In this article we are going to discuss the cross border fee for credit card processing. We will provide some examples and information on how this fee works.
What is a Cross Border Fee?
A cross border fee is a charge assessed by a merchant account provider when a transaction is processed with a credit or debit card that was issued in a country other than the merchant’s. For example, if you are a U.S.-based business and you process a transaction with a credit card issued in the UK, you may be assessed a cross border fee by your merchant account provider.
Cross border fees are sometimes also referred to as “foreign transaction fees.”
Why Are Cross Border Fees Charged?
Cross border fees are charged by merchant account providers to cover the costs associated with processing transactions that involve foreign currency. When you process a transaction in a foreign currency, your merchant account provider must convert the transaction amount into U.S. dollars. This conversion process typically incurs a fee, which is passed on to the merchant in the form of a cross border fee.
In addition to the costs associated with foreign currency conversion, merchant account providers also typically charge a small percentage of the transaction amount as a cross border fee for credit card processing. This is similar to the way that they charge a standard credit card processing fee.
What Are the Rates for Cross Border Fees?
Cross border fees can vary depending on your merchant account provider, but they are typically between 1% and 3% of the transaction amount. So, if you process a $100 transaction with a credit card issued in the UK, you may be charged a cross border fee of $1 to $3.
Are There Any Other Fees Associated with Cross Border Transactions?
In addition to the cross border fee, you may also be charged a currency conversion fee by your merchant account provider. This fee is separate from the cross border fee and is typically a flat fee, rather than a percentage of the transaction amount.
For example, if you are charged a 2% cross border fee and a $0.10 currency conversion fee, you would be charged a total of $2.10 in fees for a $100 transaction.
What Can You Do to Avoid Cross Border Fees?
There are a few things that you can do to avoid cross border fees:
1. Use a merchant account provider that doesn’t charge cross border fees.
2. Process transactions in the local currency whenever possible.
3. Use a credit card that doesn’t charge foreign transaction fees.
4. Use a prepaid debit card that doesn’t charge foreign transaction fees.
5. Pay in cash when possible.
6. Use a service like PayPal that doesn’t charge foreign transaction fees.
The best way to avoid cross border fees is to use a merchant account provider that doesn’t charge them. Unfortunately, this can be difficult to find. Many merchant account providers will openly advertise that they don’t charge cross border fees, but they will often add these fees in later.
The best way to find a merchant account provider that doesn’t charge cross border fees is to read the fine print carefully and to ask plenty of questions. You can also check out our reviews of merchant account providers to see which ones have the best terms for processing international transactions.
If you can’t find a merchant account provider that doesn’t charge cross border fees, your next best option is to process transactions in the local currency whenever possible. This way, you won’t be charged a currency conversion fee in addition to the cross border fee.
You can also use a credit card that doesn’t charge foreign transaction fees. These cards are becoming increasingly common, but they are still not offered by all issuers.
Another option is to use a prepaid debit card that doesn’t charge foreign transaction fees. These cards can be purchased online and they can be used anywhere that accepts Visa or Mastercard.
Finally, you can pay in cash when possible. This is usually not an option for online transactions, but it can be helpful for offline transactions.
