Credit, Debit Card: For those who travel overseas or shop online using their debit or credit card on foreign websites, this update is crucial. Axis Bank and Kotak Mahindra Bank, two major private banks in the country, have decided to raise the fees for Dynamic Currency Conversion (DCC) on international card transactions. This change will likely lead to higher costs for making card payments abroad.

Summary of Changes

Axis Bank’s Updates:

– DCC charges on My Zone, Select, Privilege, and Neo credit cards have increased from 1.5% to 3.5%.
– Magnus and Magnus for Burgundy cards will now have a 2% charge.
– DCC charge on Olympus cards remains at 1.8%.
– The new charges will be applicable from August 28, 2026.

Kotak Mahindra’s Revision

– Previously, the DCC charge for debit card customers was 1% + GST.
– It has now been raised to 3.5% + GST.
– This adjustment will be effective from August 1, 2026.

Impact on Customers

If you were to spend Rs 1 lakh abroad, earlier you might have paid around Rs 1,000 (plus GST) as a DCC fee. With the new charges, you could end up paying up to Rs 3,500 (plus GST). This means the DCC fee alone could inflate your expenses by roughly Rs 2,500. When making international card payments abroad, it is advisable to opt for paying in the local currency whenever feasible. This approach can help avoid DCC charges in many instances and trim down the total expenditure.

Banks have not publicly disclosed the reasons for these changes. However, these increases bring DCC charges closer to the approximately 3.5 percent foreign-currency markup applied to most standard cards. An official familiar with the matter said these changes could help issuing banks recover card-network and cross-border processing costs, and generate more fee income from increased foreign travel, international e-commerce, and payments to digital merchants registered abroad.

Experts say that when customers choose DCC, the transaction is processed in Indian rupees, and the issuing bank doesn’t receive the traditional forex markup that would be available if payments were made in the merchant’s local currency. The increased DCC charge makes the economics of both payment options nearly identical and eliminates the pricing advantage previously enjoyed with rupee billing. This charge is separate from the foreign-currency markup that applies when customers pay in the merchant’s local currency. Under DCC, the exchange rate is typically determined by the merchant or its payment processor. In addition to this rate, the issuing bank’s DCC fee and GST may also apply.