Foreign transaction fees and how to avoid them

Key takeaways:

• Foreign transaction fees are charged by your card issuer when payments are processed through foreign banks or involve currency conversion. They typically range from 1%-3% of the transaction amount.

• Typical rates include a currency conversion fee (around 1%) and an issuer fee from your card provider (about 2%).

• The best ways to cut rates include using no-foreign-transaction-fee cards, paying in local currency, and exploring fintech solutions for better exchange rates.

Foreign transaction fees can quickly eat into your margins, sometimes as much as 3% on every international payment. Paying a supplier in USD, booking overseas travel for your team, or settling SaaS subscriptions charged abroad can all trigger these small charges that add up fast.

Without the right partner, even routine cross-border expenses can snowball into unnecessary costs. That’s why understanding how these fees work, and how to avoid them, is essential for modern businesses.

Traditional banks typically charge up to 3% per international transaction, but newer solutions are changing the way global companies manage payments. Fortunately, there are ways to reduce or even eliminate these charges so you can keep more money in your business.

What is a foreign transaction fee?

A foreign transaction fee is a charge that financial institutions add when you make payments in foreign currencies or through overseas banks. This charge is usually between 1% and 3% of the amount.

What is an international transaction fee (intl txn fee)?

Some banks label their charges as an intl txn fee — short for international transaction fee. It’s simply another way of describing a foreign transaction fee. You may also see the term cross‑border fee used instead. All of these refer to the same type of charge applied when a payment is processed in a foreign currency or through an overseas bank.

Examples of foreign transaction fees

Foreign transaction fees appear in everyday consumer purchases and regular business activities. Here are some common examples:

• Booking international flights or accommodation for travel

• Shopping online from overseas retailers or marketplaces

• Paying for SaaS subscriptions or digital advertising billed in foreign currencies

• Settling invoices with overseas suppliers or contractors

For businesses engaged in eCommerce payment processing or other cross-border operations, these fees can accumulate quickly and eat into profit margins.

How are foreign transaction fees calculated?

Foreign transaction fees for card payments typically include:

• Network fee: Around 1% (charged by the card network such as Visa or Mastercard)

• Issuer fee: Around 2% (charged by your bank or card issuer)

• Total cost: Up to 3% of the transaction value

• ATM/overseas cash fees: Extra charges may apply when withdrawing money abroad

Understanding the structure of these fees, alongside related costs such as interchange fees, is key to managing international payments effectively.

Why foreign transaction fees matter for businesses

Foreign transaction fees may seem small at first glance, but for companies making frequent international payments they can add up quickly. A fee of just 2–3% on every cross‑border transaction can significantly impact cash flow and profitability. These costs affect activities like paying overseas suppliers, covering employee travel expenses, or managing SaaS subscriptions billed in another currency.

Traditional banks often charge the full 2–3% plus hidden FX markups, while modern fintech providers offer faster, more transparent, and cost‑effective alternatives. Choosing the right partner can help businesses reduce international transaction fees, improve margins, and manage global payments more efficiently.

How do foreign transaction fees work?

Foreign transaction fees vary depending on your bank or payment method. These fees combine a currency conversion fee (often around 1%) and an additional charge from your card issuer or bank (usually around 2%).

To understand how these fees affect your business, think about this example: When you buy something from another country for US$10,000, you'll pay a foreign transaction fee of up to 3% or up to US$300. This fee is made up of a network fee and an issuer fee.

For companies managing multiple overseas vendors, employees, and customers, these fees compound quickly:

• Monthly supplier payments: $50,000 × 3% = $1,500

• International customer refunds: $20,000 × 3% = $600

• Employee travel expenses: $10,000 × 3% = $300

Beyond these visible charges, businesses may encounter other hidden costs, such as FX markups on currency conversions. Additionally, it’s important to consider how long international bank transfers take and potential delayed bank transfers, as timing can also affect your overall costs and cash flow.

When are foreign transaction fees charged?

Foreign transaction fees are added whenever your card payment involves a foreign currency or is processed by an overseas bank. This can happen if you or your employees make purchases or cash withdrawals while travelling abroad, or when buying from overseas suppliers or paying for international services.

It’s not always clear when an international transaction fee will be added. A website may use a “.com.au” domain or display prices in AUD, but the payment could still be processed outside Australia.

To avoid paying extra fees when working with overseas suppliers, businesses can:

• Check if the payment will be processed locally or offshore

• Ask their bank if they can block or restrict international transactions on specific cards

How to know if you have been charged a foreign transaction fee

You’ll usually see foreign transaction fees listed as a separate line on your credit or debit card statement. The fee appears on the day the payment is processed, which may be one or two days after the actual purchase.

To avoid surprises, review your card’s terms and conditions before you spend internationally. That way you’ll know in advance if a foreign transaction fee will be applied to your purchases.

Other charges to look out for

When shopping with overseas retailers or using your card abroad, a few other charges may apply:

• Exchange rate markups: Banks often add a hidden margin on top of the exchange rate, increasing the overall cost. Comparing rates against the mid-market exchange rate can help you spot extra costs.

• International ATM withdrawal fees: Many cards charge when you withdraw cash abroad. Check if your bank has partner institutions or is part of a global ATM network, which may reduce or remove these fees.

• Dynamic Currency Conversion (DCC): ATMs or card terminals may offer to charge you in your home currency. Always choose the local currency to avoid extra conversion fees added by the processor.

• Credit card cash advance fees: Using a credit card to withdraw cash often triggers cash advance fees, currency conversion charges, and immediate interest – even if everyday purchases have a grace period.

How to avoid foreign transaction fees

Foreign transaction fees may seem inevitable, but there are ways to minimise or even eliminate them. You can use a multi-currency account, such as the Airwallex Business Account, to hold, receive, and pay in different currencies, as well as use multi-currency cards and convert cash before you travel abroad.

Foreign transaction fee-free cards

Some multi-currency cards, like the Airwallex Corporate Card, have no or low conversion costs. The key benefit is that the card draws directly from your Airwallex Global Account, so you can spend in different currencies without paying extra fees. If you don’t have the right currency available, Airwallex applies its competitive FX rates automatically, which helps keep costs lower than traditional bank cards.

Dynamic currency conversion (DCC)

Dynamic currency conversion (DCC) is when a card terminal or ATM offers to charge you in your home currency instead of the local one. When the option comes up at the Point of Sale, i might look convenient, but it usually comes with hidden markups and extra fees. Opting to pay in the local currency is cheaper in most cases and helps you avoid unnecessary international transaction fees.

Convert cash

For employees travelling abroad, converting cash at the destination can be a way to avoid foreign transaction fees. While this method may help sidestep card-based foreign transaction charges, it’s important to note that currency conversion at exchange kiosks or local banks often comes with less favourable rates.

Additionally, converting cash can be less convenient than using cards and may lead to higher overall costs than simply paying foreign transaction fees. While it’s generally more economical than opting for dynamic currency conversion (DCC).

Simplify global transactions with a multi-currency account

Managing international payments is often a headache for growing businesses. An Airwallex Business Account makes it simpler by letting you:

• Hold, receive, and pay in 60+ currencies

• Access local bank details in 60+ countries

• Settle like-for-like in 14+ major currencies without forced conversions

• Save up to 80% on FX fees compared to traditional banks

• Earn competitive returns on AUD and USD balances through Airwallex Yield

You can also use an international business debit card, like the Airwallex Corporate Card, to spend directly from your account. You’ll pay little or no foreign transaction fees, and benefit from market-leading FX rates when conversions are needed.

Together, these tools give you greater control over global money movement, helping your business cut costs and scale internationally with confidence.

Ready to take the next step? Explore how Airwallex can help you eliminate international transaction fees and simplify the way your business pays and gets paid worldwide.

Frequently asked questions about foreign transaction fees

Why am I charged a foreign transaction fee?

You may be charged a foreign transaction fee if a transaction is processed through a foreign bank or involves a currency conversion. These fees pay for the costs banks and credit card networks pay when processing international transactions. They include currency conversion fees based on the exchange rate and the risks involved. If your business uses a telegraphic transfer for international payments, these fees can also apply.

How much is a foreign transaction fee?

Foreign transaction fees typically range from 1%-3% of the transaction amount. This includes a currency conversion or network fee (around 1%) and an issuer fee from your card provider (around 2%).

How do I know if my card has a foreign transaction fee?

Your card’s terms and conditions should outline any foreign transaction fees. If you don't have your paperwork handy, contact your card issuer directly to confirm whether your card charges these fees.

Are foreign transaction fees the same as foreign exchange fees?

Not always. Foreign transaction fees are charged by your bank or card issuer, while foreign exchange fees are the markups added to the exchange rate itself. Both can apply on the same payment, which makes international transactions more expensive.

Can I get foreign transaction fees refunded?

In most cases, foreign transaction fees are non-refundable. However, if the fee was applied in error, or if a transaction was reversed, your bank may credit the fee back. It’s worth contacting your provider if you believe you’ve been wrongly charged.

Which cards don’t charge international transaction fees?

Some banks and fintech providers, including Airwallex, offer cards with no international transaction fees. These cards let you spend in multiple currencies without paying extra charges, making them ideal for businesses with global operations.

Do debit cards charge international transaction fees?

Yes. Many debit cards apply the same international transaction fees as credit cards, usually between 1%–3% of the purchase amount.

How can businesses avoid international transaction fees on SaaS and supplier payments?

Using a multi-currency account lets you pay suppliers or SaaS platforms in their local currency, which avoids double conversions and unnecessary fees.

Are international transaction fees tax deductible for businesses?

These fees are often considered business expenses, and may be deductible, but always confirm with your accountant or tax adviser.

Do PayPal and other payment platforms charge foreign transaction fees?

Yes. Platforms like PayPal typically charge both a cross-border fee and an FX margin on top of the standard exchange rate.

What happens if I pay in AUD overseas, will I still be charged an international transaction fee?

In most cases, yes. Even if you pay in AUD, if the payment is processed through an overseas bank, your card issuer may still add a foreign transaction fee.

***Note: This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations/warranties/guarantees regarding content accuracy, completeness, or currency.