Foreign transaction fees and how to avoid them

Key takeaways

• Foreign transaction fees are charged when payments are processed through overseas banks and usually range from 1% to 3.5% of the transaction amount.

• On top of the foreign transaction fee, you may also face currency conversion fees and exchange rate markups which can effectively double the total cost of an international payment.

• You can reduce or avoid these fees by using a card with 0% foreign transaction fees, like the Airwallex Corporate Card, which draws directly from your multi-currency Airwallex account.

Foreign transaction fees can eat directly into your margins, sometimes by as much as 3.5% on every international payment. Whether you're paying a supplier in USD, booking overseas travel for your team, or settling SaaS subscriptions charged abroad, these small charges can add up quickly.

Below, we'll break down how foreign transaction fees work, when they apply, what major Australian banks charge, and how you can reduce or avoid them.

What is a foreign transaction fee?

A foreign transaction fee is a charge your bank or card provider adds when a payment is processed through an overseas bank. So if you're travelling abroad and make a purchase with your credit card, for example, a foreign transaction fee will apply.

You can also be charged foreign transaction fees when you buy something online from a business in another country, like an overseas supplier. These 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.

These fees usually sit between 1% and 3.5% of the transaction amount.² 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.

Now that you know what triggers these fees, here's how they're worked out.

How do foreign transaction fees work?

Foreign transaction fees have two parts: a network fee and an issuer fee. The network fee is charged by the card network, Visa or Mastercard, and it's usually around 1%. The issuer fee comes from your bank and typically makes up the remaining 2%, bringing the combined total to around 3%.

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

Currency conversion fees

Foreign transaction fees depend 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 also be charged for currency conversion, plus face foreign exchange risk from changing rates.

Traditional banks may include currency conversion charges in the exchange rate they give you for the transaction. If you pay for a purchase in USD, your bank might convert USD to AUD at a rate 3–5% higher than the mid-market exchange rate. So the cost of an international transaction can basically end up being doubled.

Dynamic currency conversion (DCC)

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

That might seem handy, and it means your bank doesn't need to convert the currency for you. But DCC providers usually charge an extra currency conversion fee and mark up exchange rates more heavily than many banks. So using DCC can push your total transaction cost even higher.

So when do these fees show up?

When you're charged a foreign transaction fee

Foreign transaction fees can apply in several common situations. If you know when they're triggered, it's much easier to plan ahead and avoid extra costs.

Travelling overseas

Any card payment you make whilst abroad, whether that's at a restaurant, hotel, or shop, will usually incur a foreign transaction fee because the payment is processed through a local bank. ATM withdrawals work the same way. You buy a coffee in Tokyo with your Australian debit card, and your bank adds a foreign transaction fee because the payment goes through a Japanese bank.

Shopping online from overseas merchants

You don't need to leave Australia to trigger these fees. If you buy from a website that processes payments overseas, you'll probably be charged a foreign transaction fee, even if the site shows AUD pricing or has a .au domain. Buying software from a US-based SaaS provider, for example, often means the payment is processed through American banks.

Paying overseas suppliers or subscriptions

For businesses, regular payments to overseas suppliers or recurring subscriptions billed in foreign currency are common fee triggers, including Google, Facebook, and LinkedIn ad spend. Every invoice you settle through an international payment processor can bring both foreign transaction fees and currency conversion costs.

Foreign transaction fees at major Australian banks

Let's look at what three major Australian banks charge for international transactions.

Those percentages might not look like much on a single purchase. But once you look at the full scope of what Australian banks charge for international payments, the costs can build up fast.

Why foreign transaction fees matter for businesses

Foreign transaction fees can seem minor at first, but for companies making regular international payments, they build up quickly. A fee of just 2–3% on every cross-border transaction can cut into cash flow and profitability, whether you're paying overseas suppliers, covering employee travel, or managing SaaS subscriptions billed in another currency. A US$10,000 payment can incur up to US$300 in fees.

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

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

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

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

And that's before any currency conversion fees or exchange rate markups, which can drive costs even higher.

Transfer speed matters as well. Delayed transfers can disrupt your cash flow and hold up essential deliveries. Knowing how long international bank transfers take helps you plan around those delays.

Four ways to avoid foreign transaction fees

Foreign transaction fees might seem unavoidable, but you can often reduce them or avoid them altogether. Here are four ways to do that.

Use cards with no foreign transaction fees

Some multi-currency cards, like the Airwallex Corporate Card, charge 0% foreign transaction fees. Better still, the Airwallex Corporate Card can significantly reduce currency conversion fees because it draws funds directly from your Airwallex Global Account. You can spend in different currencies without converting. If you don't have the right currency available, Airwallex can draw from your home currency using the interbank FX rate with a transparent fee.

Avoid dynamic currency conversion

Dynamic currency conversion (DCC) can seem convenient because it lets you pay in your own currency instead of the local one. But it can be very expensive. DCC can involve 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 in the local currency instead.

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 tend to 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.

Pay suppliers and subscriptions in local currency

For businesses that need to make regular international payments online, a multi-currency account can cut these costs at the source. If you're paying a US-based SaaS provider US$5,000 per month, holding USD in a multi-currency account lets you pay directly without triggering a foreign transaction fee or conversion markup. That means you avoid the double hit of fees on both the transaction and the currency exchange.

How Airwallex helps you cut foreign transaction fees

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

• Access local bank details in 20+ countries and receive funds from 70+ countries to operate globally. Receive payments like a local business in major markets and keep funds in the currencies you need without forced conversions. 

• Settle like-for-like in 20+ major currencies. Pay suppliers in their currency without double conversions.

• Save up to 80% on FX fees compared to traditional banks. Competitive rates mean more of your money goes where it should.

• Earn competitive returns on AUD and USD balances through Airwallex Yield. Put idle funds to work while you hold them.

You can also use an international business debit card, like the Airwallex Corporate Card to spend directly from your account. You'll pay 0% foreign transaction fees, and market-leading FX rates when conversions are needed.

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

Open a free Airwallex account to start saving on international payments.

Frequently asked questions

How much is a foreign transaction fee?

Foreign transaction fees can range from 1% to 3.5% of the transaction amount. That includes a network fee from Visa or Mastercard and an issuer fee from your card provider.

Is 3% a high foreign transaction fee?

Yes, 3% is at the top end of the standard range. Some providers charge less, and some charge nothing at all. Keep in mind that currency conversion markups can push the total cost even higher, so the headline fee doesn't always show the full picture.

How do I avoid foreign transaction fees in Australia?

Use a card that charges 0% foreign transaction fees, like the Airwallex Corporate Card. You can also decline dynamic currency conversion when it's offered and pay in the local currency instead of AUD.

Do debit cards charge foreign transaction fees?

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

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 cost of routing payments through foreign networks and converting currencies. Foreign transaction fees aren't limited to card payments. They can also apply if your business uses a telegraphic transfer for international payments.

Sources

1. https://www.commbank.com.au/content/dam/commbank/business/pds/003-840-personal-liability-card-fees.pdf 

2. https://www.commbank.com.au/business/bank-accounts/business-visa-debit-card.html 

3. https://www.nab.com.au/important-information/business/banking-fees-charges#section-3 

4. https://www.nab.com.au/important-information/business/banking-fees-charges#1-nab-business-visa-debit-card-fees 

5. https://www.westpac.com.au/business-banking/credit-cards/low-rate-card/ 

6. https://www.anz.com.au/content/dam/anzcomau/pdf/commercial-cards-anz-business-one-fees-and-charges.pdf 

7. https://www.anz.com.au/content/dam/anzcomau/documents/pdf/transaction-accounts-fees-charges.pdf? 

8. https://www.westpac.com.au/business-banking/bank-accounts/debit-mastercard/

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.