Mumbai: In a move that could impact customers making cross-border payments, ICICI Bank has announced a significant increase in its Dynamic Currency Conversion (DCC) fee on debit card transactions. The revised charge, which will rise from 1 per cent to 3.5 per cent of the transaction amount, will come into effect from June 21, 2026.
The change is expected to make certain international and foreign merchant-linked transactions more expensive for customers, even when payments are made in Indian rupees.
What is changing?
According to the bank’s communication to customers, the updated DCC fee will apply to specific debit card transactions that involve foreign merchant processing. This includes purchases made in Indian currency at international locations or transactions within India where the merchant is registered overseas.
In practical terms, customers may incur the higher fee even if they select Indian rupees as the payment currency. The determining factor is not just the currency displayed but also whether the transaction is routed through an international payment network.
The increase from 1 per cent to 3.5 per cent represents a steep jump and could lead to noticeably higher costs for frequent users of international services and platforms.
Understanding Dynamic Currency Conversion
Dynamic Currency Conversion, commonly referred to as DCC, is a facility that allows customers to pay in their home currency while making international transactions. Instead of being charged in a foreign currency such as US dollars or euros, the transaction is converted into Indian rupees at the point of sale.
While this option may appear convenient and transparent, it often comes with additional charges. These include conversion markups and service fees levied by banks or payment processors. As a result, DCC transactions are typically more expensive compared to payments made directly in the local currency.
For instance, when a customer shops on an international website, they may be given the option to pay either in the foreign currency or in Indian rupees. Choosing the rupee option triggers DCC, which now attracts the higher fee under the revised structure.
Impact on customers
Mumbai: The fee revision is likely to affect a wide range of users, including those who frequently shop on international e-commerce platforms, subscribe to foreign digital services, or travel abroad.
To illustrate the impact, a transaction worth ₹10,000 would earlier attract a DCC fee of ₹100. Under the revised rate of 3.5 per cent, the fee will increase to ₹350, resulting in an additional cost of ₹250 per transaction.
For customers who make multiple such payments in a month, the cumulative impact could be significant. This makes it important for users to review their payment choices carefully while conducting international transactions.
When the charges apply
The revised DCC fee will be applicable in scenarios such as:
- Payments made in Indian rupees at international merchant locations
- Online transactions where the merchant is based outside India
- Transactions processed through foreign payment gateways or networks
Customers should note that the presence of the rupee symbol does not necessarily indicate a domestic transaction. The backend processing of the payment plays a crucial role in determining whether DCC charges will apply.
Tips to avoid higher costs
Financial experts generally advise customers to opt for payments in the local currency of the merchant to avoid DCC-related charges. By choosing to pay in foreign currency, the conversion is handled by the card network or bank, which may offer more competitive rates.
Additionally, customers are encouraged to:
- Carefully review payment options before confirming transactions
- Avoid selecting automatic currency conversion where possible
- Check their bank’s forex markup fees for better comparison
Being aware of these factors can help minimise unnecessary expenses.
Conclusion
The decision by ICICI Bank to increase the DCC fee underscores the rising costs associated with cross-border transactions. While the facility of paying in Indian rupees offers convenience, it may come at a higher price under the new structure.
As international spending becomes more common among Indian consumers, understanding the nuances of such charges is essential. Customers who remain vigilant about currency selection and transaction details can better manage their expenses and avoid unexpected fees.