Here’s a simple question for everyone who works in your hotel, from the GM to the front desk staff. Would you steal from your guests?
A: Yes, if I thought I could get away with it.
B: Of course not, because it’s wrong.
If you answered A, you’ll be pleased to know that I’m now about to explain exactly how you can get your sticky fingers on more of your guests’ hard-earned cash. What’s even better is that you can actually pretend you’re doing them a favor while you’re fleecing them, so not only will they never suspect a thing, but they might even thank you for your efforts.
Sounds too good to be true? Well in fact it’s simple – so simple that many of you might be doing it already. It’s called Dynamic Currency Conversion (DCC) and it applies when you accept a credit card payment from a guest who holds a foreign credit card. You can offer to process the transaction in the customer’s own currency instead of your local currency – tell the customer that this way they’ll know exactly how much they’ll be charged on their next credit card bill – and if they accept this ‘service’, they’ll end up paying anything from 2-7% more than they would if the payment was processed normally by Visa or MasterCard in the local currency. And you get your cut of that overpayment.
This is all perfectly legal, of course. The only rule to worry about is that you must always give the customer the choice between their currency and yours. At this point you may be wondering why any customer would choose their own currency when it’s going to cost them more. The answer is ignorance. Relatively few people understand how DCC works, so they simply won’t be aware that they’ve paid more than necessary. Those people who do know will of course opt for the local currency when you ask the question – and this is an important point because if you fail to offer such a customer the choice, they will then have the option of contacting their bank for a chargeback (Visa code 76), or complaining about you on a travel website.
If you answered B, then congratulations. Your moral compass is in good working order. However, this doesn’t mean that DCC can’t give you any headaches. This is because DCC is often the default option at the point of sale. If the staff who handle the transaction are not fully aware of how the system works, it’s easy to innocently process a payment using DCC without ever really offering the customer a choice, without knowing how to override the system, and without understanding why the customer might be angry about DCC. Your intentions may be pure, yet a lack of awareness can easily result in chargebacks and reputational damage.
Even if your staff have already received training in processing payments, that still might not be enough – after all, who handled their training? One company which provides point of sale terminals for credit card transactions as well as on-site training in hotels is Elavon. A quick look through one of their training manuals is not, however, encouraging. Although DCC is discussed, the details of how it works are carefully avoided, with the emphasis placed instead on how to persuade the customer to agree to its use. Armed with such training, it is unlikely that your staff would be equipped to guide your guests to the fairest payment option.
Whether you consider DCC to be a legitimate boost to your bottom line, or a rather unethical means of cheating your guests, it is something that everyone who deals with customer credit cards should understand if disagreements are to be avoided.