Why dynamic currency conversion is a must for your international ecomm business.

Whenever you accept online payments in your retail operation, you have no choice but to allow customers to pay with a credit card. Once you expand your business internationally, you also need to dive into the complex world of accepting multiple currencies. One aspect of this ecosystem is something that is known as dynamic currency conversion (DCC).

Once you learn what it is and how it works, you may decide to incorporate it into your ecommerce operations.

Diversifying your currency offerings to your international customers.

Imagine that you are an American consumer who chooses to shop on a website based in China. You choose your items and proceed to checkout only to be faced with a price in yuan.

Unless you have direct, daily expertise in global commerce with this Asian nation, you probably have no idea what the product’s price is in American dollars, the denomination you are familiar with. In many instances, you might elect to click away to another site with prices that make sense to you.

It is situations like this that underscore the need for retailers doing business abroad to configure their systems accordingly. All international payment processing providers allow you to set up your shopping cart and point of sale solution for dynamic currency conversion. (Just be sure that yours will let you offer the currencies your customers prefer to use.)

What is dynamic currency conversion?

One of the best ways to enhance customer trust and close an international sale is to implement what is known as dynamic currency conversion. After setting it up with your payment services provider, this allows you to let your customers pay in their home currency.

There are several advantages that you will immediately realize once you implement dynamic currency conversion into your checkout. These include the following.

• When the price is presented in clear terms your customer understands, they feel more comfortable with the purchase. In addition, they perceive your business as credible, trustworthy, and accommodating.
• The customer does not need to wait for their credit card bill to arrive before they see the actual price they have paid. When the receipt matches their credit card bill, confusion is kept to a minimum.
• With more certainty, the likelihood of costly and stressful chargebacks is reduced.
• Exchange rates are locked in at the time of purchase as opposed to when the payment is processed by the card issuer, which can often be days after the transaction took place.
• The improved customer experience you help to create will often lead to long-term loyalty.
• Dynamic currency purchases often have lower exchange rates than customers would see later from their credit card issuer if the transaction was not processed in this way.

In light of all the advantages that DCC has to offer, you might think that it costs a lot to implement. However, many payment service providers provide it for free as part of your entire ecommerce package.

How does dynamic currency conversion work?

DCC kicks in when one of your overseas customers is about to make a purchase. At that time, they are given the choice of whether to pay in their home currency or ours. The transaction looks like this.

• In the case of an in-person purchase, the customer swipes or taps their credit card into or near your reader. For ecommerce transactions, they go into your shopping cart system and press the “buy” button or its equivalent.
• The in-person point of sale system or international ecommerce gateway detects that the purchase is not in the base currency and triggers dynamic currency conversion.
• The final price is displayed in local currency and billing currency with all of the relevant exchange fees specified.
• The customer weighs the two options and selects the currency type they want to use. This and all associated charges are reflected on the receipt.

It is important to remember that the customer always has the final choice of which monetary denomination they will be using.

Best practices when offering dynamic currency conversion.

As we have discussed above, providing this added choice to your customers serves as a win-win for everyone involved. You, the merchant, will see fewer disputes and are likely to have higher sales numbers and more recurring buyers.

At the same time, shoppers will feel secure doing business with you even though your headquarters may be thousands of miles away.

If you are thinking about implementing DCC into your operations, keep the following suggestions in mind to optimize both your and your customers’ experiences.

• If part of your international retail operation involves in-person purchases, make sure that all staff members understand how dynamic currency conversion works. This will enable them to explain it to customers and answer any questions that may arise.
• Make honesty, clarity, and transparency your highest priorities. Both face-to-face and on your website, be prepared to explain your pricing policies. Additionally, make yourself available to answer customer queries in real time if possible to minimize the chances of confusion and chargebacks. This may mean investing in a chatbot or local customer service representatives, particularly if your customers are in a different time zone or speak another language.
• Never try to influence your customer’s decision about whether to use your base currency or theirs.

The most important thing to remember is that it is the customer who has the ultimate control. If you make the DCC involuntary, your store can be slapped with significant fees and penalties. Also, as a merchant, you are allowed to mark up the cost that customers will see in addition to the foreign exchange rate.

Although they will see the exchange rate, these additional costs may come as a surprise. This is where full transparency on your part is vital.

One of the greatest challenges of selling internationally is convincing your customers that they should buy from you instead of from a seller in their own country. Full disclosure in the entire purchase process can go a long way toward inspiring trust and elevating your credibility.

Even when customers recognize that they may be paying a few percentage points more for your merchandise, they will often elect to do so because of the other unique attributes you bring to the table. In the end, it will be your availability, consistency, and full disclosure that will convince them.