Card acceptance charges are one of the inevitable costs of doing business. While these are unavoidable, airlines are uniquely positioned to access a source of revenue from the payment process that can mitigate these costs. By nature of their business, airlines typically operate across a number of countries and currencies, with appropriate local ticket pricing. Dynamic Currency Conversion (DCC) offers an opportunity to provide airline payments price clarity and personalisation to passengers as well as leveraging their card acceptance to deliver a new revenue stream also.
DCC for airline payments explained
DCC offers cardholders the option to pay for flights and ancillary services in their home currency. For example, a German customer booking a flight from London might have the flight priced in Pounds Sterling. Without DCC, the customer would pay for their ticket in Pounds—not knowing the final amount of their purchase until the foreign exchange has been applied later by their card issuer.
With DCC, the customer has the option of paying for their flight in either Pounds or Euro with full visibility of the final price in both currencies to make an informed decision. Fexco has developed a sophisticated DCC treasury product, deployed on modern technology platforms that integrates seamlessly with the most sophisticated airline systems.
With Fexco’s DCC service the airline continues to receive settlement in their preferred currencies at guaranteed rates. Consequently, airlines are protected from foreign exchange exposure whilst still being able to offer supreme customer service to their consumers. In addition, airlines receive a commission from the DCC service which is usually reserved for the card schemes and card issuers as this service replaces the conversion process revenue traditionally enjoyed by the card issuer only.
Common myths about DCC
1.DCC will add significant complexity to my Revenue and Account Management processes
If you sell a flight for EUR €500 you will be settled EUR €500. The DCC or transaction currency does not complicate existing accounting processes and cash flows. The additional revenue generated by DCC is settled separately to keep internal accounting straightforward.
2.DCC is a bad choice for my passengers
Not at all. Contrary to some travel blogs and newspaper articles, DCC is not an additional charge or fee for your passengers, it merely replaces the foreign exchange process conducted by the card issuers. On any transaction where the currency of the card is different to the currency of the flight, a card issuer will apply a foreign exchange rate to convert the flight currency to the card currency. In the commercial world we live in, this foreign exchange rate is always going to include a foreign exchange margin. Without DCC, the revenue from this foreign exchange margin is realised by the card schemes and issuers. In 1996, Fexco came up with the idea that the foreign exchange process could be applied at the point-of-purchase and the foreign exchange margin shared with the merchant and the acquiring bank.
3.My passengers won’t be happy with the DCC service and I’ll have to deal with more chargebacks
This is a common misconception. In fact, DCC can help lower the ratio of chargebacks. The customer will have full visibility of the foreign exchange rate, the source of the rate and the margin applied to the transaction thereby reducing potential for confusion.
4.It’s too complex for my airline to implement DCC
Fexco are pre-integrated with the world’s leading Payment Service Systems, Booking Engines, Payment Gateways and over 35 acquirers worldwide. Therefore, Fexco will leverage pre-existing infrastructure and integrations to seamlessly roll-out DCC.
In addition to the above, airlines will also benefit from the additional advantages provided by DCC for their customers:
- Enhanced customer experience
- Instant conversion to a familiar currency
- Up-to-date exchange rates
- The DCC amount is the amount charged to the cardholder’s card
- Increased customer service and localisation at point-of-purchase
- Simplifies business travellers’ expense claims
- Full transparency and disclosure of rate margin
DCC with Fexco
Airlines are continuously moving towards a retailer model but they should remember that they operate in a unique payment ecosystem with unique requirements. DCC is growing in prevalence within the airline industry but it is important that airlines approach DCC with a different mind-set than that of a retailer. Fexco has the experience and knowledge of the airline industry to understand how to implement a DCC solution that fits with an airline carrier’s operational processes so that their passengers have a positive payment experience.
Fexco pioneered DCC in 1996, and has been delivering the service to airlines for over ten years. We know the airline industry and we fully understand that no two airline payment ecosystems are the same. Therefore, Fexco does not offer an out-of-the-box, standard solution, but will work with the airline’s payment providers to design and build a DCC solution that meets the airline’s specific requirements and aligns with their payment strategy. If the airline prefers, Fexco can manage the DCC implementation and integration with any third party partners on your behalf. Fexco is committed to long-term relationships and will invest in the roll-out and on-going support of the DCC service.
For more on Fexco DCC for airlines
Fexco’s core competency is Treasury and Cash Management, we know that the world of currency conversion services, including DCC, can be daunting. We can arrange a call to go through the basics of DCC and key factors an airline should consider when choosing a currency conversion strategy.
Contact Fexco’s dedicated airline Sales Manager, Álvaro Diez, who has over ten years’ experience in the airline sector to discuss how Fexco’s DCC service can generate revenue and improve your passenger’s payment experience: