Foreign transaction fee

A charge for paying in a foreign currency or abroad. Card issuers apply this fee, typically a percentage of the transaction, to cover the cost of currency conversion when a purchase is made outside the cardholder's home currency. Some corporate cards waive this fee specifically to reduce costs for frequent international travellers.

Foreign transaction fees are usually between 1% and 3% of the transaction amount and can be charged by the card issuer, the card network or both. They may apply even when the purchase is made online from home, if the merchant is based abroad or processes the payment in another currency. A related issue is dynamic currency conversion, where a merchant or ATM offers to charge in the cardholder's home currency — often at a less favourable exchange rate than the card issuer would apply.

For companies with frequent international travel, these charges can add up. They are often hidden inside card statements, making them hard to track, and they complicate expense reconciliation when the amount on the receipt does not match the amount charged. Travel policies often advise employees to pay in the local currency, to decline dynamic currency conversion and to use cards with no foreign transaction fees where possible.

Paying centrally for the largest trip costs is one of the simplest ways to reduce this exposure. Flights, hotels, rail tickets, transfers and other services booked on Tumodo are paid by the company under its agreement with Tumodo, so employees do not pay suppliers abroad with their own cards for these bookings. For daily allowances, companies can set rates for international trips and choose the calculation currency.