It's a complete scam. It's called "Direct Currency Conversion" and it's a essentially the payment processor and merchant hoping the consumer doesn't know what's going on.
Amex disallows on their network but Visa and Mastercard do not. Unfortunately, Amex also has forex fees on most of their cards.
It may be a scam for most cards, but I work for a company that does multi-currency cards that settle in the currency of your choice and our exchange rates are better than anything offered by anyone else in the card space. Just a bit more than interbank ForEX rates.
What does that have to do with DCC though? Maybe I'm missing something but that doesn't sound like it has anything to do with DCC. Any card with no forex fee is offering you a rate at just above the interbank rate if you avoid DCC.
Amex disallows on their network but Visa and Mastercard do not. Unfortunately, Amex also has forex fees on most of their cards.