Cross Border Fee For Credit Card Processing – A Detailed Guide

Now that you know what a cross border fee is, let’s take a closer look at how it works and how it can affect your credit card processing.

When you process a credit card transaction, the issuing bank of the card holder will charge a fee to the merchant account provider. This fee is generally calculated as a percentage of the total transaction amount, and is typically around 1-3% for most transactions.

However, when a credit card holder makes a purchase from a merchant located in a different country, the issuing bank will often charge an additional fee on top of the standard processing fee. This fee is called a cross border fee, and can range anywhere from 0.5% to 3% of the total transaction amount.

In addition to the cross border fee, merchants will also be responsible for paying any currency conversion fees that may apply. These fees are typically around 2-3%, and are charged by the merchant account provider in addition to the cross border fee.

As you can see, processing a credit card transaction from a foreign country can be quite costly. In some cases, the fees can add up to 5-6% of the total transaction amount!

To avoid these high fees, it’s important to understand how they work and what options are available to you.

One option is to simply avoid processing transactions from foreign countries altogether. However, this may not be practical or possible for many businesses.

Another option is to use a foreign merchant account provider that specializes in processing transactions from your specific country. These providers often have much lower cross border fees, and can save you a significant amount of money on your credit card processing costs.

If you do choose to use a foreign merchant account provider, be sure to compare the fees carefully before signing up. Some providers charge higher rates for currency conversion, while others may have higher cross border fees for credit card processing. Be sure to shop around and find the best deal for your business.

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