Axis and Kotak Mahindra Bank Increase DCC Fees for Overseas Transactions

Axis Bank and Kotak Mahindra Bank are preparing to raise the costs associated with overseas card transactions by significantly increasing the Dynamic Currency Conversion (DCC) fees applicable to certain credit and debit cards. This new fee structure is set to take effect in August and aims to align the DCC charges more closely with the typical foreign currency markup that is usually applied to international card transactions. Dynamic Currency Conversion allows customers making purchases abroad to opt for payment in Indian rupees instead of the local currency of the country where the transaction occurs. In these cases, the overseas merchant or its payment processor is responsible for converting the transaction into rupees, rather than the issuing bank handling the conversion.

While the option to pay in rupees might seem convenient for travelers, it often comes with additional costs. This is primarily because the exchange rate used is determined by the merchant or the payment processor, which may not be as favorable as the rates offered by banks. Furthermore, banks may impose a separate DCC fee in addition to the applicable Goods and Services Tax (GST), making transactions in rupees potentially more expensive than paying in the local currency. According to the updated terms and conditions from Axis Bank, the DCC fee for several credit card types will rise from 1.5 percent to 3.5 percent, effective August 28, 2026. This increase will apply to credit cards such as MyZone, Select, Privilege, and Neo. However, premium credit cards like Magnus and Magnus for Burgundy will see a smaller increase, with the DCC fee adjusted to 2 percent from the previous 1.5 percent, while Olympus cardholders will face a fee of 1.8 percent.