Dynamic Currency Conversion and Consumer Protection: Finding the right rules

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Simon Krause

The growing choice of payment services should be good news for consumers, but only if they have complete information about the products being sold and the prices charged by each firm.

Several policy options are under discussion for better regulation of the dynamic currency conversion (DCC) payment service, each of which offers specific advantages but also poses distinct challenges. Enhancing transparency, for example, will require creative solutions. The imposition of fixed price caps would call for the design of robust criteria to determine the level of the caps. And the adjustment of the payment card chip would necessitate the adoption of common standards between card providers. From a consumer protection perspective, a ban on DCC makes sense only if all other options have been exhausted and if consumers can find satisfactory alternatives. Overall, despite the challenges it presents, the first option – enhancing transparency – is the most promising. The mandatory disclosure of an indicative spread seems to be the best way for most consumers to truly understand what is at stake and how much they are paying for what.