may end up paying more than he might have with the card issuer's exchange rates.  

**Hidden charges** 

There is a fair chance that the international guests may get charged extra fees and charges that may not be explicitly offered by **[hospitality payment processing systems](https://smartcheckinn.com/)**. 

**Loss of card payment benefits **

Credit card companies offer huge rewards, cashback, and even better exchange rates etc. to encourage customers to use cards more often. By using DCC, the customer loses these benefits.  

**Limited transparency** 

You wouldn’t know if you would end up paying more than if you had used your card issuer’s exchange rate.  

## Key Takeaways 

While DCC offers convenience and reliability, the lack of transparency, hidden charges, and not-so-good exchange rates may be a big drawback. Navigating DCC can be tricky. Being well informed about the latest exchange rates will be a good way forward. Compare the exchange rates offered by card issuer and payment processors.  

Because of high competition and far too many service providers, customers usually get offered very good exchange rates. And still, if you are inclined to try DCC, feel free to ask as many questions as possible about the process to hotel staff and then take a decision wisely.