Hidden foreign transaction fees – the overlooked costs

Most businesses don’t realise how their foreign transaction fees are structured and how much money could be saved. While some fees are visible, many remain hidden in exchange rates or processing charges. We highlight all open and hidden foreign transaction fees – and explain how to avoid them.

What are hidden foreign transaction fees?

Hidden foreign transaction fees are the extra costs businesses incur with every international money transfer. They are often disguised in poor exchange rates, international card charges, or processing fees that are not clearly shown upfront. Over time, these seemingly small expenses can add up and significantly impact a company’s bottom line.

Dynamic currency conversion (DCC)

Dynamic currency conversion (DCC) occurs when a foreign merchant or ATM offers to charge your card in your home currency instead of the local one. While this may seem convenient, it usually comes with unfavourable exchange rates and additional fees. Merchants often receive a commission for providing this service, which means the costs are passed on to you. The result is that businesses end up paying much more than if they had simply accepted the charge in the local currency. Always opt to be billed in the local currency to avoid these hidden costs.

Poor exchange rates

One of the most common hidden fees is embedded in the exchange rate itself. Banks and card providers rarely offer the mid-market rate (the real exchange rate between two currencies). Instead, they add a percentage margin, which significantly increases costs for businesses making frequent international transactions. Because this fee is built into the rate rather than shown as a separate line item, many companies underestimate how much they are losing.

ATM usage fees

When withdrawing cash abroad, businesses and individuals often face multiple charges.

Together, these costs can make accessing funds abroad disproportionately expensive. Even if each withdrawal only adds a small fee, frequent use of ATMs while travelling or managing overseas operations can cause unnecessary financial leakage. To avoid this, businesses should consider cards or accounts that waive international ATM usage fees.

Card issuer fees

Many credit and debit card providers charge a standard foreign transaction fee whenever a payment is made abroad. This fee typically ranges from 1% to 3% of the transaction amount. While the percentage may appear small, the costs can accumulate quickly, especially for businesses handling large volumes of international transactions. Since these charges are not always clearly displayed, businesses may only notice them after reviewing monthly statements.

SWIFT fees

While not hidden, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) charges your bank account when making a foreign transaction. These costs vary but often amount to $20 to $50 per transaction.

SWIFT fees can be structured threefold:

Next to fees, delays in settlement and lack of transparency make SWIFT transactions difficult to track and manage. Alternative payment providers with direct local connections offer faster and far cheaper solutions for cross-border money transfers.

What triggers foreign transaction fees?

Foreign transaction fees are triggered whenever a payment, withdrawal, or transfer involves a currency or financial institution outside your home country. Understanding the situations that activate these charges is key to reducing costs.

International credit/debit card transactions

Using your card abroad usually incurs additional fees. Every time a business pays an overseas supplier or spends money during travel, the card issuer may charge a foreign transaction fee. This is typically calculated as a percentage of the total purchase amount. Exchange rate markups and DCC fees may also apply. While the fee might not be highlighted at the point of sale, it will appear on the statement later. Businesses relying heavily on cards for international transactions should carefully review terms and conditions to understand the true cost of using their cards abroad.

ATM withdrawals

ATM withdrawals abroad almost always trigger fees. In addition to local operator charges, banks in your home country often apply international usage fees. If the withdrawal requires currency conversion, an unfavourable exchange rate is likely applied as well. These combined costs can make a simple cash withdrawal disproportionately expensive. For businesses with employees travelling frequently, this can become a recurring and avoidable cost. Using cards with no international ATM fees or withdrawing larger amounts less frequently can help reduce the impact.

Currency conversions

Every time money is converted from one currency to another, fees are triggered. These are usually hidden in the exchange rate margin rather than listed openly. For example, if the true market rate is 1.10 but your bank offers you 1.06, that 4% difference is a hidden fee. Businesses dealing with multiple currencies often underestimate how much these margins cost over time. Even small differences can result in thousands lost annually. To protect against this, companies should use financial platforms that provide access to near mid-market rates.

International bank transfers

Sending money abroad through traditional banks usually involves multiple charges. The sender pays a transfer fee, intermediary banks may deduct processing charges, and the recipient may face receiving fees. These charges are particularly high for small transfers, as the fixed costs represent a larger percentage of the transaction. Additionally, exchange rate margins further increase the total expense. Businesses that make frequent international transfers, for example when paying suppliers or overseas employees, can end up spending far more than expected.

How to protect yourself against open and hidden foreign transaction fees?

While foreign transaction fees are widespread, businesses can take practical steps to reduce them substantially. The key lies in choosing the right financial tools and avoiding services that disguise charges.

Use a debit card with no foreign transaction fee

Avoiding hidden card fees is one of the simplest and most effective ways to reduce unnecessary costs in cross-border transactions. While most traditional banks charge relatively high foreign transaction fees, modern fintech providers have started to offer more competitive solutions. For companies that rely on frequent international purchases or travel, such cards can generate significant savings. In addition, combining them with multi-currency accounts helps avoid exchange rate losses.

Use foreign currency accounts to avoid exchange fees

A foreign currency account allows businesses to hold money in multiple currencies. This eliminates the need for constant foreign currency exchange when paying international suppliers or receiving payments from abroad. By transacting directly in the required currency, companies avoid hidden exchange rate markups and reduce costs. In order to bypass the complexity of opening separate currency accounts through traditional banks, many fintech providers now offer multi-currency accounts, which can be accessed from one single dashboard.

Avoid dynamic currency conversion

Businesses should always refuse dynamic currency conversion when paying abroad. Although merchants may present it as a convenience, it almost always results in poor exchange rates and higher fees. By choosing to be billed in the local currency, companies gain access to better rates and avoid additional charges. Training employees who travel internationally to recognise and decline DCC is a simple but effective step.

Avoid the costly SWIFT network for international payment transfers

Traditional banks use the SWIFT network for cross-border payments, but this system is expensive and slow. Each transfer typically involves several intermediaries, each taking a fee. Modern fintech platforms offer faster and cheaper solutions by connecting directly to local payment schemes such as SEPA in Europe or ACH in the US. Beyond cost savings, companies also benefit from faster settlement times.

amnis: The smarter alternative for international business finance

Foreign transaction fees may seem unavoidable, but smarter financial solutions make a big difference. With amnis, businesses can access multi-currency accounts, debit cards, transparent exchange rates, and low-cost international transfers – all without hidden fees.

Simplify your cross-border payments, protect your margins, and start saving money today by choosing a partner that works in your interest.

Elena Tankovski · Content Marketing Manager

As Senior Content Writer at amnis, Elena transforms complex finance topics into clear, insightful content for SMEs. She focuses on areas such as the FX market, international payments, cross-border business operations, and regulatory updates - ensuring companies have access to reliable and easy-to-understand guidance.

With a strong background in research and communication, Elena plays a key role in helping businesses stay informed, make smarter decisions, and navigate the evolving world of international finance.