Foreign Transaction Fee

The foreign transaction fee has come up a bit in the past year and I figured I’d rant about how ridiculous this fee is.  We’re a Canadian corporation and as such we have a Canadian merchant account.  For the most part we never run into issues with this and no extra fee’s for our users or anything of that nature.  There is however a few select banks in the United States who have now decided to charge their customers a 3% fee and call it a foreign transaction fee.  The best part about this fee is it shows up as if we charged it in a lot of cases when it has nothing to do with us.  This makes us look pretty bad to the few customers we have who’s banks have decided to add fee’s other banks are not adding.  Some users have suggested to us why not get a merchant account in the United States.  There are several reasons the first being we’re not incorporated in the Unites States making such a task a very difficult and if we did it would become a very costly one for us.  The second part is it’s not just the United States who get these fee’s we’ve heard users in the UK get charged a foreign transaction fee when purchasing items from Canada and the United States.  So we’d probably need a merchant account in every single country for our customers to avoid such a fee being charged by a select few banks in each country.

So a pretty big annoyance but it does not surprise me a whole lot.  We have a US credit card with our Canadian bank and we’re almost exclusively using online banking which is great to pay off our credit cards and check the balance of our accounts.  Now the strangest thing we cannot pay off our US credit card online even when we have a US currency bank account.  We have to call or go to the bank to pay as our online banking will not pay it online.  It’s very strange considering we can move funds between currencies and it takes a teller seconds to pay off our card.  So it feels like it’s some legacy policy before online banking was possible and every time we call to pay it or go to a teller it feels like we’re being an annoyance and we should be doing it online or through a ATM.

So banks are just strange in too many ways and I guess no way to avoid them.  If you’re one of the unlucky few getting charged a foreign transaction fee best to just use Paypal to pay us.  We have no way of controlling that foreign transaction fee at least with Paypal it may not if your card is charged there just yet…

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10 Responses to Foreign Transaction Fee

  1. Tony K says:

    Is this an issue if people pay you through PayPal?

  2. This is just corporate greed. Some time ago I read an article in a Dutch newspaper that Dutch banks have finally discovered what should be the most important thing to them: the customer. Not that anything has changed, but it’s quite interesting to read that most banks never, ever put the customer on the number one spot, but always money, profit, dividend and all that kind of stuff.

    Really, they could do without the transaction fee and you should be able to do everything online if they only wanted to the slightest bit.

  3. Also as mentioned in my knowledge base article here is some rates that some banks / cards charge – it’s not always a flat 3%

  4. Cody says:


    No it won’t be an issue with PayPal – it’s only a small annoyance for the credit cards as well as not every bank charges this fee. All in all it’s usually between $1-$3, just obnoxious since it’s out our hands.

  5. JG says:

    As Galbraith once said “The process by which banks create money is so simple that the mind is repelled.”

  6. I’m not in Canada, but it seems that I wasn’t charged with any extra fees (at least when I joined HH in June).
    Hope this won’t change in the beginning of September (my next invoice date).

  7. Jonathan says:

    I just got charged a 3% foreign transaction fee by CitiBank on a Paypal transaction, made in USD (I’m in the US). Their explanation? The item originating in a foreign country, even though Paypal processed the payment in my local currency. They refunded the fee when I called them on it (after asking to speak to a customer service supervisor).

  8. John Smith says:

    It does not happen with a ‘few banks’ as the blogger indicates. It’s most of the banks. Researching this issue there is a big number of people with this problem and I’ve come to one conclusion:

    ENOUGH!!! Let’s call our senators and representatives -and Obama, and ask for regulation. Just bought an item using paypal -a U.S. -based company, to buy an item in U.S. dollars, and I still got the Citibank MasterCard Foreign Transaction Fee, just because the merchant is based in a foreign land.

    Next we’ll be buying an item (say a Sony TV receiver) at the corner store and be charged for buying from a foreign based company.

    Ridiculous. The only way to force this money-addicts (and they still asked -and got, millions from the tax payers to rescue them from their profit-seeking stupidities that almost brought the market to a collapse) is to get goverment involved and regulate the fees they can charge.

    Better yet: don’t just call your senator-rep-WhiteHouse, also WRITE them and demand regulation.

    Concurrent option: let’s organize and bring a law suit over them (Banks) to refund this Foreign Transaction Fee. Money lovers. Greed!

    Ugh!!! Turn out you don’t need to be overseas to be charged with a Foreign Transaction Fee…

  9. Anonymous says:

    Yes, but there is always a foreign transaction fee..
    Thing is that you pay twice. once for Paypal (Or moneybookers in my case). and second to your local bank.. totaling 10% from the whole sum which is very stupid..

  10. We are a Canadian corporation too with 40% of our clients from the USA. We charge our clients in US $ all the time and deposit the money in our US $ bank account. We have come to accept the reality of these extra charges for “Foreign Transaction Fees” but we believe there is something not only unfair but actually dishonest going on: the fee appears with our name besides it on the statement of some credit cards making it look as if we are the ones adding this charge and as if we have received this amount. Well we did not and we did not!

    It makes us look dishonest, some of our clients are angry about it and others absolutely want us to send them a receipt for these extra changes for their bookkeeping. We cannot provide a receipt for money we did not receive! But the worst part is that – after I explained to my client what these charges were – he called his bank to verify if it was true and the bank customer service person said that 3% was charged by my company!!! My client is not happy and is sure I tried to lie to him. Now I wonder how many clients never re-order from us because they also believe we charged them an extra fee.

    As a little Canadian Corporation I feel rather disempowered when faced with these giant corporations. But it just isn’t fair.

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