The Association of Brazilian Credit Cards and Services Companies (Abecs) recommended that issuers no longer accept transactions using Dynamic Currency Conversion (DCC). As a result of this recommendation, two major issuers in Brazil, Itau and Bradesco, have stopped allowing purchases using DCC on credit cards they issue effective as of September 13th. With DCC, merchants control when they hit the consumers’ cards with the foreign exchange rate. For these two major issuers who will no longer accept DCC transactions, they are regaining control over charging their cardholders the FX rate.
DCC is useful for merchants who sell cross-border because it enables them to present an offer in the shopping cart in the purchaser’s local currency. According to Abecs’ Executive Director, Ricardo Viera, his agency was fielding complaints from consumers who had purchased in Brazilian reals but were seeing transactions on their credit card statements in U.S. dollars. By disallowing DCC, merchants could face two headaches – increased shopping cart abandon rates and different processing for customers in Brazil.
Merchants who are selling into Brazil will need to monitor whether this impacts their sales and processing costs enough to warrant alternative options, such as setting up domicility in Brazil in order to present and settle transactions in Brazilian reals.
For more information on the switch, visit our friends at CardNotPresent.com.