What Is a Cross-Border Assessment Fee?

Uncover Where These Fees Come From and How To Reduce Them for Your Business

A cross-border assessment fee is a surcharge applied by card networks when the bank that issued your customer’s card operates in a different country than your merchant acquiring bank. This fee applies to merchants based purely on geographic mismatch, even if both banks use the same currency.

Visa, Mastercard, Discover and American Express all impose these cross-border assessment fees. You’ll spot them as separate line items on your merchant statement, distinct from currency conversion fees or foreign transaction fees that are charged to your customers.

When Does a Cross-Border Assessment Fee Apply?

A cross-border assessment fee is charged when the merchant’s acquiring bank and the customer’s issuing bank are located in different countries. This applies even if the transaction is processed in the same currency. For example, a UK merchant accepting GBP payments from a French customer’s card will still incur the cross-border assessment fee because the acquiring bank is in the UK, while the issuing bank is in France.

Both online and in-person transactions are subject to the same fee structure, meaning eCommerce and physical store transactions follow identical cross-border rules.

Payment processors determine cross-border fees by examining the Bank Identification Number (BIN) on the card. The BIN reveals the country of the card issuer during the authorisation process. For instance, if a German customer makes a purchase in a London store using a German-issued credit card, the London shop will incur a cross-border assessment fee. This is because the acquiring bank in the UK and the issuing bank in Germany are located in different countries, regardless of whether the transaction is processed in GBP or EUR.

How Cross-Border Assessment Fees Differ from Other International Charges

Cross-border assessment fees are often confused with other international charges. Each targets different parties and serves specific purposes in the payment chain.

• Foreign transaction fee: This is charged to cardholders when they use their card outside their home country or make online purchases from foreign merchants. It appears on the cardholder’s statement as a percentage of the transaction amount. The fee covers the card issuer’s additional processing and risk management for international transactions. While merchants don’t see this fee, it explains why some international customers may choose alternative payment methods.
• Currency conversion fee: Imposed when a transaction requires currency exchange, these fees are typically applied to the cardholder. However, merchants may also face them when accepting payments in a foreign currency but settling in their local currency. These fees are based on current exchange rates plus the processor’s markup, separate from cross-border assessment fees.
• International service assessment fee: This is another term for cross-border assessment fees used by some processors. Charged to merchants for processing cards issued in different countries, it applies regardless of currency. These fees typically appear under names such as “international service assessment” or “cross-border fee.” They are generally non-negotiable, as card networks set the terms.

The Reasons Behind Cross-Border Assessment Fees

Cross-border assessment fees cover the additional risks, regulatory complexities and processing costs involved in international transactions. Unlike domestic payments, cross-border transactions face operational pressures that drive up costs.

Card networks introduced these fees in 2005 to support infrastructure improvements, enhance settlement efficiency and reduce fraud across global payment networks. While these fees generate revenue, their primary purpose is to offset the operational challenges that do not apply to domestic transactions.

International payments require complex global settlement systems, spanning multiple banking networks and regulatory jurisdictions. Each transaction must comply with varying regulations, fraud detection protocols and currency management systems. Cross-border transactions also have higher fraud rates, necessitating stronger monitoring and verification processes, which contribute to increased operational costs.

How to Cut Your Cross-Border Payment Costs Significantly

Cross-border fees can significantly reduce your profits, but they don’t have to be a given cost of international business. These strategies can help simplify payments and lower or eliminate cross-border fees.

Local Acquiring and Entity Setup

Local acquiring completely removes cross-border assessment fees. By establishing merchant accounts in countries where you process high volumes, your transactions are considered domestic, avoiding international fees.

Set up local merchant accounts in your key markets and work with processors offering local acquiring services, like Rapyd in the UK, Europe, Israel, Singapore and LATAM. While there are compliance requirements and operational complexities, businesses with consistent international volume benefit from domestic interchange rates rather than cross-border penalties.

This strategy works best for businesses with high transaction volumes in specific regions, where setup costs quickly pay for themselves by avoiding fees on each transaction. That’s because to set up local acquiring in most jurisdictions, businesses must establish an entity within that jurisdiction. While this requires time and money, the costs pay for themselves for businesses that transact in high volumes.

For businesses unable to establish a local entity or that lack the processing volume to justify the expansion, there are Merchant of Record services that will serve as the Merchant of Record in local regions, allowing businesses to avoid cross-border fees. However, these services will come with their own costs.

Multi-Currency Pricing and FX Strategy

Multi-currency solutions allow customers to pay in their preferred currency, eliminating conversion fees. Open accounts in multiple currencies to accept payments, convert only when rates are favourable, and reduce customer cart abandonment by providing clear pricing.

Ensure you use accurate multi-currency processing by referencing country and currency codes. Customers benefit from transparent pricing, and you gain flexibility to optimise currency conversion timing.

Partner with a Global Payment Processor

Your processor can have a significant impact on cross-border costs. Global payment platforms like Rapyd offer integrated solutions combining local acquiring, multi-currency processing and alternative payment methods. As well as payout options like Global ACH and real-time payments to lower costs when sending payments cross-border.

Look for processors with established networks in your target markets, local acquiring capabilities, and competitive fee structures. Providers specialising in international payments and offering local acquiring often offer better authorisation rates than traditional processors.

How to Lower Your Fees

Volume-based discounts and long-term commitments may help you to secure better rates as your transaction volume increases. Research market rates before negotiating and regularly review your fee structure.

Power Global Growth with Rapyd Collect

Rapyd Collect’s multi-license advantage allows businesses to benefit from local acquiring across global markets, including the UK, Europe, Israel, Singapore and LATAM. Improve authorisation rates and simplify cross-border sales with one integration to the platform trusted by 250,000 merchants worldwide.

Why Choose Rapyd?

• Support for industries such as eCommerce, marketplaces, digital goods, iGaming and online trading
• Direct Visa and Mastercard acquiring in the UK, Europe, Israel, Singapore and LATAM
• Support for cards, Google Pay, Apple Pay and hundreds of payment methods

Get Started with Rapyd