What the question on the screen means
You pay with a US card in Paris, and the terminal shows two amounts: one in euros, one in dollars. That second option is called dynamic currency conversion, or DCC. If you choose it, the conversion happens right there, at a rate picked by the company behind the terminal. Your bank then receives a dollar amount and has nothing to convert.
If you choose euros, the conversion happens later, at your card network's rate, and your bank adds whatever foreign transaction fee your card agreement lists. Either way someone converts the money. The question on the screen is really: whose rate do you want, the terminal's or your card's?
The dollar option looks friendly, because you see the final amount in a currency you know. The price of that comfort is the markup built into the rate, and it is not printed as a fee. You have to work it out, which takes a reference rate and one division.
The benchmark: the ECB reference rate
The European Central Bank publishes euro foreign exchange reference rates on every working day, usually around 16:00 CET. They come from a daily concertation between central banks, and the ECB states that they are published for information purposes only. No bank or terminal converts at exactly that rate. That is the point: it is a neutral yardstick with no margin in it, so any markup shows up as the distance from it.
EU law uses the same yardstick. Regulation (EU) 2019/518 requires currency conversion charges to be expressed as a percentage markup over the latest available euro reference rates issued by the ECB. The examples below use the rates of October 19, 2026: 1.1225 US dollars and 4.3713 Polish zloty per euro. The currency converter uses the ECB rates of the current day, with a field for your card's fee.
Worked example: a dinner in Paris
The bill is €85.00. At the ECB rate of 1.1225, that is 85 × 1.1225 = $95.41. Say the terminal's dollar offer carries a markup of 5%. That figure is an example for the arithmetic, not a quote from any provider. The terminal's rate is then 1.1225 × 1.05 = 1.1786 dollars per euro, and the dollar amount on the screen is $100.18.
| How you pay the €85.00 | Charged in dollars | Above the reference amount |
|---|---|---|
| Reference amount at the ECB rate | $95.41 | $0.00 |
| Euros, card with no foreign transaction fee | about $95.41 | the network rate's distance from the ECB rate |
| Euros, card with a 3% foreign transaction fee | about $98.27 | about $2.86 |
| Dollars at the terminal, example 5% markup | $100.18 | $4.77 |
The card rows say "about" because a card network converts at its own rate on the day it processes the payment, which is close to but not the same as the ECB rate of that afternoon. The comparison still holds: a 5% markup at the terminal costs more than a 3% card fee, and both cost more than a card with no fee. If your card had a 5% fee and the terminal 3%, the answer would flip. That is why the numbers matter more than a rule of thumb.
How to read an offer in ten seconds
Terminals do not always show the markup. When they don't, you can get it from the two amounts on the screen. Suppose the same €85.00 bill comes up as $101.20:
- The terminal's rate: $101.20 ÷ 85 = 1.1906 dollars per euro.
- The reference amount: 85 × 1.1225 = $95.41.
- The markup: 101.20 ÷ 95.4125 − 1 = 6.07%.
The last step is a percent change from the reference amount to the offered amount, which the percentage change calculator does if you type the two numbers. Without a phone, a rough check works too: one percent of $95.41 is about 95 cents, so an offer $5.79 above the reference is about 6 percent.
You need a reference rate in your head before you travel. Look it up the day you leave, and note it with the date. Rates move, so a figure that is weeks old can be off by more than a small markup.
What EU law makes the terminal show
Regulation (EU) 2019/518 added Article 3a to Regulation (EC) No 924/2009. For card payments at an ATM or point of sale, it sets out these duties:
- The markup, before you pay. Card issuers and anyone offering a conversion at the terminal must express the total conversion charge as a percentage markup over the latest ECB reference rate, and disclose it before the payment starts.
- Both amounts. Whoever converts at the ATM or point of sale must show the amount in the merchant's currency and the amount you will be charged in the currency of your account.
- The other option. The terminal must tell you that you can pay in the merchant's currency and have your own bank convert it afterwards.
- A message from your bank. Your own bank must send you an electronic message with its markup after it receives a card payment in another EU currency, then once a month per currency, and must let you opt out.
The first three duties apply since April 19, 2020, the message from your bank since April 19, 2021. Recital 5 gives the reason: a lack of transparency increases the risk that payers choose expensive conversion options. Recital 7 asks for the same form of markup for every card payment so that the options can be compared.
The regulation covers payments in euro or another EU currency within the EU. A euro card in Poland is the clean case. You pay 250 zloty. At 4.3713 zloty per euro, the reference amount is 250 ÷ 4.3713 = €57.19. If the terminal offers €59.80, its markup is 4.56%, and the terminal must say so on the screen. Your bank's message tells you its own markup, so you can compare the two percentages directly. With a card from outside the EU, don't count on that message: work out the markup yourself as above.
Fees on a US card
On the US side, the official commentary to Regulation Z defines how a card's foreign transaction fee is measured. The dollar amount of the purchase is first calculated at a conversion rate outside the control of the card issuer and any third party, for example a rate from the range of rates in the wholesale currency markets; anything charged above that amount is the foreign transaction fee. The fee counts for purchases in a foreign currency and also for purchases made outside the United States or with a foreign merchant.
Two consequences for the terminal question. First, choosing dollars does not necessarily avoid your card's fee: check your card agreement for whether it charges the fee on any purchase outside the US. Second, the commentary says a card issuer is not required to disclose a fee imposed by a merchant, and gives the case of a merchant who does the currency conversion itself and adds a fee. The markup at the terminal never shows up in your card's fee table. You only find it by doing the math.
What a markup costs over a trip
Small percentages add up across a trip. The table shows the extra cost of each markup on a €100.00 purchase, $112.25 at the reference rate of October 19, 2026, and on $3,000.00 of card spending over a whole trip. The percentage calculator works out any other combination.
| Markup or fee | Extra on €100.00 | Extra on $3,000.00 of spending |
|---|---|---|
| 1% | $1.12 | $30.00 |
| 2% | $2.25 | $60.00 |
| 3% | $3.37 | $90.00 |
| 4% | $4.49 | $120.00 |
| 5% | $5.61 | $150.00 |
| 6% | $6.74 | $180.00 |
| 8% | $8.98 | $240.00 |
| 10% | $11.23 | $300.00 |
Put the expected conversion cost into the travel budget calculator as its own line, next to flights and hotels. At 5%, $3,000.00 of spending carries $150.00 of conversion cost.
At the ATM
Cash machines abroad can ask the same question. EU law treats both places the same: the duties above apply "at the ATM or at the point of sale". The arithmetic is the same too. Divide the amount the machine wants to charge in your currency by the amount of local cash times the reference rate. If the machine also lists a withdrawal fee, that fee is separate from the conversion, so check both lines on the screen before you confirm.
A short checklist for the trip
- Before you go: look up your card's foreign transaction fee in its agreement, and note the ECB rate of the day you leave.
- At the terminal: if both amounts are shown, divide to get the markup and compare it with your card's fee.
- If you can't compare: paying in local currency keeps the conversion with the card whose terms you already know.
- After the trip: compare the charges on your statement with the reference amounts. That shows you what each choice cost and settles the question for next time.
Frequently asked questions
Should I pay in local currency or in my home currency?
Compare the two before you choose. The offer in your home currency comes with the terminal provider's rate; paying in local currency leaves the conversion to your card, at its network's rate plus any foreign transaction fee in its terms. Work out the markup of the offer against the ECB reference rate and compare it with your card's fee. If you cannot check, the card you know is the one whose cost you can look up.
What is dynamic currency conversion?
A currency conversion done at the terminal or ATM instead of by your card. The machine recognizes a foreign card and offers to charge you in your home currency at a rate the terminal's provider sets. If you accept, your card receives an amount already in your currency, and its own conversion does not take place.
Is dynamic currency conversion legal?
Yes, in the EU it is regulated rather than banned. Regulation (EU) 2019/518 requires whoever offers the conversion at an ATM or point of sale to show the markup over the ECB reference rate, both amounts, and the option to pay in the local currency, all before you pay. Recital 9 says the payer should be able to refuse it.
Can I still be charged a foreign transaction fee if I pay in dollars abroad?
It depends on your card. The official commentary to Regulation Z counts a fee on a purchase made outside the United States or with a foreign merchant as a foreign transaction fee, not only fees on purchases in a foreign currency. So a card can charge it on a dollar amount too. Check the fee table in your card agreement.
What exchange rate is fair to compare against?
The ECB publishes euro reference rates on working days at around 16:00 CET, and EU law uses them as the benchmark for the markup. The ECB says they are for information purposes only and strongly discourages using them for transactions, so no one will sell at that exact rate. That is what makes them a neutral yardstick. On October 19, 2026 the rate was 1.1225 US dollars per euro.
Sources
- EUR-Lex: Regulation (EU) 2019/518 amending Regulation (EC) No 924/2009 as regards certain charges on cross-border payments and currency conversion charges
- European Central Bank: Euro foreign exchange reference rates
- CFPB: Regulation Z, 12 CFR 1026.4 Finance charge, official interpretation 4(a)-4 (foreign transaction fees)