Foreign transaction fees: What they are and how to avoid them

Key takeaways:

• Cross-currency transactions and conversions often come with fees, typically around 1–3% of the transaction amount.

• These fees usually fall into three categories: currency conversion fees, dynamic currency conversion fees, and payment network fees on cards.

• Airwallex make it easy for you to manage these costs. With our multi-currency accounts and Corporate Cards, you can reduce these fees, keeping more of your money when sending or spending internationally.

These days, most businesses operate across borders in some way. Maybe you sell to overseas customers, use international software, or buy supplies from abroad. Either way, money is moving between countries – and those foreign transaction fees can add up fast, eating into your cash flow and margins.

Once you understand where these costs come from and how to reduce them, it becomes much easier to manage your finances and avoid unnecessary fees. Let’s walk through a few practical ways to save on overseas spending.

What is an international transaction fee?

An international, or foreign, transaction fee is what banks and payment providers charge when you make payments in another currency or through an overseas bank.

These fees usually range from 1% to 3% of the transfer amount: for example, HSBC Singapore charges about 1.5% in currency conversion plus up to 1% from card networks for transactions in foreign currencies¹.

Even though sending money abroad feels seamless, there’s a lot going on behind the scenes. Different countries and regions have their own rules for moving money, and banks need to coordinate with each other to get your payment from one account to another. Those costs are usually passed on to you as foreign transaction fees.

Here are some of the most common types of foreign transaction fees you might encounter:

1. Currency conversion fees

Currency conversion fees apply whenever you need to change your money from one currency to another – for example, sending USD to someone who receives EUR.

If you make a direct bank-to-bank transfer, such as via the SWIFT network, you’ll often face additional charges. While SWIFT is a reliable way to send money internationally, each intermediary bank your payment passes through may add its own fee, which can make the transfer more expensive.

2. Dynamic currency conversion (DCC) fees

Some businesses let you pay in your home currency – for example, MYR – even when the merchant operates in another country. This is called dynamic currency conversion (DCC), and it usually comes with extra fees.

While it might feel like you’re avoiding foreign transaction costs, a third party is still handling the currency conversion – and they’ll charge you for it. On top of that, the exchange rate you get is often much worse than the real interbank rate.

3. Credit card and payment network fees

When you pay internationally with a credit card or payment network, multiple parties are involved – your bank, the recipient’s bank, and the payment network itself. Each of them may add fees, plus additional flat-rate charges.

When do foreign transaction fees apply?

Foreign transaction fees don’t just show up when you’re travelling – they can affect many types of global business payments. You’ll commonly encounter foreign transaction fees when:

1. Paying overseas suppliers or contractors

If you send an international transfer from your domestic currency account to a supplier's account in a different currency, you'll almost always see a conversion fee.

2. Accepting payments from international customers

When you receive a payment in a foreign currency through your merchant account, your payment provider might charge a fee to convert it to your home currency before it hits your account.

3. Making online purchases from international vendors

Buying software subscriptions, digital services, or goods from a company based in another country triggers a foreign transaction fee – even if they show the price in your local currency.

4. Using a company card for international business travel

Any purchase you make overseas with a domestic company card will likely trigger fees from both the card network (like Visa or Mastercard) and your financial institution.

3 ways to avoid foreign transaction fees

International payments don’t have to translate into expensive fees. With a few small changes to how you manage money across borders, you can cut costs and simplify your workflow.

1. Hold multiple currencies to eliminate unnecessary conversions

If you work with overseas customers or suppliers but can only hold money in your home currency, you’re paying for more conversions than you realise. Every time money moves in or out of your account, FX fees quietly add up.

With a multi-currency account, you can keep funds in the currencies you receive and use them when you need to. For example, you might collect payments in USD, then use that same USD later to pay suppliers, cover ad spend, or settle SaaS subscriptions, without converting back and forth.

Compare that to a standard domestic account, where funds often get converted into your home currency first, then back again when you make international payments. That double conversion means extra fees and worse exchange rates, which can really eat into your margins over time.

2. Use a card with no foreign transaction fees

Holding multiple currencies, like what we discussed above, is only one part of the puzzle: the other is how you actually spend that money. Even if you already have USD or EUR in your account, a regular bank card often converts the payment back to your home currency first, then into the purchase currency again. That means you still end up paying FX fees.

A multi-currency business card solves this by letting you pay directly from your foreign currency balances. When you pay in USD, EUR, or GBP, the money comes from that same currency – no hidden conversions, and no extra fees in between.

If you don’t already have the right currency, the card converts it for you at competitive FX rates. Either way, you avoid the extra layers of fees that usually come with traditional cards.

Here’s what that looks like in practice:

• Spend from your existing balances: Pay in the same currency you hold.

• Keep track easily: See transactions across currencies in one place.

• Use it anywhere: One card for global expenses, whether it’s ads, SaaS tools, or team travel.

3. Use multi-currency cards when you travel

If you travel for business, a multi-currency card is usually the easiest and most cost-effective way to access your money abroad. These cards let you pay in local currency without triggering extra FX fees, and many also offer virtual card options so you can spend securely from anywhere.

ATMs can be expensive: they often charge withdrawal fees on top of conversion fees, and your bank may add its own charges. Using a card helps you avoid all that while giving you better rates than exchanging cash at airports or local kiosks.

You can still carry some cash if needed, but in most countries it’s far more convenient and safer to rely on a multi-currency card or global business account for your day-to-day expenses.

How to reduce FX fees with Airwallex

If your business regularly pays overseas suppliers or subscriptions, the simplest way to cut FX fees is to convert money less often. With an Airwallex Business Account, you can open multi-currency Global Accounts in minutes, hold funds in major currencies like USD, EUR, GBP and more, then pay out directly from those balances, instead of converting back and forth between MYR and foreign currencies for every payment.

Because Airwallex routes payments over local payment rails in 120+ countries, you can often avoid SWIFT fees on those routes. Combined with our competitive FX rates that help you save up to 80% on FX fees, you keep more of each payment instead of losing it to extra bank charges.

With one platform, you can:

• Receive and hold funds in 20+ currencies instead of converting every payment back to MYR.

• Send local transfers to 120+ countries with no SWIFT fees on those routes

• Issue multi-currency Corporate Cards for your team so overseas SaaS, ad spend, and travel are billed in the right currency, avoiding double conversions and extra card network fees.

Frequently asked questions (FAQs)

What is the typical foreign transaction fee percentage for business payments?

Most banks and payment providers charge 1% to 3% of the transaction amount for foreign business payments. This fee usually applies when you pay overseas suppliers, accept international customer payments, or make purchases in another currency. Some card networks also charge a separate international assessment fee on top of your bank’s fee.

Do I get charged foreign transaction fees for online international purchases?

Yes, even if an online store shows prices in your local currency, you can still be charged a foreign transaction fee. This usually happens when the merchant processes the payment through a bank or card network in another country. Fees typically range from 1% to 3% of the transaction, and some credit cards or payment networks may add a small cross-border assessment fee on top.

Can I avoid foreign transaction fees with a multi-currency business account?

Yes. A multi-currency business account, like an Airwallex Global Account, lets you hold and spend funds in the same currencies you receive, so you don’t have to convert back and forth. This means you can pay overseas suppliers, settle international invoices, or cover foreign subscriptions without triggering foreign transaction fees.

To get the most benefit, make sure you also use a multi-currency business card, which spends directly from your foreign currency balances instead of converting through your home currency.

Are foreign transaction fees tax-deductible for businesses?

Yes, foreign transaction fees can generally be claimed as a business expense when filing taxes with the Inland Revenue Board of Malaysia (LHDN). This includes fees from currency conversions, cross-border card payments, or international bank transfers that are incurred for business purposes.

Make sure to keep proper records, such as invoices and transaction statements, as LHDN may request documentation to support your claim.

Sources:

1. https://www.hsbc.com.sg/international/foreign-transaction-fee-using-your-card-abroad

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. If you would like to request an update, feel free to contact us at [email protected]. Airwallex (Malaysia) Sdn Bhd is licensed in Malaysia as a MSB Class B (remittance business only) licensee and is regulated by Bank Negara Malaysia (licence number 00318).