Frequently Asked Questions
FAQs in this category
Q: What is DCC (Dynamic Currency Conversion)?
A: DCC is an abbreviation for Dynamic Currency Conversion; DCC is an industry term for the service that allows cardholders to pay in the currency of their credit card for goods or services priced in a currency other than their credit card currency: for example a Euro cardholder paying in Euro for a product that the Merchant has originally priced in US Dollars.
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Q: What is the benefit to the cardholder from DCC?
A: There are several benefits to the cardholder: firstly he or she gets ‘price certainty’, knowing that the amount they see on the payment page is the amount they will pay meaning no nasty surprises and the ability to reconcile their accounts at the point-of-purchase; secondly they will get a competitive rate on foreign exchange that will often better the rate provided by their credit card issuing bank. Lastly cardholders will not be subject to currency fluctuations that can occur over the period between the point of purchase and the conversion of the transaction by the cardholder’s issuing bank.
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Q: What is the benefit to the Merchant from DCC?
A: There are many benefits to the Merchant: offering customers the ability to pay for goods and services in their own currency has been shown to lead to a reduction in customer service queries / complaints about (a) customers’ desire to pay in the currency of their credit card and (b) situations where refunds paid back to the cardholder (where the pricing currency and the cardholder currency are different) are, due to foreign exchange rate fluctuations, less than the original price paid for the goods / services. The revenue stream provided by DCC also helps to subsidise operational costs which can be passed on to consumers in the form of lower prices.
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Q: What is Multicurrency pricing, why is it different from DCC, and which is better?
A: Multicurrency pricing determines pricing based on customers preferred currency typically selected by the customer from a drop-down list. Otherwise geo-location services (such as IP address recognition) determine the country where the customer is located and price based on that country’s domestic currency. However in situations where the customer is only visiting that country and has a credit card priced not in the currency of that country, this can lead to ‘double conversion’; i.e. the cardholder is converted once by the Merchant and then a second time by his or her issuing bank. DCC as described above is more intuitive and user-friendly. Continuum offers both services including a hybrid service that it terms ‘CPC’ meaning Cardholder Preferred Currency that negates the possibility of ‘double conversion’.
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Q: What is iPS (Intelligent Payment Switch)?
A: iPS is Continuum’s ‘Intelligent Payment Switch’ that intelligently routes transactions to the lowest point of cost for Merchants thereby making significant cost savings. This is particularly effective where the Merchant has a non-centralised or primary / secondary / tertiary acquiring bank policy in place.
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Q: What is fraud prevention?
A: Fraud prevention is the application of evaluation and verification software and best practice techniques that work to prevent transactions from being completed where the cardholder is, according to the fraud prevention applications, believed to be a fraudster or is ‘out-of-funds’ at the point of purchase. Continuum deploys a number of fraud prevention techniques including BIN blocking (i.e. blocking credit cards issued in those countries that have high incidences of fraud or, conversely, limiting the acceptance of credit cards to only those issued in the Merchant’s country or region of operations) and IP blocking (i.e. blocking bookings originating from a country that has a high level of fraud irrespective of the origin of the credit card being used for the transaction).
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Q: What is Interchange and how can Continuum reduce my Interchange exposure?
A: Interchange is the fee applied by the issuing bank to the acquiring bank for processing credit card transactions. Interchange fees vary depending on whether transactions are local or international: at the lowest end, transactions where the issuer and acquirer are in the same country are deemed Domestic Interchange, where they are in the same region they are deemed ‘Intra-regional’ (or Cross-border), and where they are outside of the region they are deemed ‘Inter-regional’. Rates also vary according to whether they are paper based, magnetic stripe, or electronic chip. Variations also come in to play depending on the merchant category code (MCC). The cards themselves also attract different rates depending on whether they are debit, credit, or commercial cards: in total there are over 125 different categories of Interchange. There is also significant difference between the Interchange fees that acquirers in some countries pay to issuers, when compared to other countries: it is not untypical to see differences of 800 per cent in the Interchange fee. Continuum can help to reduce Interchange rates by routing transactions such that they are processed by an acquirer ‘within region’ and where possible within country. This is dependent on the Merchant having trans-regional acquiring relationships: through the MiGS acquiring bank network Continuum can uniquely offer Merchants access to over 70 acquirers across multiple regions.
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Q: What is MSC and how can Continuum reduce my MSC?
A: MSC, Merchant Service Charge (also known as Merchant Discount Fee and Merchant Discount Rate), is the fee levied on Merchants by Acquiring Banks for acquiring credit card transactions. The MSC rate includes the Interchange fee.
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Q: How do I know Continuum is really giving me the best value possible?
A: Continuum is independent of any financial institution investment, ownership, or management. Continuum is a payments technology company that uses its technology to extricate better value from the payments chain for its clients by reducing payment costs and opening untapped new revenue streams. Our view is that if you are not operationally independent then you have an inherent conflict of interest; if you are owned or part owned by a financial institution you are compromised and conflicted; if you have an in-house foreign exchange or treasury dealing desk then you are compromised and conflicted; in short you can either serve your parent or in-house colleagues first or you can serve your clients first – Continuum serves its clients first and foremost guaranteed, simply because it is neither compromised nor conflicted.
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Q: Does Continuum hold funds receivable?
A: No. Continuum does not have access to your funds at anytime. The funds remain within your account at all times. If currency balances accrue then Continuum will work with one of its preferred independent acquiring banks or foreign exchange dealing houses to forward sell currency balances.
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Q: Does Continuum offer in-house currency dealing services, if not why not?
A: Continuum is a payments technology company. That’s what we know, that’s what we excel at. To offer currency dealing services you need to be a large scale financial operation that complies with all financial regulations, such as KYC (Know Your Customer) and AML (Anti-Money Laundering) and have sufficient volumes to guarantee best market prices. If you are not a large scale financial operation then either your service will be inferior or you will not be offering your customers best value pricing. This is why Continuum has built a network of acquiring and FX dealing partners that can give this commitment to service and value, and who dovetail perfectly with Continuum’s products and services. We are payments technology specialists, our partners are multicurrency specialists.
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Q: What about FX risk?
A: The FX risk is minimal assuming non-exotic currencies only are accepted; however to absolutely guarantee against adverse FX movements over the exposure period (typically 2 to 3 days) then we can offer, through our partners, protected FX rates that guarantee no adverse currency movement or FX risk.
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Q: What happens if I want to quickly switch off or on currency pairs?
A: Continuum’s payments platform is unique in that our solutions can be remotely managed by Continuum Operations Centre; if you want to disengage a currency pair it can be done in a matter of minutes; if you want to change the wording on the payment page for special offers or promotions we can handle it remotely and change it back again when the offer or promotion has expired without the need to amend coding, product, procedure or performance.
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Q: How are currencies settled; should this be done by my DCC provider or by an independent third party?
A: If your DCC provider is settling your currencies (on a non like-for-like basis) then they will erode – unnecessarily - your DCC profit margin. Chances are that your treasury department is already buying and selling currencies on a daily / weekly / monthly basis therefore they will be more than capable of settling DCC currencies; if you do not have an in-house treasury then you will certainly get better value from a specialist FX dealing house or acquiring bank that is buying and selling currencies in massive volumes and therefore better positioned to offer you best market rates. Additionally Continuum offers first class comprehensive Management Information that will handle reconciliation, revenue accounting, and cash management reporting.
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Q: What is MiGS?
A: MiGS (MasterCard Internet Gateway Service) is an integral part of the MasterCard product portfolio. MiGS is a complete payment solution for Merchants and Acquiring Banks that require a secure and more efficient way to process payments from customers across all acceptance channels for global credit cards and charge cards. The Continuum iPS will securely capture all relevant customer payment information and will, where applicable, redirect that payment information to the MiGS platform. MiGS will then communicate with the relevant issuing bank to seek authorisation from the issuing bank. MiGS will respond to the iPS platform with the appropriate status allowing Continuum to continue with the transaction process. Continuum employs a combination of direct-to-issuer authorisations with switch-to-acquirer authorisation.
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Q: What is Switch-to-Issuer (‘S2i’) and why is this of benefit to Merchants?
A: For international card schemes (MasterCard, Visa, Amex, Diners Club, JCB), Continuum / MiGS routes transactions directly from the Merchant into MasterCard’s global authorization network, BankNet. BankNet has reciprocal links into VisaNet, Amex, Diners and JCB. Authorisations are sent directly to the issuer via the associated network for authorisation. Once authorised, the transaction is passed back to Continuum and on for presentation to the cardholder. At the end of each business day (determined by the acquirer) Continuum / MiGS will generate a Draft Capture File (DCF) and send it to the Merchant’s acquirer via their existing MasterCard MIP interface. The Acquirer will then process the DCF for settlement with the appropriate card scheme.
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Thinking Big Baby
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