Cross-border fees: What they are and how to minimize them

Cross-border fees are charges that apply when businesses send payments to vendors in other countries. These fees can quickly add up and cut into your margins anytime you have to pay vendors overseas.

Understanding why these fees are charged and how to minimize them can make a big difference to your bottom line. In this guide, we'll discuss what cross-border fees are, when and why they're charged, and practical strategies for reducing their effect on your business's international payables.

What are cross-border fees?

Cross-border fees are charges applied to transactions between buyers and sellers in different countries. Sometimes called cross-border charges, these fees apply whether you pay by card, bank transfer, or other digital payment methods.

These fees help cover the added complexities and risks of processing international payments through global financial networks and remaining compliant with international rules. You might see them labeled as:

• Cross-border assessment
• Cross-border processing fee
• Cross-border transaction fee
• Foreign transaction fee
• International service assessment
• International service fee
• International transfer fee

Cross-border processing fees apply regardless of the currency used in the transaction. What matters is the mismatch between your business's payment account country and the vendor's receiving account country. For businesses managing international vendor payments, these charges can accumulate quickly, especially if you frequently pay overseas suppliers or contractors.

Cross-border fees vs. other international transaction fees

You may assume cross-border fees and foreign transaction fees are identical, but these are distinct charges that can each affect your international business transactions.

Cross-border fees apply when banking networks process corporate payments across international boundaries. This includes online payments to overseas vendors, international wire transfers, and digital service subscriptions from foreign companies.

Foreign transaction fees specifically apply to purchases made in foreign currencies, regardless of where the transaction is processed. Currency conversion fees are separate charges that cover the actual cost of exchanging currencies, often applied by banks or payment processors.

Identifying these fee differences enables you to select your ideal corporate cards and manage your international business expense budgets more effectively.

When and why are cross-border fees charged?

Cross-border fees kick in when your business sends a payment across international borders, specifically when the sending and receiving bank accounts are located in different countries. This includes scenarios such as:

• A U.S. business paying a vendor in the U.K.
• A Canadian company paying a U.S. supplier in USD
• A U.S. employee using a corporate card in France

Even if you send the payment in the recipient’s local currency, your business may still incur a cross-border fee due to the international nature of the transaction. Here’s how it works:

• Your AP team initiates a payment to an overseas vendor
• The payment network (e.g., SWIFT, Visa, Mastercard) flags the transaction as cross-border based on account locations
• A fee kicks in to cover the added regulatory, compliance, and infrastructure costs
• The fee appears as a separate item or bundled with your total transaction cost

These fees exist because international payments involve higher fraud risk, multi-jurisdictional regulations, additional verification, and the use of intermediary financial institutions.

Who pays the cross-border processing fee?

In B2B payments, the payee usually covers the cross-border fee. Depending on your provider, these charges are either deducted from the total amount sent or added to the transfer cost.

You may see these fees as line items on the invoice from your payment processor or within your financial platform’s monthly reports. Some providers bundle them into exchange rates or platform fees, which can obscure the true cost of sending funds internationally.

Because these charges can vary depending on destination country, payment method, and provider, it’s important to track them closely and incorporate them into your vendor payment cost analysis.

Cross-border fees in action

Here's a simple example of when cross-border fees would show up in a B2B transaction:

• Buyer: A software company based in Austin, Texas
• Seller: A digital marketing agency in London, U.K.
• Purchase: Monthly content marketing services worth £3,000
• Payment Method: The software company's U.S. corporate Visa card

Here's how the transaction plays out step by step:

1. The software company's finance team processes the payment online using their corporate card
2. The transaction is processed in British pounds. At the time of the transaction, £3,000 is approximately $3,750 USD.
3. Their U.S. bank identifies this as a foreign transaction since the merchant is based in the U.K.

Fees triggered:

• Foreign transaction fee: 2.7% of $3,750 = ~$101
• Currency conversion fee: Usually bundled into the foreign transaction fee, but may be listed separately
• Total extra cost: $101 on top of the $3,750 purchase

As a result, the software company's monthly marketing spend effectively increases from $3,750 to $3,851 due to the cross-border fee, adding over $1,200 annually in unexpected costs. This prompts them to explore alternative payment methods, such as specialized B2B payment platforms that offer better exchange rates and lower fees for recurring international transactions.

This scenario illustrates how cross-border fees can significantly affect B2B recurring expenses and operating costs.

How much do cross-border transactions cost?

Cross-border fees vary depending on payment method, destination country, and provider. Here are typical rates:

Card network fees, such as Visa and Mastercard, usually apply a percentage of the payment for a corporate card used internationally. Wire transfer fees tend to be fixed amounts, with additional hidden costs if intermediary banks are used.

Other variables that influence your fee structure include:

• Destination country: Payments to high-risk or less developed financial markets may incur higher fees
• Currency used: Converting to a different currency often triggers additional conversion charges
• Payment method: Some providers charge more for faster transaction processing (e.g., same-day transfers)

These fees can change as networks adjust for new regulations or risk models. Review your fee statements regularly and confirm current rates with your payment provider.

How much are cross-border fees for Visa, Mastercard, and PayPal?

When you're running a business that makes cross-border payments, you'll quickly discover that major credit card companies and payment platforms each have their own distinct fee structures. These fees exist for good reason.

Processing cross-border transactions involves additional risks, compliance requirements, currency conversions, and coordination between financial institutions in different countries. The increased administrative overhead and regulatory challenges naturally translate into higher costs passed along to users.

Visa cross-border fees

Visa's international service fee (ISF) currently sits at 1% for transactions settled in USD, and 1.4% for transactions not settled in USD.

When you factor in Visa's standard assessment fees—0.13% for debit cards and 0.14% for credit cards—the total assessment fees can reach 1.54% on international transactions. This variable-rate structure means businesses that pay international suppliers in their local currency face higher fees than those who stick to USD transactions.

Mastercard cross-border fees

Mastercard's cross-border pricing is more straightforward: 0.6% for transactions settled in U.S. dollars and 1% for transactions settled in foreign currencies. The fee appears on your processing statement with labels such as "MC cross-border fee" or similar variations.

Mastercard has increased its cross-border fee several times since its introduction. As international transaction volumes continue growing, you should expect potential future increases. Always check with your payment provider for the latest fees.

PayPal international fees

PayPal's international fee structure is more complex and generally higher than traditional card networks. For business transactions, you'll typically pay a standard domestic rate of 2.9% plus an additional 1% international fee when making payments in different countries. This means international business transactions often cost around 3.9% plus fixed fees, which vary by country.

PayPal's currency conversion adds another 3–4% markup above the wholesale exchange rate, which applies whenever PayPal converts currencies during the transaction process. This conversion fee is separate from the international transaction fee, making PayPal potentially expensive for businesses that frequently deal with foreign currency transactions.

PayPal charges these fees when sending or receiving money internationally, during currency conversions, and when processing payments between accounts registered in different countries. The exact fees depend on factors such as your account type, funding source (bank account versus credit card), and whether currency conversion is involved in the transaction.

How can you avoid or minimize cross-border fees?

While cross-border fees are part of doing international business, you can sometimes reduce these costs through proven strategies. The key lies in choosing the right combination of approaches that match your payment patterns and business needs.

Use local accounts in key markets

Opening local bank accounts in international markets where you frequently conduct business can help you sidestep many cross-border fees. This approach works by keeping funds local, allowing you to pay suppliers in their native currency without triggering international transfer charges.

Pros:

• Eliminates foreign exchange fees for local transactions
• Builds trust with local partners who receive payment from familiar accounts
• Gives you better insight into local banking practices and regulations
• Often provides faster payment processing for domestic transactions

Cons:

• Requires significant upfront effort to establish accounts and meet compliance requirements
• May involve monthly maintenance fees and minimum balance requirements
• Can complicate cash flow management across multiple accounts
• Exposes you to local banking regulations and potential political risks

This strategy makes most sense when you have consistent, high-volume transactions in specific markets. If you're spending more than $50,000 annually in a particular country, you may see meaningful savings that justify the administrative complexity.

Leverage global payment platforms

Specialized platforms such as Wise, Payoneer, and Ramp Bill Pay offer alternatives to traditional banking channels, often with lower fees and better exchange rates than conventional banks.

These platforms structure their fees differently from traditional banks:

• Wise: Charges a small fixed fee of roughly $7 USD plus 0.33% of the transfer amount
• Payoneer: Offers fixed fees of $1.50 for same-currency withdrawals under $50,000 monthly, with up to 3% fees for currency conversion
• Ramp Bill Pay: Charges a $20 flat fee

The platforms eliminate many hidden costs by using mid-market exchange rates rather than marked-up bank rates. You could see significant savings compared to traditional bank transfers, making these platforms ideal if your company makes regular international payments.

Negotiate currency terms with vendors

Rather than accepting standard payment terms, you could negotiate currency arrangements that reduce or share cross-border fee burdens with your vendors and partners. Here are some effective negotiation tips:

• Propose invoicing in your home currency to shift exchange rate risk to the vendor
• Suggest splitting cross-border fees 50/50 as a compromise solution
• Offer to pay slightly higher base rates in exchange for absorbing currency costs
• Bundle multiple invoices to reduce per-transaction fees
• Establish payment schedules that align with favorable exchange rate windows
• Consider longer payment terms as a trade-off for better currency arrangements

Currency negotiation works best when you have ongoing relationships and a good amount of purchasing power with key suppliers.

Use Ramp to send international business payments

International payments are a core part of running a global business. Whether you're paying suppliers, contractors, or team members across borders, you need a system that's fast, reliable, and built to handle complexity. The right setup can prevent costly delays, protect relationships, and keep your operations running smoothly.

Ramp Bill Pay supports multiple payment methods, so you don’t have to rely on a one-size-fits-all solution. Move money the way that works best for each situation:

• International wire transfers: Ramp supports payments to vendors abroad in U.S. dollars or payments to international vendors in their local currency
• Domestic wire transfers: Send large, time-sensitive payments the same day through the Fedwire network
• ACH (direct deposit): Schedule regular or same-day ACH payments for payroll, vendor bills, or other recurring expenses
• Ramp cards: Pay vendors by Ramp card and earn cashback with vendors that accept Visa
• Check payments: For U.S. vendors who still prefer checks, Ramp can issue and mail checks on your behalf

With Ramp, you control how and when payments go out without sacrificing speed, accuracy, or visibility. Get started with Ramp Bill Pay.