Lessons learned from a DCC implementation

After a few hectic weeks, the completion of the Dynamic Currency Conversion (DCC) project we've undertaken is now visible. The purpose was to configure a payments system in such a way to allow the user (a bank) to perform DCC on their ATM terminals.

For a bank, this is the simplest scenario for DCC. Until now, the bank dispensed Euros to their acquiring customers and sent transactions to the schemes in Euro. With DCC, the bank will now present the DCC offer to their acquiring card holders and, if they accept it, sent the transaction to the schemes in the billing currency of the cardholder and dispense Euros.

So, what have we learned during the implementation? Quite a few things.

• It might go without saying but it's very important for the acquirer to go to the schemes and find out about the hidden costs of a DCC implementation. Barring certification costs, an acquirer that wishes to implement DCC may find out that the schemes are not very forthcoming regarding their charge policies. Acquirers need to find out about yearly costs, and hidden costs that may appear in the guise of funds requested as collateral by the schemes.
• If possible, try to avoid updating the ATM application in order to avoid the relevant certification cycles. Depending on the scheme requirements for DCC, this may not always be possible.
• Pay particular attention to the settlement and chargeback processes and find out how the introduction of multiple currencies change these.
• Allow your operational staff to have their say before the project nears its completion. Introducing multiple currencies on the acquiring side, even if the introduction is restricted to settlement, will affect the way your operations do your balancing. 

And the most important thing: devote serious time to investigate the roll out of your new service from a marketing perspective. An ATM network may have thousands of ATMs but some terminals are worth way more than others. It has been observed from past data that a handful of terminals that are located to key locations (main tourist attractions, major convenience spots and so on) may account for a vast volume of acquiring transactions (20% of your terminals may bring in 80% of the volume, depending on deployment). Some locations are also favored by specific demographic groups (Rhodes is famous for attracting a disproportionately large number of UK visitors).

Your marketeers need to make the extra effort to advertise the DCC service

• Ensure that your terminals are neat and stand-out.
• Make deals with travel agents, local hotels and retailers to drive more traffic to your terminals.
• Introduce granular fees to encourage card holders to make larger withdrawals.
• Advertise your charge rates and make damn sure that the customers understand why they are beneficial to them (DCC is a service that made a bad name for itself; more correctly, greedy acquirers and ill-behaved merchants have given DCC a bad name).
• Target specific demographics with special deals on some locations.