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What you can do to avoid currency conversion disputes

What you can do to avoid currency conversion disputes

When your customers pay with their bank cards from another country, do you offer them the option of paying in their local currency? If that is not the case, they will incur an exchange rate that will leave them with a significant loss of funds.

Smart businesses are looking into adopting services like “Dynamic Currency Conversion” or “Cardholder Preferred Currency”. These services convert currencies at a different rate than the credit card system or issuing bank, making the whole process easier for the customer.

For example, when customers pay for something in the United Kingdom with Spanish bank cards, the purchase amount will be billed to them based on the Euro (EUR) to British Pound (GB) conversion rate set by the bank servicing the relevant trade and service organisation.

Although Europe uses the Euro almost exclusively, most other countries use their own currencies. As a result, consumers will spend more or less of their own money on a product, depending on the exchange rate at the time of conversion.

The perils of chargebacks and currency conversion

Often with hefty transaction fees comes buyer’s remorse, and customers will try to get their money back using their bank’s chargeback system. That will not only incur costs to your business but will also break the trust barrier between yourself and your customers.

One major rule when offering Dynamic Currency Conversion services (DCC) as part of the purchase process is that the customer must have the choice to use it or not and cannot be coerced into using it.

If DCC is used without the customer’s express consent, Visa and Mastercard will give them chargeback rights. But, if you can show that the cardholder was given the option to use DCC and chose it, you can defend the chargeback by presenting the transaction with that evidence.

But how can you make the whole buying process easier for your customers? By using a payment gateway that provides an affordable Dynamic Currency Conversion (DCC) service for both parties.

At Trust Payments, we know how much customers love this option, and we offer it for both online and in-store (POS) solutions. The DCC feature on our POS terminal provides foreign cardholders with the choice to pay in their home currency at the point of sale, and you can take a commission on each transaction.

Three tips to avoid currency disputes

Fraudulent chargebacks continue to increase, despite some reversals resulting from merchant errors. While it’s impossible to completely prevent chargebacks, reducing them saves you money and protects your business reputation.

Take the following three steps to prevent currency exchange disputes:

1. Evaluate card not present settings from your payments provider

Using DCC as a default setting in eCommerce and other settings that require card-not-present transactions is not recommended. Customers should be informed of the terms, and they should explicitly opt-in.

Furthermore, you can avoid problems at the checkout by using a multilayer approach that includes chargeback prevention alerts, email verification methods, and card security codes also called card verification values (CVV).

2. Review your card network guidelines

Do you know if your card network offers a Dynamic Currency Conversion payment option? While most card networks do not directly offer DCC, they allow their acquirers to do so, provided they meet guidelines that are designed to ensure customers are aware of what they are getting into.

Customers should be made aware of the following:

  • The amount of the transaction in the local currency
  • The amount of the transaction in the billing currency
  • The rate to be applied if the transaction is conducted in the customer’s billing currency.

Upon deciding which currency the customer wishes to transact in, the Merchant must honour the customer’s choice.

3. Partner with the right POS payment provider

Use a payments provider that will enable a frictionless process with the purchase amount and exchange rate clearly displayed before customer authorisation and clear receipts for both parties.

Using the right DCC payments partner will ensure your customers pay in the currency they prefer while the payment process offers transparency on the exchange rate. As this rate is guaranteed for the transaction, the process is convenient and frictionless for your customers.

Talk to the Trust Payments team to start optimising payments for your international customers now. Want to learn more about our DCC solution? check out our handy guide below: