Avoiding the new cross border fee from VISA and MasterCard

Now you have to pay a fee when buying online if the store is outside your country, even if they charge you in your local currency

Written by Tomas Lyngen

Published: 17 Jan 2024

Why is this happening?

VISA and MasterCard decided the users to cover more of the infrastructure cost and implemented something called Foreign Transaction Service Fee or cross boarder fee. That's a fee that is added by your bank on behalf of VISA and MasterCard every time you purchase something from an online seller located outside your country

Historically this fee has only been added when the transaction was made in a different currency than your bank account, but now you'll get this few as long as the POS (Point of Sales) is located outside of your country. Which means even local sites using foreign payment systems can cause this fee to be applied

If you subscribe to Netflix or buy something from Google outside USA, it's a good chance their payment system is located in Netherlands or Ireland. So even if you get the price in your local currency, you'll still be charged with a cross boarder fee. YouTube has already implemented a warning that there might be a cross boarder fee applied for card transactions

VISA and MasterCard indicate this fee is 1% of purchase amount, but I have seen my bank add more than just 1% fee. As my Netflix went from PHP 549 to PHP 557.24 a month, which is about 1.5% increase. Even if one transaction isn't that bad, when you add all transaction you have that's cross boarder a month and especially through a year, the money quickly starts to add up...

How to get around the fee?

There's a few ways to get around the fee. Which is best, will depend on your preference

Use alternative payment methods

One of the easiest ways to ensure you don't pay the cross boarder fee, is to use alternative payment methods. Most use some kind of digital wallet these days and these often don't rely on cards to make online transactions

I personally moved Netflix, Google and Steam payment to GCash, a digital wallet offered in the Philippines and powered by AliPay international, to avoid the fees. Considering moving more in the future, as needed and where it's possible, as some only offer card payments online

Exactly which options are available to you, depends on what's the common payment methods in your country

Only use local payment solutions

Another option is to ensure the site you're buying from, is actually utilizing a local payment solution. Which is easier said than done, as it's not always easy to see what solutions they use in the background. Google has started indicating when you pay with card, that you might get a cross boarder fee and more vendors will guaranteed follow suite. Which will be an good indicator that they probably don't use a local solution, even if the amount is in your local currency