Currency conversion and cross-border card fees

Three places a conversion can happen

When an account is funded in one currency and held in another, somebody converts the money. The cost depends almost entirely on which of three parties does it.

1. The merchant side. The payee, or the terminal or checkout it uses, offers to convert the amount into the payer's home currency at the point of payment. This is dynamic currency conversion.
2. The card scheme. Visa or Mastercard converts between the transaction currency and the currency in which the card is billed, using the rate that applies when the transaction is processed.
3. The issuer. The bank or e-money firm that issued the card or holds the account applies its own rate or adds a charge on top of the scheme rate.

More than one of these can apply to a single payment, which is why the amount that eventually appears on a statement can differ from every rate seen during the transaction.

How a conversion is priced

Two components make up the price: a reference rate, and a mark-up over it.

The reference rate is a wholesale benchmark. In Europe the benchmark used for disclosure is the European Central Bank's euro foreign exchange reference rates, which are usually updated at around 16:00 CET on every working day except TARGET closing days, based on a daily concertation procedure between central banks that normally takes place around 14:10 CET³. The ECB is explicit that the rates are published for information purposes only and that using them for transaction purposes is strongly discouraged³.

The mark-up is what the converting party adds. European law requires it to be expressed in a comparable way: currency conversion charges must be stated as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the ECB¹².

That disclosure duty has a shape worth knowing:

• For card-based transactions at cash machines and points of sale, the information must be given before the payment transaction is initiated¹.
• For credit transfers where conversion is offered online, the payer must be told, before initiation, of the estimated charges for currency conversion services, in a clear, neutral and comprehensible manner².
• Electronic message requirements, which alert a payer after a conversion, applied from 19 April 2021, with the main transparency provisions applying from 19 April 2020¹.

Separately, charges for cross-border payments in euro must be the same as the charges that provider levies for corresponding national payments².

What the card schemes actually publish

Scheme rate calculators are indicative tools, not guarantees.

Mastercard's converter states that the currency conversion rate and converted amount are indicative only and inclusive of any bank fee entered, that rates are specific to the date and time the bank authorises the transaction, and — the important sentence — that your bank may or may not use Mastercard currency conversion rates to bill you and may impose additional fees in connection with foreign currency transactions⁴. It also notes that the rate does not apply where the merchant or cash machine operator performs the conversion instead⁴.

Visa's consumer calculator is framed the same way, offering an indication of the rate a cardholder may receive when using a Visa card to pay while travelling internationally⁵.

So the scheme rate is a component, not the final price. The issuer's treatment sits on top of it, and merchant-side conversion replaces it altogether.

Fees that sit behind the scenes

Not every cross-border cost appears on a customer's statement. Interchange is a fee paid within the payment system, from the merchant's acquirer to the card issuer, and it forms part of what a business pays to accept a card.

The UK Payment Systems Regulator examined this directly. In its final report of 13 December 2024 on UK–EEA consumer cross-border interchange fees, it concluded that Mastercard and Visa had likely raised these fees to an unduly high level at the expense of UK businesses, and that a lack of competition led to costly price increases with an unclear rationale⁶. The regulator estimated that in 2022 alone UK businesses paid an extra £150 million to £200 million as a result of the increases, which followed changes made in 2021 and 2022, and it proposed a two-stage price cap remedy⁶.

Customers do not pay interchange directly. It matters here because cross-border acceptance costs shape which payment methods businesses offer and how they price them.

Practical checks before paying across a currency border

• Prefer a price expressed as a mark-up over a named reference rate. That is what European disclosure rules are built around¹².
• Read a merchant-side conversion offer as a separate product. If a checkout offers to bill you in your home currency, it is proposing to do the conversion itself rather than leaving it to the scheme and issuer⁴.
• Expect the statement figure to differ from the calculator figure. Both schemes describe their published rates as indicative⁴⁵.
• Check the direction of travel. A deposit converted one way and a withdrawal converted back can incur two conversions on the same money; how long payments take sets out where that extra step sits in the chain.
• Read the account currency, not just the site's display currency. A site showing a balance in one currency may be settling in another.

Method-by-method comparisons, including where reversibility and dispute rights differ, are in our payment methods guide, with the card-specific detail at how chargebacks work and the wider set at payment methods explained.