When a card terminal in London, Prague, or New York asks whether to charge you in euros or the local currency, the answer is almost always the local currency. The prompt is the front end of dynamic currency conversion (DCC), a service that lets the merchant or its processor set the exchange rate instead of your bank. Inside the EU, the law forces that rate into the open. Outside the bloc, the decision is yours alone.
- DCC shifts the conversion: the merchant or its processor converts the payment, not your bank, and applies its own margin.
- EU rules demand transparency: Regulation (EU) 2021/1230 requires terminals and ATMs to show the percentage margin over the ECB reference rate before you pay, plus both amounts.
- The cost is real: a 2017 Norwegian study cited by BEUC found DCC users paid more in 99.7% of cases, with an average 7% surcharge.
- Protection stops at the EU border: the rules cover euros and EU-member currencies; in the UK, US, or elsewhere, nobody must show you the margin.
What happens when you choose euros?
Choosing euros means the merchant or its payment processor performs the conversion at its own rate. Choosing the local currency means the merchant charges in its own currency and your bank converts under your card’s terms. EU law treats these as competing conversion services.
Under Article 4 of Regulation (EU) 2021/1230—consolidating Regulation (EU) 2019/518—both your bank and conversion providers must express the total cost as a percentage margin over the latest European Central Bank reference rate. At the point of sale, the provider must disclose before payment how much the merchant receives and how much you will pay. It must also tell you that you can pay in the local currency and let your bank convert.
Your bank must publish its margin and send an electronic message—SMS, email, or notification—when you pay or withdraw in another EU currency. The notice arrives once a month per currency, and you can opt out. The rules phased in: 15 December 2019, margin disclosure from 19 April 2020, and bank messages from 19 April 2021.
How much can the gap cost?
There is no fixed figure because margins vary. As a reference, the 2017 Norwegian study cited by BEUC found that people who chose dynamic conversion paid more in 99.7% of cases, with an average extra cost of 7%.
Illustrative example: a £100 dinner. If the terminal applies a 7% margin over the ECB rate and your card applies 2%, paying in euros costs about five percentage points more. Over a week of hotels, meals, and ATM withdrawals, those points add up.
Before traveling, check your card’s foreign-exchange margin. For EU currencies, your bank must publish it. Mobile wallets do not eliminate the prompt: the payment still goes through your card, and the terminal can offer DCC.
Inside the EU you have legal cover—outside, only your attention
Articles 4 and 5 apply only to payments in euros or in currencies of EU member states. Since Bulgaria adopted the euro on 1 January 2026, according to the European Central Bank, the eurozone has 21 countries. Non-euro EU currencies include the Czech koruna, Polish zloty, Hungarian forint, and Swedish and Danish kroner.
In Prague or Warsaw, the merchant must show the margin, both amounts, and the option to pay in korunas or zlotys. In London or New York, the terminal is not bound by these rules to show you anything. It can offer “pay in euros” at a rate you never see, and saying no is your responsibility.
Practical guidelines:
- At the terminal: select the local currency. If the cashier chooses for you or asks “in euros?”, ask them to repeat the transaction.
- At the ATM: decline the proposed conversion and let your bank convert.
- At foreign online stores: if you can choose the currency, compare as you would at a terminal.
- Check the receipt: in the EU, both amounts and the margin must appear after payment on a durable medium.
DCC survives because it is presented as a favor. “Would you like to pay in your currency?” sounds courteous, and the payer has three seconds to decide in front of a queue. Brussels has solved transparency on its territory: visible margin, visible amounts, and the right to refuse. It cannot solve it at a terminal in New York.
The practical rule should be simple: local currency always, unless you can verify that the merchant’s margin is lower than your card’s. Inside the EU you have the data. Outside, you usually do not—and when you cannot compare, local currency is safer.