Multi-currency pricing vs dynamic currency conversion: which to offer

A customer in Almaty looks at a jacket priced at EUR 100. There are three ways the payment can reach their tenge card: you charge EUR 100 and their bank converts it; you show and charge a price in tenge that you set; or you charge in euros but offer, at the payment step, to convert to tenge at a rate your provider sets. The customer pays a different amount in each case, someone different earns the conversion margin, and the refund behaves differently.

This article defines multi-currency pricing and dynamic currency conversion (DCC), sets out the card scheme and EU rules for DCC, shows who earns the margin, explains why currency alone does not decide approval, and covers refunds. It ends with a recommendation for cross-border merchants selling into CIS, MENA, LATAM and Turkey.

What is multi-currency pricing?

Multi-currency pricing means the merchant sets the price in the customer’s currency and charges that currency. The jacket costs KZT 61,000, not EUR 100 converted on the fly, and that is the amount the customer approves. Behind the scenes, the merchant’s provider converts the proceeds into the merchant’s settlement currency.

Stripe’s documentation names the three currencies involved:

• The customer’s payment method currency, the currency of their card or bank account.
• The presentment currency, the currency of the charge.
• The settlement currency, the currency your bank account receives. See settlement for how funds reach you.

If the presentment currency differs from the card currency, the customer’s bank may charge a foreign exchange fee. If it differs from your settlement currency, your provider converts it, for a fee. Multi-currency pricing aims to make the first two match, so the customer pays exactly the price they saw.

There are degrees of it. Stripe’s comparison of its own options is a useful map: fixed prices per currency that you set and update yourself, with the most exchange-rate risk; quoted rates that you lock for 5 minutes, 1 hour or 24 hours, which expire if the rate moves by more than 3.5%; and automatic conversion at checkout, where the provider sets the local price and carries the risk.

What is dynamic currency conversion?

DCC keeps your price in your currency and, at the payment step, offers card customers the option to pay in their card’s home currency instead. The provider identifies the card’s currency, usually from the BIN, quotes a converted amount that includes a markup, and the customer chooses. If they accept, the charge goes through in their currency at the quoted rate. If they decline, it goes through in yours and their issuer converts it.

The customer gets certainty about the amount. They pay for it through the markup, and the rate is set by the provider doing the conversion, not by their bank.

What do the card schemes require for DCC?

Visa’s guidance to cardholders states the core rules plainly. Merchants should give the customer a choice to accept or decline currency conversion, and must not choose on the customer’s behalf. Screens and receipts must show the amount in both the local currency and the cardholder’s currency, the exchange rate, and any additional fees or markup, with both currency symbols. Providers should not use language, font size or colour to steer the decision.

Visa Acceptance Solutions’ developer guide for DCC turns that into checkout requirements:

1. Register through your acquirer. DCC is enabled by the acquirer, not switched on in code alone.
2. Present an active choice. The guide says DCC may not be performed by default.
3. Show both prices, the rate and the markup in the offer; its worked example notes that the merchant must disclose a 3% markup to the cardholder.
4. Proceed in your own currency if the customer declines.
5. Put the DCC details on the confirmation page and receipt.
6. Check recurring payments with your acquirer, which have extra requirements.

The guide names both Visa and Mastercard as supporting currency conversion. If your acquirer offers DCC, its contract will spell out the scheme rules it applies.

What does EU Regulation 2019/518 require?

Regulation (EU) 2019/518, adopted on 19 March 2019, amended the EU’s cross-border payments regulation to cover currency conversion charges. Its recitals say the aim is to protect consumers against excessive charges for currency conversion, and that a lack of transparency increases the risk of payers choosing expensive conversion options.

For card payments, it requires:

• One comparable number. Providers and anyone offering currency conversion at an ATM or point of sale must express the total currency conversion charge as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the European Central Bank.
• Disclosure before the payment. The mark-up must be shown to the payer before the payment is initiated, and providers must publish their mark-ups in an easily accessible way.
• Both amounts, and the alternative. At the point of sale, the payer must see the amount in the payee’s currency and in the currency of their own account, and be told they can pay in the payee’s currency instead. A recital says this information should be shown on screen in the case of online purchases.
• A message from the issuer. Card issuers must send the cardholder an electronic message with the mark-up after receiving a payment order in another EU currency, at most once a month per currency, with an opt-out.

The first three obligations apply from 19 April 2020 and the issuer message from 19 April 2021. The Regulation applies to payments within the EU, but its approach, one mark-up over a public reference rate shown before the customer commits, is a good standard for any market.

Who earns the FX margin?

Whoever performs the conversion sets the rate and keeps the margin. The question is whether that is the customer’s bank, your provider, or the provider of a DCC service.

Setup	Who converts	Who pays the margin	Who carries rate risk
Single currency (you charge EUR)	Customer’s issuer	Customer, through the issuer’s rate and any fee	Customer
Multi-currency pricing, fixed prices	Your provider, from presentment to settlement currency	You, through the provider’s conversion fee	You, between price updates
Multi-currency pricing, provider sets the local price	Your provider	Depends on the product	Provider
DCC	The DCC provider	Customer, through the markup	Provider

The third row varies most. In Stripe’s Adaptive Pricing, for example, the local price shown to the customer includes a conversion fee of 2% to 4%, which the customer pays, and the merchant pays 0%. Stripe uses the mid-market rate and applies the fee to guarantee the rate through settlement. Read the fee schedule for whichever product you use: the same marketing words can describe very different economics.

Does charging in local currency raise approval rates?

It can help, but the currency is only half of what the issuer sees. Stripe’s documentation says converting prices to local currencies can improve customer conversion and authorisation rates while lowering processing costs. It also warns that the customer’s bank may charge them a fee if the payment method and your business are in different countries, regardless of the currency used.

The other half is the acquirer. Stripe’s guide to authorisation rates notes that banks are often more likely to approve domestic payments, and that local acquiring removes foreign and cross-border fees for customers. A tenge charge sent by a European acquirer is still a cross-border payment to a Kazakh issuer. A tenge charge sent by a Kazakh acquirer looks domestic. DCC does not change the acquirer either: the payment remains cross-border, only now in the customer’s currency.

Cross-border costs also go beyond exchange rates. Stripe’s Pix documentation notes that Brazilian customers paying businesses outside Brazil pay IOF, a Brazilian tax on foreign exchange transactions, currently 3.5% of the transaction value, and that merchants can choose to absorb it. Whether you price in reais does not change that; whether the payment is domestic does.

What happens to refunds and chargebacks?

Exchange rates move between the payment and the refund, and the rules for who absorbs the difference vary:

• Ordinary converted payments. Stripe converts refunds and disputes of currency-converted payments at the current rate. Its example: a 60 USD payment settled at 0.88 EUR per dollar gives the merchant EUR 52.80; if the rate is 0.86 at refund time, EUR 51.60 is deducted. The customer always gets back the exact amount they paid, in their currency.
• Provider-set local prices. Under Stripe’s Adaptive Pricing, refunds use the same rate as the original payment, so there is no extra cost to the merchant.
• DCC. Visa Acceptance Solutions’ guide says a DCC refund should apply the same exchange rate used at authorisation, and must not exceed the amount originally captured.
• Single currency. You refund EUR 100 and the customer’s bank converts it at its own rate on the refund date. The customer may get back a different amount in tenge than they paid, and some will contact you about it.

Disputes follow the same logic. A chargeback raised months after the payment can be converted at a very different rate, which matters in currencies that move sharply.

Worked example: one jacket, three ways to pay

Example figures, for illustration only. Assume EUR 1 = KZT 600 at the reference rate.

Option	Customer approves	Customer pays in KZT	Merchant receives
Single currency in EUR	EUR 100	About 60,900, after a 1.5% issuer fee	EUR 100
Multi-currency pricing, fixed KZT price	KZT 61,000	61,000	About EUR 100.65, after a 1% conversion fee
DCC with a 4% markup	KZT 62,400	62,400	EUR 100

DCC is the most expensive option for the customer, and the price they pay is not the price they saw on the product page. Fixed multi-currency pricing gives the customer a round local price they saw from the start, and gives the merchant a small buffer against rate moves, at the cost of updating prices when the rate shifts.

Which should you offer?

For most cross-border e-commerce merchants:

1. Use multi-currency pricing in markets with real volume. Show and charge local currency from the product page, and pair it with local acquiring where you can. Many local payment methods only work in local currency anyway.
2. Charge your own currency elsewhere, with clear wording that the customer’s bank will convert it.
3. Offer DCC only as a disclosed, active choice, through an acquirer that supports it, and never as the default.
4. Never stack them. A price already shown in local currency should not trigger a second conversion offer.
5. Write down your refund rule per provider before customers start asking.

What are the common mistakes?

• Showing local prices but charging in dollars. The statement amount will not match the page.
• Treating local currency as local acquiring. The issuer still sees a foreign acquirer and may decline or add fees.
• Defaulting to DCC or burying the alternative. Visa’s rules forbid choosing for the customer.
• Ignoring refund FX. In volatile currencies, the gap between payment and refund rates can exceed your margin.
• Not reconciling by currency. Fees and conversions differ per currency, so finance needs each one separately.

How does Omno handle multiple currencies?

In Omno, the currency is a field on every payment session, and routing and PSP-eligibility rules can use it alongside country, method, card attributes and customer group, so each currency can go to a provider that acquires it locally and settles it the way you want. Reporting splits payments and payouts by currency and provider for reconciliation. The smart routing and cascading page covers the rule settings.