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Dynamic Currency Conversion

Paying in NZD on overseas online sites or while overseas on holiday might seem convenient but are you really getting a good deal?


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Paying this way is called Dynamic Currency Conversion (DCC). It seems great at the time – you don’t have to figure out how much you’re really spending. The website or merchant does it all for you. And the transaction comes through on your credit card statement in NZD – so no pesky currency conversion fee from your bank!

We contacted the major New Zealand banks and they confirmed they don’t charge a currency conversion fee on DCC transactions.

But that fee is still getting added on – this time by the merchant or website. Enquiries by the Banking Ombudsman in 2011 show those currency-conversion fees could be higher than what your Kiwi bank would charge you!

Our banks usually charge between 2 and 3 percent of the New Zealand dollar amount. Overseas sites and merchants often appear to be charging more than this when using DCC. Also, if you use PayPal for purchases there may be a 4 percent currency-conversion fee.

So check the conversion fees when shopping online because paying in the local currency may or may not be cheaper. When we priced a woman’s shirt on UK clothing website ASOS, it was $8.12 more expensive to pay in NZD using DCC. However, for a book purchase from The Book Depository it was $1.18 cheaper to use DCC.

We say

  • Find out the currency-conversion fee your bank charges.
  • Ask the overseas merchant what their conversion fee is before you pay.
  • Where the overseas merchant’s fee is higher – or they won’t tell you – ask to have your credit card charged in the country’s currency rather than NZD.
  • It’s up to you whether you want to go ahead or shop elsewhere if the merchant insists on charging in NZD.
  • Use a currency-conversion calculator when buying online to check whether DCC is the better deal or not.
  • If you didn’t agree to use DCC, but see it on your credit card bill ask your bank to contest the charge.

Tip: Download a currency-conversion app to your smartphone before travelling overseas.

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