How To Minimise Foreign Transaction Fees When Buying Online

How To Minimise Foreign Transaction Fees When Buying Online

Buying online? If that site you’re shopping from is based overseas, there’s no doubt you’d expect to pay some form of currency conversion charge. But what if your online shopping is from what appears to be an Australian online shopping site – and the items you’re buying are promoted in Australian dollars?

Online Shopping Transaction FeesBeing able to pay in Australian dollars via a site that has a domain name doesn't exclude you from being charged a fee from your bank.

The shopping site doesn’t let you know where the retailer’s own merchant bank is situated and your bank wants its profits.

So, even if you pay in Australian dollars, the majority of banks processing a payment for a financial institution that is outside of Australia, will slug you with an international transaction fee.

And if you hold a Visa, American Express or Mastercard with one of the Big 4 banks, you’ll be stung with these foreign transaction fees – usually charged at 3% (although Westpac’s fee for American Express is 3.5%)


Ways To Avoid Foreign Transaction Fees When Online Shopping

  • Never assume that, just because you are paying in Australian dollars, there will be no fees

  • If you are online shopping from a site that is a foreign company, be aware they may not have an Australian payment provider.

  • Choose to pay for your online purchases with a debit or credit card that doesn’t carry any international transaction fees

  • Ask the company where their payment provider is located

  • Be bold and ask the company for a refund on the transaction fee you may get charged. In many cases, you may be lucky


What The Banks Are Charging for Foreign Transaction Fees

Big 4 banks 

Foreign transaction fee for credit card payments 


3% (3.5% for Amex)




3% as of 7 March 2015 (up from 2%)



While it seems that there is a legitimate fee passed on to banks for international transactions from credit cards, it doesn't seem to be 3%. However, none of the major banks will reveal the exact figure of the charge.

The banks’ official line? That they need to charge us this fee to cover their own foreign currency conversion.

But if you’re paying in Australian dollars and currency conversion is not actually taking place, the only actual cost to the bank doesn’t seem to add up to a full 3%.


No Regulation

The world of international transaction fees charged by leading banks is a hazy one.

With regulation unclear, it’s difficult to know what is fair and what’s not.

 According to the financial service regulator, ASIC, the fact that banks charge these fees is not against the law – as long as they disclose the fees in their terms and conditions.

Because the Big 4 banks are upfront about disclosing the fee, it puts the onus on online shoppers like you to check where the payment processing will occur.

The issue is under examination from the ACCC, after many complaints from online shoppers.

In the meantime, it’s very much a case of ‘buyer beware’.

Always check before you buy online – that bargain may end up costing you more than you calculated.


For more information about online shopping transaction fees and comparison of currency conversion rates, contact our foreign transaction experts at The Currency Shop today.

Have a question? Ask our experts. Request a call 1800 004 930