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

Key takeaways:

• You'll typically pay up to 3–4%¹ in international transaction fees when you make cross-currency transactions and conversions.

• There are four key types of foreign transaction fees: currency conversion fees, dynamic currency conversion fees, credit card/payment network fees, and bank transfer fees. 

• With Airwallex Global Accounts and Corporate Cards, you can hold and spend in multiple currencies, significantly reducing or eliminating foreign transaction fees on your business spend.

Almost every business is now a global business. You might be selling to overseas customers, paying for international software, or sourcing supplies from abroad. As a result, foreign transaction (FX) fees often feel unavoidable, and these can quickly add up. 

The good news is that many of these costs can be reduced or avoided altogether. Once you understand where currency exchange fees and hidden charges come from, you can plan your finances more carefully and keep more of your money. In this guide, we’ll look at practical ways to save on overseas spending.

What is an international transaction fee?

Financial institutions charge international or foreign transaction fees when you make payments in another currency or send money through overseas banks. These bank charges go up to 3% or more¹ of the transfer amount.

Even though international payments can feel instant, a lot is happening in the background. Different countries have their own banking systems and regulations, so multiple institutions often need to coordinate to move money from one account to another. The cost of this extra processing is typically passed on to you in the form of foreign transaction fees.

3 ways to avoid foreign transaction fees

There are several ways to save on foreign business transactions – from lower-cost bank transfers to multi-currency wallets and business cards with reduced fees. Choosing the right international payment methods for your business needs can significantly reduce your costs.

Option 1: Hold multiple currencies and eliminate unnecessary conversions

If your business operates internationally but your account only supports one currency, you may be paying unnecessary exchange fees. Every time money comes in or goes out, it’s automatically converted, often at unfavourable rates.

A foreign currency account helps you avoid this by letting you hold and use multiple currencies directly. With Airwallex’s Global Accounts, you can hold funds in different currencies, and each account comes with local bank details – so it works as if you have a local account in that country.

This lets you collect payments from international customers in their preferred currency and spend those funds later without converting them back and forth. For example, if your business is based in Singapore but you receive USD from US customers, you can keep those funds in USD and use them to pay overseas suppliers, contractors, or software subscriptions priced in USD.

In contrast, a standard domestic bank account typically converts funds into your home currency as soon as they arrive, then converts them again when you make an overseas payment – resulting in fees on both sides of the transaction.

Option 2: Use a card with no foreign transaction fees

Modern cards designed for international business can reduce FX fees when you spend overseas. Airwallex Corporate Cards are multi-currency business Visa cards that let you pay for international expenses without FX fees, as long as you’re spending from your relevant currency balance.

If you don’t have enough of that currency, the card automatically converts funds at Airwallex’s competitive exchange rates.

Here's what you can do with Airwallex Corporate Cards:

• Pay directly in different currencies by holding and spending from the same currency balance, avoiding unnecessary conversions.

• View and track transactions across multiple currencies in a single account.

• Use the card globally, so you and your team can pay suppliers, subscriptions, and travel expenses wherever you are.

Option 3: Travel with multi-currency cards​​

If you travel for business, a multi-currency business card is usually the easiest and most cost-effective way to pay for expenses overseas. You can pay directly in the local currency and avoid the extra fees that often come with cash withdrawals.

​​It’s best to avoid using ATMs overseas whenever possible. International withdrawals often come with multiple charges, including currency conversion fees, overseas withdrawal fees, and ATM operator fees.

If you do need cash, convert it before you travel rather than withdrawing it overseas. Banks and money changers at home typically offer better rates than airport counters or foreign ATMs. That said, most business spending today is cashless, and carrying large amounts of cash isn’t practical or secure.

Types of foreign transaction fees

When you make payments across borders, you’ll usually run into four main types of fees: 

1. Currency conversion fees

2. Dynamic currency conversion fees

3. Credit card/payment network fees

4. Bank transfer/telegraphic fees

Each works a bit differently and can add up faster than you expect.

Currency conversion fees

Whenever you send money internationally and it needs to be converted into another currency, banks or payment providers usually charge a conversion fee. This is typically around 1–4% of the total amount. 

For example, HSBC charges 1.5% on foreign currency transactions made with its debit cards, and the Visa network imposes an additional charge of up to 1% on top of that, for a total of up to 2.5% in conversion fees².

If you’re sending money via a traditional bank transfer (like through the SWIFT network), these transfers can also come with extra fees from any banks the money passes through.

Dynamic currency conversion fees

Some businesses will offer to convert the payment for you at checkout, letting you pay in your home currency instead of the local one. For example, you could pay an overseas supplier in SGD instead of their local currency.

It might seem like you’re avoiding foreign transaction fees, but you’re actually paying a conversion fee to the third party handling it. Plus, the exchange rate they offer is usually less favourable than the real interbank rate, so you could end up spending more without realising it.

Credit card and payment network fees

These fees cover the cost of converting currency through all the parties involved – your bank, the card network (like Visa or Mastercard), and the merchant’s bank or payment processor.

Typically, this adds 1–3% to your payment amount, on top of any separate platform or interchange fees.

Bank transfer and telegraphic fees

If you send money via a traditional international bank transfer, Singapore banks often add a flat cable/handling fee on top of the FX mark‑up. These are typically in the S$10–S$35 range per transfer. For example, OCBC charges a $30 transfer fee per transaction³.

What foreign transaction fees mean for your business

If your business deals with cross-border transactions – like collecting payments from overseas customers, paying employees abroad, or buying supplies – you’ll face currency conversion costs and constantly changing exchange rates.

Exchange rates move all the time, influenced by factors such as:

• Inflation differences: If your country’s inflation is lower than your trading partners’, your currency can be stronger, giving you more purchasing power. Higher inflation abroad can make foreign goods more expensive.

• Interest rates: Higher rates attract foreign investment, which can push your currency up.

• Economic indicators: GDP growth, employment rates, and manufacturing output signal the overall health of an economy.

• Political instability: Uncertainty can weaken a currency and discourage foreign investors.

• Trade balances: Countries that export more than they import often see their currency strengthen.

How does this affects your business? When your home currency weakens, it costs more in your home currency to pay overseas suppliers or staff. For example, if 1 SGD buys fewer US dollars than before, your USD-denominated expenses rise. Holding funds in the currencies you need through a multi-currency account can help soften the impact.

Conversely, when your home currency strengthens, foreign costs drop, but your products may become more expensive for overseas buyers, making them less competitive in export markets. This could slow sales or reduce market share.

With this in mind, holding multiple currencies (and strategically choosing when to convert) lets you balance costs and competitiveness. 

How are foreign transaction fees calculated?

Most foreign transaction fees are percentage-based, so the fee grows with the size of your payment. Some banks, however, may charge flat fees instead.

In Singapore, foreign transaction fees average around 3.25% of the transacted amount⁴. For example, if you pay an international employee S$3,000, the fees could be over S$90.

The actual rate you pay depends on the type of foreign transaction fee charged and the rate your chosen institution charges.

Reduce foreign transaction fees with Airwallex

Foreign transaction fees don’t have to be a given when doing business internationally. By using multi-currency accounts, corporate cards with zero foreign transaction fees, and smart currency management, you can cut unnecessary conversion costs and keep your cash flow healthy.

For businesses operating across borders, Airwallex’s Global Accounts and Corporate Cards are designed to make this easy. Manage funds in 20+ currencies, pay international suppliers without extra conversion fees, and give your team global spending power – all from a single platform that helps you save money.

Frequently asked questions (FAQs)

How can I avoid foreign transaction fees on business spend?

Look for a financial platform that offers multi-currency accounts and corporate cards with zero foreign transaction fees. When you hold funds in the same currency as your payments, you eliminate costly conversions.

Is 3% a high foreign transaction fee?

Yes, 3% is at the higher end of the typical 1–3% range. While it may seem small per transaction, these fees add up quickly if you have regular cross-border spend, eating into your profit margins over time.

Do all corporate cards have foreign transaction fees?

No – while many traditional business credit cards charge these fees, modern solutions like Airwallex Corporate Cards eliminate them. When you hold the relevant currency in your account, you can spend with no additional fees.

What's the difference between foreign transaction fees on cards vs. wire transfers?

Card fees average 3.25% per transaction⁴, making them costly for frequent purchases. International wire transfers involve high flat fees plus FX mark-ups, though alternatives like Airwallex bypass SWIFT using local payment rails to reduce both cost and time.

Sources:

1. https://www.dbs.com.sg/personal/support/card-charges-and-fees-overseas-transaction-fees.html

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

3. https://www.ocbc.com/business-banking/outward-telegraphic-transfer 

4. https://www.dbs.com.sg/personal/support/card-charges-and-fees-overseas-transaction-fees.html

This publication does not constitute legal, tax, or professional advice from Airwallex, nor does it 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 (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.