At Tab, we want to make international transactions easier and more transparent for everyone. On most international card payments, there are several fees for both businesses and customers, and these can vary dramatically, so only you will know exactly what works for your business.
We make sure our fees are really clear, especially for your customers, so both you and they know exactly how much you'll be paying.
What is an international transaction?
An international transaction is any transaction where the customer's bank is in a different country from your bank even if the bank accounts are in the same currency.
It is more expensive for banks to transfer money across country borders, so these transactions are usually much more expensive than domestic transactions (where the customer's bank is in the same country as your bank). Domestic transactions are usually free for the customer.
Expand the sections below to find out more about Business and Customer fees.
Business Fees
Business Fees
You already know that you get charged to process card payments. These fees can vary dramatically, but most businesses pay between 2.6% and 5.9% for international card payments. Sometimes there are upfront or monthly costs too (like monthly subscription fees, or a cost for a POS device).
Usually these rates will vary depending on the country the card is issued in and the type of card, so you may pay much more on some transactions than others.
Lots of card processors advertise lower fees, but these are normally for domestic transactions, so you should always check the rates on cards from the most common countries your guests are from.
Tab
At Tab we think you should always know how much you're paying, so we have a really simple payment structure. There are no upfront or monthly fees, and we charge the same fees for all cards and all countries:
2.9% for Instant Payments (where the customer is with you)
2.9% + $1 USD for Advance Bookings
Customer Fees
Customer Fees
When customers pay by card, banks usually charge foreign transaction fees. These vary even more than business fees, and customers rarely know how much they're paying.
The fees that customers pay can broadly be broken into two parts - transaction fees (which are usually listed on a customer's bank statement) and currency exchange fees (which are wrapped into the payment amount). The currency exchange rates are usually the highest part of the fees.
Transaction fees
Transaction fees are the additional fees that the customer's bank charge them to use their card abroad. It is sometimes a fixed fee (around 50¢ - $2 USD), sometimes a percentage rate (around 1-3%), and sometimes both.
Currency exchange fees
Most banks do not use pure market exchange rates. They use another service (usually provided by a card issuer such as Visa or Mastercard), who charge a small fee on the exchange rate (around 1%). The bank usually then adds a percentage fee to this exchange rate (usually between 1.99 - 4.99%).
Tab
At Tab, we convert the customer's payment into a domestic transaction. This means that they have no bank fees for their transaction. We also use a 'pure' exchange rate, so there are no hidden fees wrapped into the payment. For this service, we charge your customers a flat rate of 4%.
Usually this is cheaper for them than any other type of international transaction - and depending on the countries, card and currency, it can be significantly cheaper.
There are, of course, exceptions to this - for example, some customers pay for bank accounts that don't apply international fees. These accounts usually still apply the currency exchange fees, so it may still be valuable for these customers to pay via Tab.
Examples
Because all banks, cards and currency pairs are different - and banks don't like to make their fees clear - it can be really hard for customers to understand how much they're paying. To help, we've put together some examples from major banks.
We want to be transparent, so we've used the example of 1000 MXN (Mexican Pesos) as it's a major currency, so has more favourable rates and fees. Similarly, we've given examples from major banks in the UK and US which give among the best rates and fees in the world - so these are some of the cheapest examples of international transactions.
When guests are calculating their fees, it's really important that they find out not just the transaction fees but the currency exchange fees too.
Expand to see 1000 MXN at Lloyds (UK; GBP) on 5th October 2023
Expand to see 1000 MXN at Lloyds (UK; GBP) on 5th October 2023
On this payment, the customer saved 2.6% (1.20 GBP) by paying through Tab
Sources:
The Lloyds fees for international transactions on a standard account can be found here under 'Transactions outside the UK - Buying goods or services in a currency other than pounds'
The Visa Payment Scheme Exchange rate (used by Lloyds) can be found here. To find just the Visa rate set 'bank fees' to 0%
Expand to see 1000 MXN at Bank of America (US; USD) on 5th October 2023
Expand to see 1000 MXN at Bank of America (US; USD) on 5th October 2023
On this payment, the customer saved either 0.6% (0.32 USD), 1% (0.55 USD) or 4.8% (2.64 USD) by paying through Tab.
Sources:
The Bank of America fees on a Personal Advantage account can be found on pg.10 here under 'International Transaction Fee'.
Bank of America may use different exchange rates - either the Visa, Mastercard or BoA exchange rates. We've listed all three.
You can see from these examples how difficult it can be for customers to know how much something is going to cost them.
A note on withdrawing cash
Withdrawing cash is the most expensive way of making a payment abroad for your customer, as their bank will charge them the same currency exchange fees but higher transaction fees (usually $2.50-$5). The cash machine will apply a fee also, which can often be extremely high, and may force the customer to use their exchange rate, which is usually a highly disadvantageous exchange rate. We've seen examples of people paying 16% in total on cash withdrawals.