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. They typically range from 1% to 3% of the transaction amount.

• Overseas transactions can also incur currency conversion fees and exchange rate markups, on top of foreign transaction fees charged by your bank.

• The best ways to cut rates include using cards with no international transaction fees, avoiding direct currency conversion, and paying for purchases in cash using the local currency.

Foreign transaction fees can quickly eat into your margins, sometimes by 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. This guide will explain everything you need to know to avoid international transaction fees.

What is a foreign transaction fee?

A foreign transaction fee is a charge that financial institutions add when processing a payment through an overseas bank. For example, if you’re travelling abroad and make a purchase with your credit card, a foreign transaction fee will apply.

You can also face foreign transaction fees when you make an online purchase from a business in another country, such as an overseas supplier. Foreign transaction fees can apply even if a site has a .au domain and shows pricing in AUD – what matters is whether the company uses a payment processor outside Australia.

Foreign transaction fees are typically between 1% and 3% of the transaction amount. They aren’t the same as interchange fees, which apply when your business accepts card payments from customers.

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. These all refer to the same type of charge applied when a payment is processed in a foreign currency or through an overseas bank.

How do international transaction fees work?

Foreign transaction fees consist of two parts: a network fee and an issuer fee. The former is charged by the card network, like Visa or Mastercard, and is usually around 1%. The latter is charged by your bank and is typically around 2%.

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.

Currency conversion fees

Importantly, foreign transaction fees depend only on where a transaction is processed, not on the currency used. If your transaction involves converting currency – for example, from AUD to USD – you could face additional charges for currency conversion.

Many traditional banks hide currency conversion charges by marking up the exchange rate for your transaction. For example, if you pay for a purchase in USD, your bank might convert USD to AUD at a rate 2–3% higher than the mid-market exchange rate. This can essentially double the cost of an international transaction.

On top of that, you could pay a specific currency conversion fee if you use dynamic currency conversion (DCC). DCC happens when a card terminal or ATM offers to charge you in your home currency instead of the local currency. 

This might look convenient and eliminates the need for your bank to convert currency for you. However, DCC providers usually charge an extra currency conversion fee and mark up exchange rates more steeply than many banks, so using DCC can increase your total transaction cost even more.

Why international transaction fees matter for businesses

Foreign transaction fees may seem small, but for companies making regular international payments, they add up fast. A fee of just 2–3% on every cross‑border transaction can reduce cash flow and profitability, whether you’re paying overseas suppliers, covering employee travel, or managing SaaS subscriptions billed in another currency. For example, a US$10,000 payment can incur up to US$300 in fees. 

Across multiple vendors, employees, and customers, these costs compound quickly:

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

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

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

That’s before any currency conversion fees or exchange rate markups, which can further push costs up.

It’s also important to consider how long international bank transfers take. Delayed transfers can disrupt your cash flow and hold up essential deliveries.

Examples of international  transaction fees

Let’s take a look at the international transaction fees you can expect to pay at two major Aussie banks.

Commonwealth Bank

Commonwealth Bank charges international transaction fees whenever you make a purchase or withdraw cash overseas. 

• International card payments: 3.5%

• ATM withdrawals: A$2 for ASB Bank (a subsidiary of Commonwealth Bank) ATMs in New Zealand or Commonwealth Bank ATMs outside Australia; A$5 plus 3.5% of the transaction for all other overseas withdrawals

National Australia Bank

National Australia Bank (NAB) also charges international transaction fees for overseas purchases or cash withdrawals outside Australia.

• International card payments: 3.5% (certain cards offer reduced fees)

• ATM withdrawals: A$5

3 ways to avoid international transaction fees

Foreign transaction fees may seem inevitable, but you can often reduce or even avoid them. Here are three ways to do it. 

Use cards with no international transaction fees

Some multi-currency cards, like the Airwallex Corporate Card, have no foreign transaction fees. Even better, the Airwallex Corporate Card significantly reduces currency conversion fees since it draws funds directly from your Airwallex Global Account. So, you can spend in different currencies without conversion. If you don’t have the right currency available, Airwallex applies its competitive FX rates automatically, helping keep costs lower than traditional bank cards.

Avoid dynamic currency conversion

Dynamic currency conversion (DCC) seems convenient because it lets you pay in your own currency rather than the local one. But it can be very expensive – DCC involves an international transaction fee, a currency conversion fee, and an exchange rate markup. You’ll avoid the currency conversion fee and get a better exchange rate if you decline DCC and pay for purchases in the local currency.

Get cash before you travel

You can avoid foreign transaction fees on your credit or debit card altogether by paying in cash when travelling abroad. Just make sure you get cash in your destination’s currency before you arrive. Exchange kiosks at airports have very high exchange rate markups and fees, and most banks charge high fees for cash withdrawals from international ATMs.

If you do need to get cash after arriving in another country, check whether your bank has any local partners. Some cards offer a limited number of fee-free international ATM withdrawals through select partner banks.

Unfortunately, using cash isn’t an option if you want to avoid international transaction fees for online purchases.

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 70+ currencies

• Access local bank details in 21+ countries

• Settle like-for-like in 20+ 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 international 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 cover the costs banks and credit card networks incur when processing international transactions. They include currency conversion fees based on the exchange rate and the risks involved. 

Foreign transaction fees aren’t limited to card payments. They can also apply if your business uses a telegraphic transfer for international payments.

How much is an international transaction fee?

Foreign transaction fees typically range from 1% to 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 international 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 to the same payment, which makes international transactions more expensive.

How do I avoid currency conversion fees?

The easiest way to avoid foreign currency conversion fees is to pay for purchases in the local currency rather than use a direct currency conversion service. If a point-of-sale or online checkout asks you what currency you want to pay in, use the business’s local currency rather than AUD.

Can I get international transaction fees refunded?

In most cases, a foreign transaction fee is non-refundable, but your bank may return it if the fee was applied in error or if the payment was reversed. 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 operating worldwide.

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.

What are the best ways to manage multi-currency card spend?

If you're using a multi-currency card, choose one that lets you pay directly from the balance in a linked foreign currency in a linked account. This helps you avoid unnecessary FX conversion fees. 

You should also check the multi-currency card and linked account provide an easy way to check balances before spending and let you move funds easily between currencies. Features such as spend controls, real-time monitoring, and accounting integrations help your business manage multi-currency spending across regions.

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.

This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.