Foreign transaction fees and how to avoid them

Foreign transaction fees are charges, typically totaling 1% to 3% of a purchase, applied when card payments involve foreign banks or currency conversion, often consisting of a card-network conversion fee of about 1% and an issuer fee of about 2%. These costs can arise from international supplier payments, travel expenses, overseas purchases, advertising, and customer refunds, and can accumulate substantially for businesses with frequent cross-border activity, alongside possible FX markups and transfer delays. Strategies to reduce costs include choosing cards without foreign transaction fees, paying in the local currency rather than accepting dynamic currency conversion, and using multi-currency accounts or fintech payment services; however, cash conversion may involve unfavorable exchange rates and inconvenience. The material highlights Airwallex’s multi-currency account and Borderless Card as examples of products intended to help businesses hold, receive, and spend foreign currencies while reducing conversion-related charges.

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