As your business expands globally, navigating overseas transactions becomes more complex. Hidden charges—especially from foreign currency conversion and exchange rates—can eat into your margins if you’re not paying attention.
In this guide, we’ll break down Dynamic Currency Conversion (DCC), discussing how it works and how it compares to other overseas transaction fees like cross-border fees (CBFs). You’ll also learn how to reduce these costs using smarter payment strategies, including tools like Aspire’s Business Account and Global Payments solutions.
What is Dynamic Currency Conversion (DCC)?
Dynamic Currency Conversion, or DCC for short, is a fee added at the point of sale—either in-store or online—that allows international customers to pay in their home currency rather than the merchant’s local currency.
According to The Points Guy, DCC transactions typically carry higher conversion costs, making them less cost-effective for both cardholders and businesses.
At first glance, DCC seems convenient. You get to see the cost in your own currency and may feel more comfortable approving the transaction. However, what many people—and businesses—don’t realise is that this convenience often comes with marked-up exchange rates and extra fees.
How DCC Affects Businesses
For businesses making payments to overseas merchants or purchasing goods and services internationally, DCC can lead to unnecessary costs:
- You’re charged in Hong Kong Dollars, but the conversion rate set by the payment processor is not always the best exchange rate.
- A markup is often added to the exchange rate, sometimes as high as 3–5%.
- These fees are layered on top of other cross-border charges.
In short, DCC is a service you’ll want to opt out of whenever possible.
How DCC Works
Let’s walk through a real-world example.
Say you’re a Hong Kong-based business buying software from a US vendor. At checkout, you're offered two choices:
- Pay in USD (merchant’s local currency)
- Pay in HKD (your home currency)
If you select Hong Kong Dollars, DCC kicks in. The payment processor or acquirer handles the conversion and applies the following:
- Their own exchange rate, which is usually higher than the market rate
- A conversion fee or markup on overseas transactions
- An additional Dynamic Currency Conversion fee on top
So, while you think you're simplifying your payment process, you're actually spending more than necessary. The better option? Always choose to pay in the overseas merchant’s preferred currency and let your Corporate Card or foreign currency payments platform handle the FX—especially if you're using a provider like Aspire with competitive currency conversion rates.
Understanding Other Foreign Currency Transaction Fees
While Dynamic Currency Conversion is a common fee in global transactions, it’s not the only one. Here are two others every business should understand:
Foreign Currency Transaction Fee
Also known as an FX fee, this is applied when a payment is made in a foreign currency different from your card’s base currency. It’s important to note that FX fees can differ. Most traditional providers charge 1–3% on every international transaction.
Why it matters: Even if you avoid DCC by paying in foreign currency, you could still face FX transaction fees from your card issuer or payments firm—unless you're using a platform that offers transparent multi-currency pricing.
Cross-Border Fee (CBF)
A Cross-Border Fee is charged by card networks like Visa or Mastercard when a transaction is processed across country borders, regardless of whether a currency conversion takes place.
CBF Example: You use a Hong Kong-issued card to pay a Singapore-based vendor in SGD. Even if no currency conversion is needed, a CBF may still apply due to the geographic difference.
Key Characteristics:
- Typically ranges from 0.5%–1%
- Charged in addition to FX fees
- Applied silently, and is often not visible at checkout
Comparison: DCC vs. CBF
Tips to Minimise DCC and Foreign Transaction Fees
Hidden fees from Dynamic Currency Conversion and foreign transaction charges can quietly chip away at your profits—especially if your business operates internationally. However, with a few simple strategies and the right tools, you can take control of settling foreign currency transactions and keep more of your money where it belongs: in your business.
1. Always Pay in the Local Currency
Whenever you're completing a cross-border transaction—online or in-person—always choose to pay in the overseas merchant’s local currency.
While it might seem convenient to see the total in Hong Kong Dollars, this triggers Dynamic Currency Conversion, which often applies an inflated exchange rate to online transactions with a foreign country. Paying in the local currency lets your card provider or payments platform (ideally one with better FX rates) handle the conversion, saving you money.
2. Use a Multi-Currency Business Platform
Avoid unnecessary conversions by using a business account that supports multiple currencies. This allows you to hold, send, and receive funds in the same currency as your overseas suppliers or partners, eliminating forced conversions and the fees that come with them.
3. Choose Cards Designed for International Payments
Standard corporate cards often come with high FX and cross-border charges. Switch to corporate cards built for global business use. These cards offer more favourable rates, often with low or no foreign transaction fees. They are perfect for frequent international purchases such as software subscriptions, advertising, or equipment.
4. Consolidate Spending with Transparent FX
Partner with a payments firm that gives you full visibility into your foreign exchange costs. Aspire’s Global Payments platform shows you live FX rates and breakdowns of each charge, letting you time your payments for the most cost-effective conversion. It’s a powerful way to stay ahead of volatile currency markets and maintain predictable costs.
5. Track All Your Fees and Costs in Real Time
Without visibility, managing fees is guesswork. Use Expense Management tools that automatically track FX fees, international transactions, and team spending across all departments. This gives you a clear picture of your costs, making it easier to budget, audit, and optimise your international finance operations.
By adopting these best practices, your business can significantly reduce the hidden costs of cross-border transactions and reinvest those savings into your growth.
Save More on International Transactions with Aspire
With Aspire, Hong Kong businesses can take control of their international spending. Whether you're paying global suppliers, managing cross-border teams, or buying digital tools in USD or other currencies, Aspire helps you:
- Fund and manage your business account in multiple currencies
- Make seamless global payments with real-time FX rates
- Issue smart corporate cards for global team purchases
- Monitor and categorise spending with expense management
No hidden charges. No inflated currency markups. Just smarter, more efficient international finance. Ready to cut unnecessary fees and streamline your cross-border payments? Get started with Aspire today.
FAQs
What is Dynamic Currency Conversion (DCC)?
DCC allows you to pay in your home currency during foreign currency transactions but usually results in higher fees due to marked-up exchange rates.
Is DCC mandatory for international payments?
No, DCC is optional. You can avoid it by paying in the local currency of the overseas merchants.
What is the difference between DCC and foreign transaction fees?
DCC involves a currency conversion by the overseas merchant’s processor, while FX fees are charged by your card issuer for foreign currency payments.
How can I avoid cross-border fees (CBFs)?
Use a global-friendly business account or card that supports local transactions in multiple countries or currencies.
What is the best way to manage FX fees as a business?
Use platforms like Aspire that offer transparent FX rates, low-fee international payments, and tools to track and manage spending across currencies.
Frequently Asked Questions
