Additional service for your customers: payment in their own currency. White paper (e-)dcc

Transcription

1 Additional service for your customers: payment in their own currency White paper (e-)dcc

2 Contents Introduction No more need for conversion 3 Customers pay in their own currency What are (e-)dcc payments, and why are they of interest to your customers? 4 Your benefits How do (e-)dcc payments benefit you? 5 DCC in practice How do DCC payments work? 6 e-dcc in practice How do e-dcc payments work? 8 Differences (e-)dcc compared with Multi Currency Service 9 Division of duties Who are the parties involved in (e-)dcc transactions? 10 Honest and transparent DCC supplement instead of conversion fee 11 MasterCard and Visa What are the terms and conditions associated with (e-)dcc? 12 Further information 13

3 Introduction No more need for conversion Credit cards offer ease of payment in any country and provide consumers and business travellers with the option to pay quickly, easily and securely virtually anywhere including in countries with other currencies. However, cardholders usually have to wait first to see at what exchange rate the payment will be settled. Dynamic Currency Conversion (DCC) brings an end to that uncertainty. DCC enables you, as a retailer, bar or restaurant owner or other accepting business of credit cards to provide customers from non-euro countries to pay in their own currencies. This is highly convenient for your customers, as they know exactly how much they are paying for their purchase. For you, as a business owner, Dynamic Currency Conversion also offers a number of key benefits: as well as making your customers more likely to make purchases, it also provides you with substantial commissions. Experience has shown that large numbers of consumers from non-euro countries opt for DCC payments. When it comes to point-of-sale payments, half of all cardholders choose to pay in their own currency, while for online purchases this rate is as high as 60%. You can offer Dynamic Currency Conversion in both your physical store and your online store. For physical stores, we use the name DCC, while for online stores the service is known as e-dcc. This PaySquare white paper contains detailed information about the backgrounds, features and options, and practical aspects of (e-)dcc. The regulations will also be addressed, along with MasterCard and Visa s perspectives on (e-)dcc. July

4 Customers pay in their own currency What are (e-)dcc payments, and why are they of interest to your customers? If you offer (e-)dcc to customers from non-euro countries, you give them the opportunity to pay directly by MasterCard or Visa card in their own currency instead of euros. The amount to be paid is directly converted to the cardholder s currency at a real-time exchange rate. If your customer accepts the offer of paying in their own currency, the amount they pay will be equal to the amount to be debited from their amount at a later date. Customers from non-euro countries may have various reasons to opt for payment in their own currency instead of in euros. The key benefits of (e-)dcc for your customers: They are certain about the transaction amount and do not need to have any doubts before making a purchase. They will find it easier to assess whether or not they are getting a good deal. The amount your customer pays is identical to the amount that will eventually be debited from their account. Unclear conversions or exchange-rate fluctuations are no longer a factor. Customers who use their credit card to pay for business expenses incurred can claim these directly, without waiting until they have received their statement. 4

5 Your benefits How do (e-)dcc payments benefit you? If you accept credit card payments, there are several reasons it might be worth your while offering your customers from non-euro countries the opportunity to pay in their own currency. The key benefits of (e-)dcc for you as a business: You bear no foreign-exchange risk. You increase your customer base. Customers who know exactly how much they are paying are more likely to decide to make a purchase, thereby boosting your sales. This service allows you to market yourself even more as a customer-friendly business. You receive a generous commission on every (e-)dcc transaction. You receive the payment in euros, which saves you a considerable amount of administration time. If you accept credit cards through PaySquare and provide (e-)dcc services, you pay no fees or monthly subscription fees for connecting (e-)dcc. Some DCC providers (i.e. organisations specialising in foreign-exchange services), including Global Blue, allow you to keep track of your revenues and of the revenues from your (e-)dcc payments in the form of regular, carefully prepared reports. Several DCC providers, including Global Blue, will train your people to use DCC, enabling you to achieve maximum results. PaySquare can help you serve your customers by converting amounts to any of the following 30 currencies: US Dollar (USD) Australian Dollar (AUD) Brazilian Real (BRL) Pound Sterling (GBP) Canadian Dollar (CAD) Danish Krone (DKK) United Arab Emirates Dirham (AED) Euro (EUR) Hong Kong Dollar (HKD) Indian Rupee (INR) Israeli New Shekel (ILS) Japanese Yen ( JPY) Latvian Lats (LVL) Malaysian Ringgit (MYR) Mexican Peso (MXN) New Turkish Lira (TRY) Norwegian Krone (NOK) Ukrainian Hryvnia (UAH) Chinese Renminbi (CNY) Romanian Leu (RON) Russian Ruble (RUB) Singaporean Dollar (SGD) Taiwanese Dollar (TWD) Kazakhstani Tenge (KZT) Czech Koruna (CZK) Polish Zloty (PLN) South African Rand (ZAR) South Korean Won (KRW) Swedish Krona (SEK) Swiss Frank (CHF) 5

6 DCC in practice How do DCC payments work? If a customer would like to pay by credit card at the cash register, the payment terminal determines whether the cardholder is from a non-euro country. If this is the case, the payment terminal gives an alert. Next, you can offer your customer the opportunity to pay in their own currency. The payment is only made in your customer s currency if they have given express permission to do so. Before you complete the transaction, your customer will see the following information on the payment terminal: the price in euros. the exchange rate (for example, Reuters exchange rate including a currency conversion fee). the total amount in the customer s currency. EMV chip If your customer is using a credit card equipped with an EMV chip, they can approve the amount to be paid by pressing the OK button on the payment terminal. Your customer confirms the choice of their own currency and enters their PIN to confirm the transaction. The transaction receipt shows the price in euros, the exchange rate and the total amount in the customer s currency. Magnetic strip If your customer is using a credit card with a magnetic strip and signature, they can approve the amount to be paid by pressing the OK button on the payment terminal. Your customer confirms the choice of their own currency and as is typical for magnetic strip transactions signs the transaction receipt. As before, the cardholder receives a transaction receipt stating the price in euros, the exchange rate and the total amount in the customer s currency. 6

7 DCC INFORMATION Date: 01/05/ :38 Total: 100,00 EUR Exchange rate: 1 EUR = 1.10 CHF Transaction currency amount: 110,00 CHF Cardholder has chosen to pay in CHF. This transaction is based on Global Blue reference rate Plus 3% Mv choice is final.transactions can also be conducted in EUR. Service provided by PaySquare & Global Blue. You are offered a choice of currencies. The local currency is EUR. The cardholder currency is CHF. Please choose your preferred currency. DCC INFORMATION Cash register no: CT Store: Accounting period: 0335 Reference: VISA Card no.: xxxxxxxxxxxx0123 Exp. Date: 05/20 PAYMENT Date: 01/05/ Transaction no.: Customer receip BUSINESS NAME EENDRACHTLAAN 315 NL-3526 LB UTRECHT PaySquare: We pay attention. Total: 100,00 EUR Exchange rate: 1 EUR = 1.10 CHF Transaction currency amount: 110,00 CHF Retrieval ID: A123B123CDE0 Referrence NO: Signature: Example of a DCC payment A customer from the United States buys a 100 pair of trousers in Scheveningen, and he would like to pay with his MasterCard. The payment system registers that the customer wants to pay using a credit card issued in a noneuro country, and alerts the retailer. The retailer then asks the US customer if he would like to pay in dollars. If this is the case, the DCC, through the acquirer (e.g. PaySquare) requests the current exchange rate and fees from the DCC provider (e.g. Global Blue). The current exchange rate including the foreign-exchange fee, for example, is 1.00 = $ The DCC provider sends this information to the payment terminal via the acquirer. The US customer approves the payment in dollars and confirms the transaction in the amount of $ Through MasterCard, the $ transaction is transferred to the organisation issuing the credit card (i.e. the issuer). The latter can directly debit the cardholder s amount for $ The DCC provider pays the agreed commission to the retailer in Scheveningen from the foreignexchange fee. 7

8 e-dcc in practice How do e-dcc payments work? When your customer pays for their purchases in your online store, the amount to be paid appears on the payment page. The Payment Service Provider which settles the payment on your behalf lists this amount in euros. Once the cardholder has entered the credit card number and other card details, the processing system determines whether your customer originates from a non-euro country. If this is the case, the processing system asks whether your customer would like to pay the total amount in their own currency. During this transaction, your customer will view the following information on the screen: the price in euros. the exchange rate, including any foreign-exchange fees. the total amount in the cardholder s currency. It is important that your customer explicitly chooses to pay in their own currency. PSP 8

9 Differences (e-)dcc compared with Multi Currency Service Multi Currency Service (MCS) also enables you to give customers the opportunity to pay in your online store using their own currency. But what are the differences between MCS and e-dcc? Multi Currency Service enables you to set the exchange rate yourself. This means you must keep track of current exchange rates and that you bear the foreign-exchange risk. In the case of (e-)dcc, it is the DCC provider (an organisation specialising in foreign-exchange services) that sets the exchange rate and bears the risk. If you accept a (e-)dcc payment, you will receive a substantial commission, which is not the case with Multi Currency Service. (e-)dcc enable you to have the amount in euros converted to 30 different currencies through PaySquare. Multi Currency Service through PaySquare can convert payments to 10 different currencies. Multi Currency Service enables you to receive your payment in euros, US dollars or Pound Sterling. However, payment in US dollars and Pound Sterling is only possible if your customer has chosen for payment in one of these currencies. If you choose for (e-)dcc, you will always receive your payment in euros, regardless of the currency selected by the customer. 9

10 Division of duties Who are the parties involved in a (e-)dcc transaction? As with all credit card payments, there are several parties involved in (e-)dcc transactions. 1. The acquirer (e.g. PaySquare): holds a licence issued by a credit card company such as MasterCard and Visa in order to enter into contracts with businesses for the acceptance of credit cards, international debit cards and cardrelated services such as (e-)dcc. connects businesses to domestic and international payment networks. processes the transactions and payment to the business accepting the credit card payment (e.g. the accepting business; for example, a retailer). facilitates secure transaction processing through anti-fraud measures. reports to the accepting business. 2. The (e-)dcc provider (e.g. Global Blue): specialises in foreign currencies and financial services for international travellers, including taxand duty-free shopping, international transfers, foreign-exchange offices and (e-)dcc. sets the exchange rate for (e-)dcc transactions. bears the foreign-exchange risk for (e-)dcc transactions. trains retail staff to use DCC so you can achieve maximum results. allows you to keep track of the results of your (e-)dcc payments in the form of meticulous reports. 3. Payment Service Providers for e-commerce transactions (e.g. Ingenico): organises payment transactions for the online store and facilitates payment settlement in the online store. facilitates the processing of online payments with one or more payment methods, including e-dcc, in online stores from a technology point of view. 4. Providers of payment systems in physical stores: supply various types of payment terminals, point-of-sale systems and reservation systems. technically facilitate the acceptance of payments using one or several payment methods, e.g. DCC, in physical stores. (Please note: DCC cannot be integrated into all payment terminals and payment systems; in some cases you require a separate or different payment terminal for the acceptance of DCC.) 10

11 Honest and transparent DCC supplement instead of conversion fee Prior to the launch of (e-)dcc, it was always the card-issuing organisation (i.e. the issuer) of the cardholder that was responsible for converting the purchase amount from euros to their own currency, whereby the cardholder paid a conversion fee to their issuer. This amount is typically equivalent to around 3% of the transaction amount. If a (e-)dcc payment is made in your physical store or online store, the DCC provider is responsible for converting the purchase amount. This organisation, which specialises in foreign-exchange services, pays your DCC commissions out of the foreign-exchange fee, based on the arrangements you made with your acquirer (e.g. PaySquare). For the processing of (e-)dcc transactions, PaySquare works together with Global Blue, a DCC provider that uses fair exchange rates and conversion fees. This way, you can be sure that your customer receives a fair service that adds value for them, without being faced with any unpleasant surprises. Your customer is aware right away of the fee at the time of payment and does not need to wait for their account statement. Cardholders making (e-)dcc payments are always entitled to full transparency regarding the fee they pay as part of the DCC exchange rate. 11

12 MasterCard and Visa What are the terms and conditions associated with (e-)dcc? MasterCard and Visa both attach a number of terms and conditions to (e-)dcc payments. Acquirers such as PaySquare must be able to demonstrate that businesses that accept (e-)dcc payments through the acquirer must satisfy all the applicable terms and conditions. MasterCard and Visa have set strict rules regarding the information your customers can view on a payment terminal or the payment page of an online store: You must always allow your customers to choose themselves whether to pay in euro or their own currency. Before your customer approves the transaction, you must inform them about the exchange rate, the foreign-exchange fee and the total amount in their own currency. If your customer views the exchange rate used and the total amount in their own currency, they must be offered the option to refrain from making a (e-)dcc payment and choose payment in euros instead. Even after completing the (e-)dcc transaction, your customer still has the option to reverse the transaction or choose to pay in euros. In this case, your customer must be able to demonstrate that the transaction has been completed, without you having explicitly alerted them to the option of paying in euros. It is therefore important that you provide clear instructions to your staff: always leave the choice to pay in euros or their own currency to the customer! The cardholder has the option to challenge the exchange rate used for the (e-)dcc payment at a later stage. Repayments/refunds must always be settled in the same currency in which the original (e-)dcc transaction was made. For this reason, too, it is important that you work with a reliable DCC provider that applies fair exchange rates and conversion fees. If you would like to refund the purchase amount to the cardholder (e.g. for refunds), this refund must be completed in the same currency and at the same exchange rate as the original transaction at the time of the purchase. 12

13 Further information For more information, please visit or Contact Do you have any questions? Please feel free to contact our Customer Service department. From The Netherlands: T E service@nl.paysquare.eu From Luxembourg: T E service@lu.paysquare.eu The contents of this white paper are for informational purposes only; we accept no liability for any errors or omissions. This information is derived from public sources. Misprints and printing errors reserved. As a professional partner in payment transactions, we like to proactively and objectively inform you about payment transactions through the white papers we publish. In these white papers, we present solutions for a variety of issues, related to specific demands from the market. You can download all our white papers and brochures at the section Customer Service - Downloads at 13

14 10.04 LNE PaySquare SE Eendrachtlaan LB Utrecht PO Box AJ Utrecht The Netherlands PaySquare SE, CoC From the Netherlands: T E service@nl.paysquare.eu W From Luxembourg: T E service@lu.paysquare.eu W