Non-sterling transaction fees: What they are, and how to avoid them

Key takeaways

• Non-sterling transaction fees (also called foreign transaction fees) typically cost 1-3% of the transaction amount when UK card holders spend in currencies other than pounds sterling

• UK banks charge these fees on credit card purchases abroad, cash withdrawals from foreign ATMs, and online payments to international websites in non-GBP currencies

• Airwallex Borderless Cards eliminate non-sterling transaction fees by allowing you to hold and spend in 20+ currencies, saving UK businesses up to 3% on every international payment

Every time you use your UK debit card or credit card abroad, withdraw cash from a foreign ATM, or pay an international supplier in dollars or euros, hidden charges can significantly reduce your available funds. These charges—commonly labelled as "non-sterling transaction fees" on UK bank statements—quickly accumulate for businesses managing international operations.

For UK companies with overseas suppliers, international customers, or travelling employees, these fees represent a substantial operational cost. Without proper management, routine business expenses in foreign currencies can drain thousands of pounds annually from your bottom line.

This guide explains non-sterling transaction fees in detail, shows you exactly how UK banks calculate these charges, and reveals practical strategies for reducing or eliminating them entirely.

What is a non-sterling transaction fee?

A non-sterling transaction fee is a charge applied by UK banks and card issuers when you make payments in currencies other than pounds sterling or through overseas payment networks. These fees typically range from 1% to 3% of the transaction amount.

UK card providers commonly label this charge as a "non-sterling transaction fee" on statements and banking apps, though some banks use alternative terms like "foreign currency transaction fee" or "overseas payment charge."

These fees appear on everyday business activities:

• Paying for digital advertising on US platforms

• Booking flights from international carriers

• Purchasing inventory from European suppliers

• Withdrawing cash from ATMs while travelling abroad

• Subscribing to overseas software services

• Paying international contractors or freelancers

The fee structure consists of two main components when using credit cards or debit cards:

Network fee: ~1% (charged by Visa or Mastercard card networks)

Issuer fee: ~2% (charged by your UK bank or card issuer)

Total: Up to 3% of transaction value

For a £10,000 payment to an overseas supplier, you could pay up to £300 in non-sterling transaction fees alone. For businesses making frequent international transactions, these costs compound rapidly, significantly impacting profitability.

Non-sterling transaction fee vs foreign transaction fee

Non-sterling transaction fees and foreign transaction fees are effectively the same charge—UK banks simply use different terminology on statements and in banking apps.

Why UK banks use "non-sterling" terminology:

The term "non-sterling transaction fee" precisely describes what triggers the charge: any transaction not in pounds sterling. This includes payments in euros, dollars, yen, or any other currency, regardless of where the transaction occurs.

UK card providers prefer this terminology because it's clearer for customers. Your bank statement will typically show "non-sterling transaction fee" or "non-sterling purchase fee" when you spend in foreign currencies.

How the fees are calculated:

Both terms describe identical fees calculated the same way:

• Percentage-based charge on the transaction amount (usually 2.5-3% total)

• Combination of card network fees (Visa/Mastercard) and bank issuer fees

• Applied automatically when the purchase currency differs from GBP

Whether your Barclays statement shows "non-sterling transaction fee," your NatWest app displays "foreign currency fee," or your HSBC card charges a "non-GBP transaction fee," these all refer to the same cost structure.

How do non-sterling transaction fees work?

Non-sterling transaction fees combine multiple charges that UK banks apply when you spend in foreign currencies. Understanding the breakdown helps identify where costs accumulate.

Standard fee structure:

Most UK banks charge between 2.5% and 3% total, split into:

• Currency conversion fee: ~1% (covers the cost of exchanging GBP to the foreign currency)

• Additional issuer fee: ~1.5-2% (charged by your bank as an administrative fee)

Example calculation:

You purchase £5,000 worth of inventory from a German supplier priced in euros:

• Base purchase: £5,000

• Currency conversion fee (1%): £50

• Bank issuer fee (2%): £100

• Total non-sterling transaction fee: £150

• Total cost: £5,150

For businesses managing significant international expenses, these fees compound quickly:

Note: Figures represent typical costs for UK businesses with regular international payments. Actual fees vary by bank and card provider.

Beyond these direct charges, businesses encounter additional hidden costs including FX markups embedded in exchange rates and delayed settlement affecting cash flow.

How do non-sterling transaction fees impact UK business owners?

For individual travellers, non-sterling transaction fees represent an inconvenience. For UK businesses operating internationally, these fees can fundamentally impact profitability.

The conversion trap:

Many UK businesses fall into what we call the "conversion trap"—paying currency conversion fees multiple times on the same money. Here's how it happens:

Scenario: Your UK company sells to US customers and pays Vietnamese suppliers (who accept USD)

Step 1: US customer pays you in dollars

• Your payment processor (Visa/Mastercard/Stripe) auto-converts USD to GBP

• First conversion fee: Up to 3%

Step 2: You need to pay Vietnamese supplier in USD

• You must convert your GBP back to USD

• Second conversion fee: Up to 3%

Total cost: 6% in currency conversion fees on the same revenue, plus the FX margin markup both times.

For a UK eCommerce business processing £100,000 monthly in international sales and supplier payments, this conversion trap costs approximately £6,000 monthly or £72,000 annually in completely avoidable fees.

Common UK bank non-sterling transaction fees

Different UK banks charge varying rates for non-sterling transactions. Understanding your current provider's fees helps calculate potential savings:

Major UK banks (typical rates):

• Barclays: 2.99% non-sterling transaction fee

• NatWest: 2.99% non-sterling purchase fee

• HSBC: 2.75% foreign transaction fee

• Lloyds: 2.99% non-sterling transaction fee

• Santander: 2.75% non-sterling transaction fee

• Halifax: 2.99% non-sterling transaction fee

• Nationwide: 2.5% non-sterling transaction fee (FlexPlus account: £0)

Premium account exceptions:

Some UK banks waive non-sterling transaction fees for premium account holders:

• NatWest Reward Platinum: £0 non-sterling transaction fee

• RBS Reward Platinum: £0 non-sterling transaction fee

• Nationwide FlexPlus: £0 non-sterling transaction fee (£13 monthly fee applies)

However, premium accounts typically charge monthly fees (£10-£15) that may not justify the saving for businesses with moderate international spending.

Hidden costs to watch out for when paying in non-sterling currencies

Beyond the visible non-sterling transaction fee on your bank statement, UK businesses face several additional hidden costs when making international payments.

FX markups hidden in exchange rates

UK banks don't disclose their exchange rate markups prominently. When you pay in euros or dollars, your bank applies its own exchange rate—typically 2-4% worse than the mid-market rate.

Example: Mid-market rate shows £1.00 = €1.16. Your bank's rate: £1.00 = €1.12. This 3.4% difference is an additional hidden cost on top of the stated non-sterling transaction fee.

Dynamic Currency Conversion (DCC)

When spending abroad, card machines often ask: "Pay in GBP or local currency?" This is Dynamic Currency Conversion—a trap that adds 4-7% in extra fees.

Always refuse DCC and pay in the local currency. The conversion happens through your UK bank's standard non-sterling transaction fee (2.5-3%) rather than the merchant's inflated DCC rate (5-8%).

Cash withdrawal fees from foreign ATMs

Withdrawing cash abroad triggers multiple fees:

• Non-sterling ATM withdrawal fee: 2.5-3% from your UK bank

• Cash withdrawal fee: £1.50-£2.50 per transaction from your bank

• Foreign ATM operator fee: Variable, often €3-€5

• Unfavourable exchange rate: Additional 2-4% markup

Total cost: 6-10% of the withdrawal amount plus fixed fees.

Multiple conversions across accounts

Businesses using traditional business accounts face conversion fees every time money moves:

• Receiving international payments: Conversion to GBP (up to 3%)

• Paying international suppliers: Conversion from GBP (up to 3%)

• Currency exchange for multi-currency operations: Each conversion (2-3%)

These compounding conversions make multi-currency operations prohibitively expensive with traditional UK banks.

How to avoid non-sterling transaction fees

Eliminating or significantly reducing non-sterling transaction fees requires strategic payment method choices and banking arrangements.

Use cards with no non-sterling transaction fees

Several UK providers offer cards without non-sterling transaction fees:

• Specialist travel credit cards (often with annual fees)

• Premium bank accounts (with monthly charges)

• Multi-currency business debit cards (like Airwallex Borderless Card)

For frequent international spending, savings from eliminated fees quickly exceed any account or card fees.

Always decline Dynamic Currency Conversion

When paying abroad via card machine or online checkout, reject any offer to "pay in GBP" or "see the price in pounds sterling." This DCC costs 4-7% compared to your bank's standard 2.5-3% non-sterling transaction fee.

The counter-intuitive rule: Always pay in the local currency for better rates.

Use multi-currency business accounts

Modern multi-currency accounts let you:

• Hold balances in euros, dollars, and other currencies

• Pay suppliers directly from foreign currency balances

• Receive international payments without forced conversion

• Eliminate repeated conversion fees

When you maintain EUR and USD balances, payments in those currencies incur no conversion fees.

Choose wire transfers for large payments

For substantial international payments (£10,000+), wire transfers often cost less than card payments:

• Card payment: 3% of transaction amount (£300 on £10,000)

• Wire transfer: Fixed fee £15-£25 plus smaller FX margin

However, wire transfers take longer and require more administrative effort than card payments.

Optimise timing of currency conversions

If you must convert currencies, strategic timing reduces costs:

• Monitor exchange rates and convert when favourable

• Batch conversions to reduce per-transaction overhead

• Use specialist FX providers for large conversions (better rates than banks)

Do UK banks charge non-sterling transaction fees on all international payments?

Not all international payments trigger non-sterling transaction fees. Understanding the triggers helps avoid unnecessary charges.

What triggers non-sterling transaction fees:

✓ Payments in currencies other than pounds sterling

✓ Purchases from international websites (even if priced in GBP but processed overseas)

✓ Cash withdrawals from foreign ATMs

✓ International money transfers in foreign currencies

✓ Subscription services billed in foreign currencies (Netflix US, Adobe, etc.)

What doesn't trigger non-sterling transaction fees:

✗ GBP payments to UK merchants

✗ Payments within the UK regardless of merchant origin

✗ Euro payments processed through SEPA when receiving (some accounts)

✗ Premium account holders with fee waivers

Special cases:

Some transactions appear domestic but trigger fees because they process through foreign banks. Online purchases from international retailers often fall into this category, even when priced in GBP.

Benefits of multi-currency cards for UK businesses

Multi-currency corporate cards transform how UK businesses manage international payments, offering substantial advantages over traditional business credit cards and debit cards.

Eliminate unnecessary currency conversion

Multi-currency cards link to accounts holding multiple currencies. When you spend euros from your EUR balance or dollars from your USD balance, no conversion occurs—meaning zero conversion fees.

Benefits:

• No 2.5-3% non-sterling transaction fee on supported currencies

• Hold revenue in the currency you earn it

• Pay suppliers in their preferred currency without conversion

• Plan currency conversions strategically rather than accepting automatic rates

Increased transparency over business expenses

Centralise all foreign currency spending through one platform:

• Consolidated view of spending across all currencies

• Real-time expense tracking and categorisation

• Simplified accounting and financial reporting

• Digital receipts and automatic expense submission

This visibility enables accurate forecasting and budgeting for international operations.

Global acceptance with Visa and Mastercard networks

Multi-currency business cards work everywhere Visa or Mastercard is accepted:

• 200+ countries and territories

• Millions of merchants worldwide

• Online and in-person payments

• Cash machine (ATM) withdrawals globally

Your team spends freely without worrying about card acceptance or carrying multiple payment methods.

Enhanced security and spending controls

Modern multi-currency cards offer superior security features:

• Set custom spending limits per card

• Restrict transactions to specific merchant categories

• Instant card freezing through mobile apps

• Virtual cards for online purchases

• Real-time transaction notifications

These controls reduce fraud risk and prevent unauthorised spending.

Airwallex Borderless Card vs traditional UK corporate cards

UK businesses evaluating payment solutions for international operations face a clear choice: traditional bank cards with non-sterling transaction fees or modern multi-currency alternatives.

How Airwallex eliminates non-sterling transaction fees

The Airwallex Borderless Card connects to your Airwallex Business Account, which holds 20+ currencies simultaneously. Here's how it works:

Zero non-sterling transaction fees when spending from currency balances

• EUR payments from EUR balance: £0 fee

• USD payments from USD balance: £0 fee

• Any supported currency from matching balance: £0 fee

Minimal conversion fees when converting currencies:

When you lack the required currency balance, Airwallex automatically converts at interbank rates plus a small transparent margin—typically 0.5-1% compared to 2.5-3% from traditional banks.

Real-world savings example:

Igloohome, a smart lock company, saved 5% per transaction by switching from traditional corporate cards to Airwallex Borderless Cards for international supplier payments.

Additional benefits for UK businesses:

✓ Instant virtual card issuance: Generate virtual cards in seconds for online payments

✓ Physical cards: Order physical Visa cards for team members

✓ Custom spending controls: Daily limits, monthly budgets, merchant restrictions

✓ Streamlined expense management: Mobile app for receipt uploads and instant submissions

✓ Fast reimbursements: Direct bank account transfers for employee expenses

✓ No hidden fees: No annual fees, no replacement fees, no foreign ATM fees

Comparison table:

Start reducing non-sterling transaction fees today

Non-sterling transaction fees represent one of the largest hidden costs for UK businesses operating internationally. Traditional banks charge 2.5-3% on every foreign currency transaction, but modern multi-currency solutions eliminate most of these fees.

For companies with £50,000+ monthly in international payments, savings can exceed £15,000 annually. Even businesses with modest overseas spending quickly recoup any account or card fees through eliminated non-sterling transaction charges.

The Airwallex Borderless Card offers UK businesses a straightforward solution: hold multiple currencies, spend without conversion fees, and eliminate the 2.5-3% non-sterling transaction fee that traditional banks charge on every international payment.

Ready to eliminate non-sterling transaction fees? Open an Airwallex Business Account to access Borderless Cards with zero non-sterling transaction fees.

Here's how:

• Step 1: Create an Airwallex Business Account

• Step 2: Complete business verification and submit documents

• Step 3: Instantly generate Borderless Cards for your team

• Step 4: Start spending in 20+ currencies without non-sterling transaction fees

Open an Airwallex account and start saving on international payments today.

Looking to understand payment processing costs comprehensively? Read our guide on payment gateway fees to learn about the complete cost structure of accepting payments. For businesses setting up payment systems, explore how to set up online payments and compare top payment gateway providers for UK businesses.

FAQs

Do all UK banks charge non-sterling transaction fees?

No, not all UK banking products charge non-sterling transaction fees. Most traditional UK banks (Barclays, NatWest, HSBC, Lloyds) charge 2.5-3% on foreign currency transactions for standard accounts. However, premium accounts like NatWest Reward Platinum, RBS Reward Platinum, and Nationwide FlexPlus waive these fees, though they typically charge monthly account fees (£10-£15) that may not represent savings for businesses with moderate international spending. Specialist providers like Airwallex eliminate non-sterling transaction fees entirely without monthly account fees.

What's the difference between non-sterling transaction fees and currency conversion fees?

These terms are often used interchangeably but technically refer to different components. A "non-sterling transaction fee" is the total charge your UK bank applies to foreign currency transactions (typically 2.5-3%). This total comprises: (1) currency conversion fee (~1%) covering the cost of exchanging GBP to foreign currency, and (2) an issuer or administrative fee (~1.5-2%) charged by your bank. When banks list these separately on statements, you may see both charges. When listed together, it appears as a single "non-sterling transaction fee."

Are non-sterling transaction fees charged on cash withdrawals from foreign ATMs?

Yes, UK banks charge non-sterling transaction fees on cash withdrawals from foreign ATMs, plus additional fees. Typical charges include: (1) non-sterling cash withdrawal fee of 2.5-3%, (2) cash fee of £1.50-£2.50 per withdrawal, (3) unfavourable exchange rates with 2-4% markup above mid-market rates, and (4) foreign ATM operator fees (typically €3-€5). Total cost can reach 6-10% of withdrawal amount plus fixed fees. Using multi-currency cards or fee-free travel cards significantly reduces these costs.

Can I avoid non-sterling transaction fees when shopping online from international websites?

Partially. Non-sterling transaction fees trigger when transactions process through foreign banks or in foreign currencies—even if the website displays prices in GBP. Many international websites process payments overseas, which triggers the fee. To avoid charges: (1) use cards with no non-sterling transaction fees (travel cards, premium accounts, multi-currency business cards), (2) if the site offers currency choice, select pounds sterling, though some sites still process through foreign banks, (3) check if the merchant has a UK presence that processes payments domestically, or (4) for business purchases, consider multi-currency accounts that eliminate these fees on all international transactions.