How to Pay Online in a Different Currency

International Transaction Fees

Have you ever purchased a crepe in Cannes or a gelato in Genoa and wondered why you received a bill for much more than the total cost of the tasty treat on your credit card statement? Then you, friends, have met our old nemesis: international transaction fees.

International transaction fees are charges applied by credit card companies to you, the consumer, when your credit card is used to make a purchase in a foreign currency. These charges are typical and obvious when traveling abroad, but they are also applied to purchases made online from a foreign vendor that operates in a foreign currency, as well.

Put simply: if you buy something with a credit card, and the transaction needs to be processed into a foreign currency to complete the payment, you get slapped with an additional fee from the credit card companies for the trouble.

How Much are Fees?

Fees, like burglars or ninjas, are sneaky. Most online shoppers can expect to pay an average international transaction fee of 3% when buying with a credit card. That typically shakes out to 1% going to the payment processor – usually the name on the card, like Visa or MasterCard – and 2% going to your bank for the trouble you've caused them, you pesky shopper.

Of course, not all purchases are created equal, and 3% of the cost of a cheeseburger is quite a different animal than 3% of a luxury automobile, boutique end table, or vintage handbag. 3% may only constitute a difference of $0.12 on your four-dollar grande cappuccino, but if you're spending $10,000 on high-end electronics from Japan, your credit card is taking an additional $300 out of your pocket just for the privilege.

And it gets worse: most credit card companies charge a further margin of 3-5% on top of the daily market exchange rate. This margin is entirely at the discretion of the credit card company, and may not be obvious or readily apparent without doing a bit of research into your contract.

All told, you could be paying as much as an extra 6% more than the cost of your purchase just to use your credit card when buying in a foreign currency. That $10,000 stereo system now costs an additional $600, and that $80,000 worth of fine jewellery? It's now going to cost $4,800 just to pay for it.

A Better Way: Direct Currency Exchange

There must be a better way, right? There is when you use OFX to send money internationally.

Before making your next international luxury purchase like fine goods or booking premium accommodations, inquire whether the vendor accepts payments directly to their bank account. If they do, you can use OFX to convert your payment into the correct foreign currency and send the money straight to them without ever uttering the words “credit card” or “international transaction fee.” With OFX, many major currency orders are processed within one business day of OFX receiving your funds so payment is simple, prompt, and reliable.

Plus, OFX offers unrivaled fraud prevention and risk management, winning the 2016 Digital Identity Excellence Award for International Fraud Prevention. With SSL encryption, identity protection, and 24/7 live monitoring and customer service, sending money internationally with OFX isn't just cheaper and smarter. It's also very safe. (Just make sure you’re sending to a legit recipient.)

So go ahead: buy that stereo, enjoy that jewellery, and book that holiday. Pay for it with OFX, leave your credit card in your wallet, and save yourself money, time, and hassle.

Mitigating Risks

Of course, sometimes there are hangups that prevent deals from being completed immediately. Maybe the German sports car you thought was Forest Green was actually Kelly Green. Either way, complications often arise that may delay the purchase of your goods.

That’s exactly why OFX has built-in tools that help you mitigate that risk when paying online in a foreign currency.