Accepting International Credit Cards
What You Need to Know
Today’s global marketplace means that your customers might not be from down the street – they could be sitting in their living room in Tokyo, preparing to buy your product online. International customers expand your marketing reach. However, what you and your customers might not realize is that there’s a cost to these transactions. Read on to learn about what you need to know about accepting international credit cards.
Cross Border Credit Card Fees
Your customers living outside the US are interested in what you’re selling. But they might be less enthusiastic when they realize there’s a fee involved.
Since the mid-2000s, Visa and MasterCard have each charged what’s known as “cross border” fees that involve a bank located in a foreign country or a credit card issued outside of the US. For example, let’s say you sell watches online. Your business is located in Providence, RI, but your renown has spread beyond the Ocean State’s borders. In fact, your products have been featured in international magazine spreads. Jacques from Paris becomes so enamored with one particular model that he buys it online.
Jacques uses a MasterCard to pay for his new watch. Let’s say the watch is $200. MasterCard charges the acquiring bank that handles the transaction 0.40% of that amount. The acquiring bank passes along that charge to you, and you pass that charge along to Jacques, so he ultimately pays more for his purchase.
Types of Cross Border Fees
There are two types of cross border fees: domestic and foreign.
Foreign cross border fees are what Jacques the Parisian paid when he bought his watch. Since Jacques doesn’t have an American dollar bank account, he paid for the watch in euros.
A domestic cross border fee refers to what people pay when they make a purchase in the US with a foreign credit card. Let’s say Jacques’ wife Marie travels to New York City on business. She’s homesick for a croissant, so she stops at a French bakery and pays for her purchase with her credit card.
Why Do Credit Card Companies Charge Cross Border Fees?
Think of cross border fees as the cost of doing business in the age of e-commerce. Now that customers can buy almost anything they want from almost anywhere in the world, credit card companies must deal with currency conversions and other fees associated with international transactions.
Simply put, credit card companies do not want to absorb the cost of currency conversions. They earn more money by passing those fees along to merchants, who then charge customers for the expense.
Power Pay Payment Processors: Accept Credit Cards Easily and Quickly
If you want to expand your customer base, accepting credit cards is the easiest way to do that. And Power Pay Payment Processors can help. We enable you to accept credit cards quickly and easily. Power Pay doesn’t charge hidden fees, and our rates are the lowest in the industry. Find out more today by calling 1-800-483-8815.