By crossborderfees September 25, 2025
In today’s global economy, businesses of all sizes are increasingly selling across borders. Whenever a customer from one country buys from a merchant in another country, cross-border merchant fees typically come into play.
These fees are flat-rate percentages added on top of normal processing costs for international transactions. Payment networks like Visa, Mastercard, and American Express impose these extra charges to cover added risks and compliance requirements of moving money across borders.
Without planning for these cross-border merchant fees, a sale that seemed profitable domestically can suddenly yield much less after fees.
The rise of e-commerce has made cross-border trade commonplace. In 2024, global retail e-commerce sales reached about $6 trillion, and are projected to approach $8 trillion by 2028.
For context, 95% of the world’s consumers live outside the United States, so the potential overseas market is enormous. However, fewer than 1% of U.S. small businesses currently export to foreign buyers.
Those that do tap into this vast market must contend with cross-border fees on every overseas sale. In practice, each cross-border merchant fee is an extra “tax” on international revenue, making it essential for merchants to understand and manage these costs.
Cross-border fees are sometimes called “international transaction fees” or “foreign transaction fees” on statements. For example, PayPal explains that a foreign transaction fee is an umbrella term covering cross-border surcharges, currency exchange fees, and other charges.
Consumers may see a single “foreign transaction” line on their credit card bill even if multiple fees apply. Merchants, however, should track each component separately, because each one reduces the net amount they receive from the sale. In short, cross-border merchant fees represent the additional cost of doing business globally.
How Cross-Border Merchant Fees Are Charged
Cross-border merchant fees occur at several points in the payment process:
- Card Network Assessments: Credit card associations (Visa, Mastercard, Discover, Amex) charge a specific international surcharge on foreign transactions.
For example, Visa’s International Service Assessment (ISA) is 0.80%, plus an International Acquirer Fee of 0.45%. For a U.S. merchant accepting Visa in USD, that totals about 1.25% on each international transaction.
Mastercard’s Cross-Border Fee is about 0.60% for USD transactions (up from 0.40% in 2015). Discover’s rate is roughly 0.80% for USD purchases, and American Express charges about 0.40% on USD transactions.
These network assessments are the core cross-border merchant fees imposed by Visa, Mastercard, and others on international card sales. - Interchange Fees: In addition to the cross-border assessment, the card-issuing bank also takes an interchange fee on every sale.
While interchange applies to all transactions, some countries set higher interchange rates for international purchases. This fee goes to the card issuer (the customer’s bank) and is typically the largest component of cost.
In a cross-border sale, the interchange fee may be slightly higher than for a domestic sale, but it is separate from the network surcharges.
Merchants should note that interchange is set by network rules and is not called a cross-border fee, although it contributes to the total processing cost. - Processor/Gateway Surcharges: On top of network fees, merchant account providers often add their own international surcharge.
For example, Stripe’s U.S. pricing is 2.9% + $0.30 for domestic cards, plus an additional 1.5% if the card is issued outside the U.S. (and another 1.0% if currency conversion is needed).
PayPal’s standard rates (2.99% + fixed fee) get an extra 1.50% on international commercial transactions. These processor charges may appear as line items (e.g. “Foreign Transaction Fee”) or may be bundled into your overall rate depending on your pricing plan.
In essence, any provider that allows foreign cards will typically include a cross-border markup around 1–2%. - Currency Conversion Fees: If the transaction involves two currencies (for example, selling in USD to a customer paying in EUR), a currency conversion fee usually applies.
This is a percentage markup on the exchange rate (commonly 1–3%). For instance, PayPal’s business rates include about a 3–4% currency conversion spread.
Even if a merchant lists prices in the buyer’s currency, someone must convert money behind the scenes, and that conversion fee is an additional cost on the transaction.
Merchants on interchange-plus pricing will see these components itemized on their statements. BigCommerce notes that Visa and Mastercard charge cross-border fees to the payment processor, which in turn passes the cost to the merchant.
In practice, a U.S. merchant’s statement for an international Visa sale might show “Visa Cross-Border ISA: 0.80%” and “Visa Acquirer Fee: 0.45%,” along with interchange.
If you’re on a flat-rate plan, all these are blended, but the end result is the same: the merchant receives slightly less from a foreign card payment than from a domestic one.
Some payment gateways offer tools to mitigate fees. For example, processors that use interchange optimization may route transactions through lower-cost networks when possible.
However, the network cross-border fees themselves remain fixed by Visa/Mastercard. The merchant’s best defense is awareness: understanding exactly how each fee component is charged and verifying it against statements.
Key Terms and Definitions
- Cross-Border Fee: A surcharge applied when the card issuer’s country is different from the merchant’s country. This is the core fee on our topic. It’s an “international assessment” by the card network on each cross-border transaction.
- Foreign Transaction Fee: A term often used on consumer statements, usually inclusive of both the network cross-border fee and any currency conversion. Consumers typically see this on their card bill when they buy something abroad, but merchants should decode it into its parts.
- Currency Conversion Fee (Exchange Fee): A percentage charged when changing currencies (often 1–3%). For example, converting USD to EUR might incur ~3% conversion fee. This is separate from the cross-border surcharge but often happens alongside it.
- Interchange Fee: The fee paid to the card-issuing bank. It’s applied to all transactions and varies by card type and country. International sales usually have slightly higher interchange, but note that this fee is not the same as the network’s cross-border surcharge.
- Merchant Account / Acquirer: The bank or processor that holds your merchant account. They receive the gross charge, collect interchange and network fees, and deposit the remainder to you. Think of them as your payment clearinghouse.
- Dynamic Currency Conversion (DCC): A checkout option that lets customers pay in their home currency. While it seems convenient, DCC typically uses a poor exchange rate with large markups (5–6%). Merchants often disable it to avoid inflating cross-border costs.
- Mid-Market Rate: The true currency exchange rate. Many processors claim to offer “mid-market” rates. Always confirm what rate your provider uses, since some embed extra spread beyond the cross-border and interchange fees.
Understanding these terms helps demystify your fees. In essence, a cross-border merchant fee is simply the additional percentage that Visa/MC (or others) add when the transaction crosses countries. It’s not a mysterious tax, but a necessary part of the global payments infrastructure.
Typical Rates and Providers
Cross-border fees vary by network and provider. For U.S. merchants, typical benchmarks are:
- Visa: ~0.80% on USD transactions and ~1.0–1.2% on foreign-currency transactions, plus an additional 0.45% on USD sales for the acquirer fee.
- Mastercard: ~0.60% on USD transactions and ~1.0% on non-USD.
- Discover: ~0.80% on USD purchases.
- American Express: ~0.40% on USD purchases. (Amex’s lower rate means US merchants might pay slightly less for accepting Amex cross-border, assuming they accept it.)
- Stripe (US): 2.9% + $0.30 domestic, +1.5% for foreign cards, +1.0% for currency conversion.
- PayPal (Business): 2.99% + $0.49 domestic, +1.5% on international commercial payments (≈4.49% total on a credit sale to a foreign buyer).
- Square: 2.6% + $0.10 per swipe (covers US cross-border fees internally). Note: Square processes only US-issued cards, so it doesn’t label any transactions as foreign, but its flat rate inherently includes a domestic cross-border allowance.
- Wire Transfer (SWIFT): $30–$50 per transfer (a flat cost, not percentage-based). Used for large B2B payments.
- Bank ACH: Domestic ACH is very cheap (¢ per txn). International transfers vary. For example, sending USD abroad via Fedwire might have a flat fee per wire. European SEPA transfers (Euro-zone ACH) usually have small fixed fees (<€1) for consumer transactions.
- Fintech Transfers (Wise, etc.): Typically around 0.5%–2% of the amount, often with transparent mid-market rates. These services are popular for vendor/vendor payments, but require banking rather than a credit card checkout.
A practical way to think about it: if your domestic card processing cost is ~3%, expect international sales to cost ~4–5% (the extra 1–2% being cross-border plus conversion).
For example, on a $100 international sale via Stripe, you’d pay $4.70 total (2.9% + $0.30 + 1.5%), whereas on PayPal you’d pay about $4.49 (2.99% + $0.30 + 1.5%). Those extra dollars per transaction add up quickly.
It’s worth noting that these fees are higher on higher interchange transactions (e.g. reward or corporate cards). Thus, the total fee can sometimes approach 5% or more on such cards. Conversely, smaller transactions feel the flat fees more heavily (e.g. the fixed $0.49 on PayPal).
Example Calculation
Consider a concrete example: a California retailer sells a $100 item to a customer in Germany who pays with a German-issued Visa card (processed in USD). The fees would be approximately:
- Stripe base fee: $3.20 (2.9% + $0.30).
- Stripe international surcharge: $1.50 (1.5%).
- Visa ISA (0.8%): $0.80.
- Visa Acquirer fee (0.45%): $0.45.
Total fees = $5.95 (≈5.95% of $100). The merchant nets $94.05. If this had been a domestic U.S. sale, the fee would have been only $3.20, leaving $96.80. Thus, accepting the foreign card cost an extra $2.75 in fees.
Even a few percentage points matter. Merchant Maverick notes that cross-border fees “are usually a small percentage (under 1%) of each sale”, but in practice with processor surcharges the total can easily be 1.5–2% or more above domestic rates.
For higher-ticket items, that’s significant. For low-ticket items, the fixed fees loom larger: on a $10 sale, Stripe might deduct $0.58 (2.9%) + $0.30 + $0.15 (1.5%) = $1.03, whereas PayPal would deduct $0.79 (2.99%) + $0.49 + $0.15 = $1.43.
In that example, Stripe’s total fee is $1.03, PayPal’s is $1.43. Over many transactions, choosing the best processor for your mix of currencies and prices can save money.
Why Cross-Border Fees Matter
Cross-border merchant fees matter because they directly cut into your revenue on international sales. Each extra percentage point you pay is a percentage point less in profit.
For a retailer with a 10% profit margin, a 2% cross-border fee could slash that margin by 20% (as we saw, a $10 profit becomes $8). Over hundreds or thousands of sales, the impact is substantial.
Merchants then face a choice: absorb or pass on these costs. Absorbing them means your profit per sale shrinks. Passing them on (via higher prices for foreign customers or adding a surcharge) can deter buyers.
Many businesses compromise by adjusting list prices modestly for international markets and bundling the cost into shipping or pricing. PayPal advises merchants to “factor the cross-border fees into what they charge customers” to maintain margins. For example, adding a 1–2% buffer to your international pricing can prevent fee surprises.
Customer perception is key. International buyers often pay their own foreign transaction fees (1–3% from their bank) on top of the price. If they see your price raised or a fee line-item, it may discourage the purchase.
Transparently stating prices in the customer’s currency (so they only see the bank’s conversion fee, not yours) can improve trust, even if you pay some conversion cost yourself.
Cross-border fees also reflect actual risk and cost. International transactions require extra compliance, fraud checks, and currency settlement.
Merchant Maverick notes that networks levy cross-border fees because “international transactions require extra processing and sometimes carry higher risk”. In this sense, the fees pay for the global infrastructure and security enabling such sales.
Despite these costs, expanding internationally usually brings more revenue. BigCommerce points out that while cross-border fees are an expense, they are “often overshadowed by revenue opportunities” in new markets.
Many companies report significant growth abroad that justifies the extra fees. The key is to manage the fees smartly, so they remain a small predictable expense rather than an unexpected hit to profit.
Managing and Reducing Cross-Border Fees
While you can’t eliminate cross-border fees entirely, you can mitigate them through strategy:
- Local Entities/Accounts: If sales are strong in a particular region, consider setting up a local subsidiary or bank account.
For example, opening a European branch with a Euro merchant account makes EU sales “domestic” for that entity, avoiding USD cross-border surcharges. Payment platforms like Stripe and PayPal support multi-currency payouts to foreign accounts, enabling this approach. - Multi-Currency Pricing: List and accept payments in the customer’s currency. This usually incurs a currency conversion fee on the backend, but avoids unexpected foreign transaction fees for the buyer.
Many gateways (Stripe, PayPal, Adyen, etc.) allow you to display prices in multiple currencies. Keeping a balance in foreign currency can also save repeated conversion fees. - Negotiate with Processors: If you have significant volume, ask your payment provider for a better deal.
While Visa/Mastercard fees are fixed, processors can sometimes lower their surcharge or fixed fees for merchants with high transaction volume or growth potential. If you’re on a flat-rate plan, consider switching to interchange-plus to see the real costs. - Offer Local Payment Methods: Enable popular local payment methods in each market. For example, iDEAL (Netherlands), SEPA Debit (Europe), ACH (US), or Alipay (China).
These methods often have lower fees than international cards. This won’t help every market, but can reduce reliance on cross-border credit cards. - Transparent Pricing: Some merchants incorporate the cost into their pricing or show an “international processing fee” at checkout. While this can deter price-sensitive customers, doing it transparently (with a note like “to cover international transaction costs”) maintains trust. Others simply adjust their listed prices for global markets to include an approximate fee.
- Monitor and Audit: Regularly review your statements and reports. Calculate your effective cross-border rate (total cross-border fees paid divided by total international sales volume).
If you spot anomalies (e.g. a sudden spike in fees or transactions), investigate. Modern accounting tools and reporting dashboards can help categorize and track these fees automatically. - Avoid Dynamic Currency Conversion: Don’t let payment terminals or gateways auto-offer to charge customers in their home currency via DCC.
Though convenient, DCC typically uses a worse exchange rate, effectively boosting the fee to 5–6%. It’s better to charge in your own currency or a common currency like USD or EUR. - Stagger Large Payments: If possible, for very large transactions, consider splitting payments into smaller amounts to minimize the impact of flat fees. (For example, a $1,000 sale could be two $500 payments, which might save on fixed cents, depending on the provider.)
The goal is to treat cross-border fees as a known cost of doing business and minimize it wherever feasible. By planning your pricing (e.g. building a small premium into international prices) and using the right tools, you can ensure these fees have a predictable, manageable effect on your bottom line.
International Sales Checklist
Selling across borders requires more than just accepting international cards. Keep these points in mind:
- Market Research: Identify which countries have demand for your products. Remember that 95% of the world’s consumers live outside the U.S., so choosing the right markets can greatly expand your sales.
- Currency Strategy: Decide if you will display prices in local currencies or only in USD. Pricing in local currency can improve conversion, but you’ll handle the currency exchange.
If you charge in USD to foreign cards, the buyer pays the conversion, but you still pay the cross-border network fee. - Payment Setup: Ensure your payment processor/gateway is enabled for international transactions. Check your contract for the exact cross-border fees by region and card type. Make sure your checkout system can handle multi-currency if needed.
- Test Transactions: Do test purchases from foreign IP addresses (or using a VPN) with foreign cards. Compare the amount charged to the amount received. This practical check can reveal unanticipated fees or issues (like DCC being applied).
- Accounting: Tag and track cross-border transactions in your accounting software. This makes it easier to reconcile fees. For example, if $10,000 in foreign sales yields $9,850 net, note that $150 was paid in cross-border fees for analysis.
- Shipping and Taxes: While not a payment fee, remember international shipping, customs, and VAT/GST.
These costs often get bundled into your pricing strategy alongside processing fees. Some merchants include duties/taxes in the price (Delivered Duty Paid) to simplify pricing. - Customer Communication: Be clear if any fees or currency issues apply. If adding an international processing fee at checkout, label it as such. Alternatively, list prices in the customer’s currency upfront, so there’s no surprise exchange rate added after payment.
- Partnerships: In some cases, partnering with a local distributor or marketplace can eliminate cross-border payment fees (they handle local sales for you). Many brands use Amazon Global or Shopify Marketplaces to leverage local payment processing in each country.
Regularly reviewing this checklist and staying aware of cross-border costs will help ensure your international sales remain profitable.
Common Mistakes to Avoid
- Ignoring Fees: Assuming foreign cards don’t add fees (they do!). Not realizing an extra 1%–1.5% is added to foreign sales can cause underpricing. Always check your international transactions separately.
- Forgetting Conversion Costs: Mixing up cross-border fees with currency conversion fees is common. Both apply on international sales, so failing to account for one or the other will misstate your costs.
- Neglecting Fixed Fees: Small transactions are heavily impacted by the fixed fee portion (e.g. $0.30/$0.49 per transaction). Not accounting for those can lead to unexpected costs on high-volume, low-value sales.
- Not Auditing Statements: Some merchants never reconcile their merchant statements line-by-line. This can hide incorrect charges or forgotten fees. It’s crucial to regularly match what you were charged versus what you expected.
- Enabling DCC: Allowing dynamic currency conversion (where the POS or gateway auto-converts to the cardholder’s currency) can nearly double your fees due to poor rates. It’s usually best to charge in your base currency.
- Overlooking Card Types: International cards come in many flavors (credit, debit, corporate, prepaid). Each may have different network rules. Don’t assume a “non-cross-border” treatment just because a card is bank-issued; the country of issuance is what matters.
- Lumping Fees Together: Some businesses just see “fee = 3%” and forget what portion is cross-border. Not separating these costs can make it hard to identify ways to save. Always break down the fees when reviewing expenses.
Avoiding these pitfalls ensures cross-border fees don’t stealthily eat your profits.
Additional Tips for Financial Professionals
- Accounting Treatment: Record cross-border fees as a cost of sales or payment-processing expense. Track them by category to easily see their impact on gross margins. When forecasting international revenue, include an allowance for these fees.
- Tax Considerations: Consult tax experts on VAT/GST for digital and physical goods. While separate from cross-border fees, taxes and fees together determine the landed cost to you and the final price to the customer.
- Interchange-Plus Clarity: If your processor allows it, get an interchange-plus statement. This shows the exact interchange rates (sometimes different for cross-border) and network fees. It can help you verify that you’re not paying an inflated rate.
- Use Analytics: Consider tools or payment gateway dashboards that categorize domestic vs international transactions. Some platforms flag higher-cost transactions automatically, helping you identify patterns (e.g. a surge in Asian cards might prompt a currency adjustment).
- Volume Negotiation: High volume can sometimes let you move to a better rate (e.g. dropping from 2.9%+1.5% to 2.5%+1.5%). Processors like Stripe or PayPal may offer customized pricing for major exporters.
- Customer Incentives: In some cases, you might encourage certain payment methods. For example, offering a small discount for ACH/bank transfer payment can shift revenue out of the card rail (though this mostly affects receivables rather than cross-border fees directly).
- Stay Informed: Payment policies change. The 2015 Mastercard fee hike shows networks can alter their rates. Follow industry news (e.g. Merchant Maverick, PaymentsJournal) for announcements on fee changes.
By integrating cross-border fees into your pricing, accounting, and strategy, you avoid unpleasant surprises. Remember, as PayPal advises, building these costs into your price list ensures they “don’t unexpectedly eat into profits”.
Future of Cross-Border Payments
New payment technologies may change the landscape. U.S. banks are developing account-to-account networks (sometimes called “Pay-by-Bank” or open banking) that allow direct transfers without using Visa/Mastercard.
If widely adopted, such networks could enable cross-border payments at much lower cost (often a fixed fee or low percentage) because they bypass the card networks. Some fintech services (Wise, Revolut, etc.) already offer transfers with ~0.5%–1% fees by using such rails.
Blockchain and digital currencies also promise cross-border transfers, but widespread adoption remains limited. As of 2025, credit cards and PayPal still process the vast majority of global retail payments.
That said, merchants should watch these trends. Increased competition and new tech may drive down cross-border fees in the long run. For now, however, cross-border merchant fees remain a reality of international commerce.
Key Takeaways
- What? Cross-border merchant fees are the extra percentage charged when the buyer’s card issuer and your merchant country differ.
- Who Charges? Visa, Mastercard, and others set these network surcharges (about 0.5%–1.2% typically), and your processor usually adds their own markup.
- Who Pays? The merchant pays. It comes out of the payout you receive.
- How Much? A few percent of each sale. For example, Visa’s cross-border assessment is 0.80% (plus 0.45% more), Mastercard ~0.60%, on top of base fees.
- Impact: Every international sale nets you slightly less. Plan for a 1–2 point higher processing cost on foreign transactions.
- How to Manage: Incorporate fees into pricing, use local currencies/accounts, negotiate rates, and monitor statements. Factoring these fees into your budget helps protect your profit margins.
Frequently Asked Questions
Q: What exactly triggers a cross-border merchant fee?
A: It’s triggered when the payment involves different countries. If your merchant account is based in the U.S. and you accept a card issued by a foreign bank, a cross-border fee is added.
The currency of the transaction doesn’t matter for this rule; it’s the card’s issuing country that counts. For example, a U.S. merchant charging USD to a Canadian-issued Visa still triggers the fee, even though no currency conversion happened on the merchant side.
Q: Who ultimately pays the cross-border fee?
A: The merchant does. These fees are deducted from the sale before the money lands in your account. The customer usually just sees the price (and maybe their bank’s own foreign transaction fee).
Some merchants choose to pass the cost to customers through higher prices or surcharges, but unless explicitly added, the seller’s payout is reduced by the fee.
Q: How large are cross-border fees?
A: Commonly around 0.5%–1.5% of the sale, though it varies by network and currency. U.S. merchants typically pay about 0.80% + 0.45% on Visa and ~0.6% on Mastercard for cross-border (USD) transactions.
Then add your processor’s surcharge (often 1–1.5%). The total is usually in the 2–5% range for an international credit card sale.
Q: Are cross-border fees negotiable?
A: The card network fees themselves are not. Visa/Mastercard set these surcharges and they are “passed through” to merchants. What can be negotiated is your processor’s portion of the fee.
If you have enough volume, you might get a lower overall rate or switch to a more favorable pricing plan (like interchange-plus).
Q: What’s the difference between cross-border fees, foreign transaction fees, and currency conversion fees?
A: A cross-border fee is specifically the card network surcharge for country mismatch. A foreign transaction fee usually refers to what a cardholder sees on their statement (and it often includes the bank’s charges plus the network fee).
A currency conversion fee is the extra percentage charged for converting one currency to another. In one transaction, you might incur all three: a cross-border fee (issuer country ≠ merchant country), a currency conversion fee (if currencies differ), and potentially a foreign transaction fee on the buyer’s end.
Q: If I sell digital products internationally, do I still pay cross-border fees?
A: Yes. The fee depends only on the payment, not the product. Whether you sell software downloads, online courses, or merchandise, a foreign-issued card triggers the same cross-border fees.
Q: If I invoice customers in their currency, can I avoid cross-border fees?
A: No. Invoicing in a foreign currency means you have a currency conversion (and its fee), but the network still sees the card country. A U.S. merchant sending an invoice in EUR to a German company will still pay a Visa/Mastercard cross-border fee on the transaction, because the issuer is not in the U.S.
Q: Do cross-border fees apply to shipping costs?
A: Yes. Any amount charged on the card (including product, shipping, and tax) incurs the fee. The networks apply the percentage to the entire transaction total, so including shipping in the charge doesn’t avoid the fee – it just means you pay a bit more in absolute dollars.
Q: If I refund or charge back a cross-border sale, do I get the fee back?
A: Generally, you only get back the percentage-based part of the fee. For example, PayPal’s policy is to return only the variable fee portion on a refund; the fixed fee portion ($0.30 or $0.49) stays with them.
Many card processors are similar. So refunds and chargebacks often leave you out the cross-border fee or a portion of it.
Q: Will using Apple Pay, Google Pay, or other wallets avoid cross-border fees?
A: No. These wallets are just payment instruments. A foreign Visa card used through Apple Pay will still incur the same Visa cross-border fee. The network only looks at the card’s origin, not the form factor of the wallet.
Q: Can I eliminate these fees by using cryptocurrency payments?
A: Cryptocurrencies don’t use Visa/Mastercard, so technically you avoid those network fees. However, converting crypto to fiat usually has its own costs (exchange fees) and price volatility. Cryptocurrency payments are still relatively rare for mainstream retail, so for most purposes traditional cross-border fees apply.
Conclusion
Cross-border merchant fees are a key part of doing business internationally. They typically add around 0.5% – 1.5% (or more) to each international sale. At first glance this seems small, but on scale it can significantly affect profitability.
Businesses that sell overseas must treat these fees as a normal expense. As PayPal puts it, calculate them up front and “factor” them into your prices.
Understanding what these fees are and why they exist is crucial for financial planning. Cross-border fees fund fraud prevention and currency handling, so they aren’t arbitrary; they cover real costs of global payments.
By staying informed of the exact rates your networks and processors charge, you can set prices and strategies that keep your margins intact. With e-commerce growing rapidly worldwide, managing cross-border fees effectively is an essential skill for any merchant or financial professional.