What are Markup Fee and Foreign Transaction Fee? | A Complete Guide to International Card Fees

The markup fee, more commonly known globally as the foreign transaction fee, is a charge that many cardholders are unfamiliar with. Many of our followers have reached out to us on Facebook and via email asking for clarification on this topic. Today, we'll provide some insights into the "markup fee."

Let’s start with a simple and clear explanation. If you use a card that operates in a specific currency, and you make a payment in a currency different from your card's, a markup fee will be applied.

.f an American citizen uses a credit or debit card based in USD to make a payment in Canada, whether at a restaurant or shopping mall, the payment will likely be processed in the local Canadian currency (CAD) instead of USD. In such a case, the markup fee would be applicable.

To help explain the markup fee more clearly, let’s look at another example. Let’s assume you’re a Bangladeshi and using a dual-currency debit/credit card from a local bank. Your card supports two currencies: BDT and USD. If you make a transaction in any currency other than BDT or USD, the markup fee will be applied. Even with a multi-currency card, the fee will apply only when the transaction is made in a currency that’s not supported by the card.

Why is the Markup fee Applied?

The markup fee is generally charged when you make an international payment, meaning when you use your card to make a transaction in a foreign currency. In this case, the bank or card-issuing institution will convert the transaction amount into your local currency, and they impose an additional charge for this conversion process, which is the markup fee.

This fee mainly covers the cost of currency conversion, the exchange rate difference charged by card networks (such as Visa, Mastercard, or American Express), and additional risks or processing costs involved in the transaction. In the United States, this rate is usually between 3% to 5%. In Bangladesh, the rate typically ranges from 2.5% to 4%, though it can vary based on the specific bank or card. Therefore, it is crucial to be aware of the markup fee when making international transactions. Additionally, value-added tax (VAT) or other local taxes might be applicable depending on the country or region.

How to Avoid the Markup Fee?

Use Special Cards: Some credit or debit cards are designed to waive the markup fee for international transactions. For example, some banks and fintech companies issue cards for worldwide transactions with no fee. Examples of such cards include PayPal, Payoneer, Skrill, and similar services. Using these cards can help you avoid the markup fee.

Use Special Accounts: Some banks or financial institutions offer specific accounts for international transactions where the markup fee is not charged. With these accounts, you can make transactions in foreign currencies without incurring additional charges.

Use Cryptocurrency: Some platforms encourage making international payments via cryptocurrency, and such transactions are often exempt from markup fees. However, this method may involve risks and restrictions, so it’s essential to research and understand the implications before opting for this route.

Make Payments in Local Currency: Whenever possible, you can opt to make payments in the local currency while traveling abroad or shopping online. This avoids the need for currency conversion and the associated markup fees, as no conversion process or additional charges will apply.

Use Online Banking and Payment Systems: Some online payment platforms, such as  or TransferWise (now Wise), can help reduce the markup fee for specific transactions if you transfer money from a bank account.

Additionally, you can contact your bank or card issuer to inquire about special packages or plans that might offer a waiver of the markup fee.