Axis Bank and Kotak Mahindra Bank are increasing Dynamic Currency Conversion (DCC) charges on select overseas card transactions, making it more expensive for customers who choose to pay in Indian rupees while shopping abroad or on international websites. The revised charges, which take effect from August 1 for Kotak Mahindra Bank debit cards and August 28 for select Axis Bank credit cards, are part of the banks’ updated card fee structures.
The move comes as banks continue to fine-tune their card pricing strategies amid rising cross-border transaction volumes and foreign exchange processing costs. Customers using cards internationally will need to pay closer attention to the payment currency offered by merchants, as accepting Dynamic Currency Conversion can significantly increase the overall cost of a transaction.
What Is Changing?
Both banks are sharply increasing their Dynamic Currency Conversion (DCC) charges, though the changes apply to different card categories.
Revised DCC Charges
| Bank | Card Type | Current Charge | Revised Charge | Effective Date |
|---|---|---|---|---|
| Axis Bank | Select Credit Cards | 1.5% | 3.5%* | August 28, 2026 |
| Kotak Mahindra Bank | Debit Cards | 1% + GST | 3.5% + GST | August 1, 2026 |
*Premium Axis cards such as Magnus and Magnus for Burgundy will see the DCC charge increase to 2%, while Olympus cardholders will pay 1.8%, reflecting differentiated pricing for premium products.
Which Axis Bank Cards Are Affected?
Axis Bank has revised DCC charges for several popular credit cards.
Affected cards include:
- MyZone Credit Card
- Select Credit Card
- Privilege Credit Card
- Neo Credit Card
Premium cards will have lower revised rates than standard cards:
| Premium Card | New DCC Charge |
|---|---|
| Magnus | 2% |
| Magnus for Burgundy | 2% |
| Olympus | 1.8% |
What Is Dynamic Currency Conversion (DCC)?
Dynamic Currency Conversion is a payment option offered by overseas merchants, ATMs, or online retailers that allows customers to pay in Indian rupees (INR) instead of the local currency.
Although paying in rupees may appear convenient, DCC often results in higher costs because:
- The exchange rate is determined by the merchant or payment processor rather than the card network.
- Banks levy an additional DCC fee.
- GST is applicable on the DCC charge.
- Customers may effectively pay both an unfavorable exchange rate and additional processing charges.
DCC vs Paying in Local Currency
| Payment Option | Cost Impact |
|---|---|
| Pay in Local Currency | Generally uses Visa/Mastercard exchange rate with the applicable forex markup |
| Accept Dynamic Currency Conversion | Merchant-set exchange rate plus DCC fee and applicable taxes, making transactions more expensive in many cases |
Who Will Be Affected?
The revised charges primarily affect customers who:
- Travel internationally.
- Shop on overseas websites.
- Make payments at foreign merchants.
- Withdraw cash abroad where DCC is offered.
- Choose to pay in Indian rupees instead of the local currency.
Customers who always select the local currency during international transactions generally avoid DCC charges, although the normal foreign currency markup applicable to their card will still apply.
How Customers Can Reduce Overseas Transaction Costs
To minimize additional charges while using cards internationally, customers should:
- Always choose the local currency instead of Indian rupees whenever prompted.
- Compare the foreign exchange markup applicable to different cards before travelling.
- Consider using dedicated forex cards if making frequent international payments.
- Review updated card fee schedules issued by their bank before overseas travel.
Looking Ahead
The decision by Axis Bank and Kotak Mahindra Bank to raise Dynamic Currency Conversion charges reflects a broader trend of banks revising card pricing structures as cross-border payment volumes grow. While the changes directly affect only transactions where customers opt for DCC, they underscore the importance of understanding overseas payment options before travelling or shopping internationally.
Looking ahead, international card users are likely to become more selective about payment methods as banks continue to adjust fees and reward structures. Choosing to pay in the local currency rather than Indian rupees remains one of the simplest ways to avoid unnecessary DCC charges and reduce the overall cost of overseas transactions.
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