How to pay online in a different currency

1. Credit and debit cards

Credit and debit cards offer convenience and familiarity. However, it comes at a price. 

Depending on your card’s terms and conditions on international transaction fees and other hidden fees, you could be paying between 1% and 3% of the purchase amount, according to Forbes.

Here’s why:

International transaction fees (or foreign transaction fees) are charges applied by card companies when your credit or debit card is used to make a purchase in a foreign currency. As outlined above, these vary and could be up to 3% of the purchase amount.

While 3% may only be a $0.12 difference on your $4 coffee, spending $10,000 on luxury goods could be taking an additional $300 out of your pocket.

It’s best practice to check your card’s terms and conditions before you click the ‘pay now’ button.

On top of international transaction fees, you may also incur a currency conversion fee. 

When you make a purchase from an international website, your local currency is converted into the merchant’s currency. 

This is charged by the credit card payment processor or the merchant you’re buying from. 

As reported by Forbes, an international transaction fee of 3% could comprise a 2% foreign transaction fee, plus a 1% currency conversion fee. And according to Canstar, some credit cards charge a conversion fee, averaging at around 3%.

However, it’s difficult to find the true currency conversion cost. This is because the currency conversion fees are often rolled into your transaction fee, or it’s already included in the purchase price. 

2. Money transfer services

While these extra fees may sound small with a few percent here and there – it all adds up. To avoid incurring such high fees from banks and credit cards, consider a dedicated money transfer service.

Money transfer services like OFX help convert your payment into the preferred foreign currency and send the money straight to your recipient’s bank account with great rates and low or no fees.

If you are comparing rates, you should bear in mind that an attractive exchange rate may be offset by a high transaction fee (or vice versa).

Transaction fees are kept low at OFX, as we have our own network of local bank accounts. 

This allows you to pay into our local account in your home country, and we pay out from our local account in your recipient’s country, so your recipient doesn’t have to pay receiving fees. 

For transactions over AUD$10,000 (or foreign equivalent), OFX doesn’t charge a transaction fee. However, be aware that in some regions, a third party intermediary or bank may deduct a fee from the value of the transfer. This fee may vary and OFX receives no portion of it.

“I have been using OFX for about 10 years now for foreign transfers. The rates are very competitive and the service has always been prompt and reliable. Highly recommended.”
– Peter, OFX client

3. Third-party payment services

Third-party payment services are entities that help you make or receive payments online. Typically, there are no transaction fees involved for payments in the same currency. 

But if the transaction requires a currency conversion, most third-party payment providers use a retail exchange rate, and you could also be hit with an additional conversion service charge. 

4. Direct bank transfer

Another way to transfer money is directly from your bank account into a foreign bank account. 

This is also known as a wire, telegraphic transfer or SWIFT transfer. Bank to bank transfers are reliable but could be more expensive with less favourable exchange rates.

5. A multi currency account (For business owners)

If you own a business and need to make regular online payments to offshore employees, consider a multi currency account. 

A multi currency account allows you to hold or manage multiple currencies in a single platform, offer flexibility and potentially lower conversion costs.

Sometimes, complications may arise that could delay the purchase of your goods. There could be situations that prevent deals from being completed immediately.

Having a “buy now – pay later” option that lets you lock in an exchange rate could help protect you against market moves. With OFX Forward Contracts, you can book a rate today for a set date in the future. This means your rate is locked in despite any currency fluctuation.

Having the option to lock in today’s exchange rate for a future payment could protect you against any major market moves. With OFX Forward Contracts, you can book a rate today for a set date in the future. This means you’re locked in despite any currency fluctuation.

However, booking a Forward Contract may also mean losing out if the market rate improves, because you’re contracted to settle at the agreed rate.

Paying online internationally could become expensive with added fees. 

With so many payment options to choose from, there is no one choice that fits-all when it comes to making international payments.

Factors like the amount you’re paying, interactional transaction fees, the current currency exchange rate and time-sensitivity can all affect your decision. 

Compare the different online payment methods to decide which options suit you best.