CCY Conversion Fee: All You Need to Know

6月 28, 2021

Most of the time, the terms ‘cross currency (CCY) conversion fee’ and ‘foreign transaction fee’ are used interchangeably. However, they are not the same.

The CCY conversion fee is charged by the credit card payment processor when you purchase or make transactions in a foreign country using your home currency debit or credit card. A foreign transaction fee, on the other hand, is charged by the credit card issuer when you make purchases from a foreign merchant, either online or in the merchant’s home country.

In this article, we will focus more on the CCY conversion fee, how it works, and a better alternative.

What is a Cross Country Conversion Fee

When you purchase something at the store of a foreign merchant and pay using your debit or credit card, the payment is made in the home currency of the merchant. In such cases, the CCY conversion fee can be charged by the merchant or by your debit/credit card processor.

The currency conversion fee is the fee charged to convert your home currency into the home currency of the merchant. This is usually 1% of the transaction. The CCY conversion fee is sometimes called the “foreign currency conversion fee” or the “foreign currency exchange fee”.

When purchasing in a foreign store, you may be asked if you want to convert the purchase amount to your home currency. If you agree, then the POS at the merchant’s end will use Dynamic Currency Conversion (DCC) to convert the purchase price to your home currency.

While this may seem like a good idea as it allows you to see the cost of your purchase in your home currency immediately (instead of waiting for the credit card bill), it comes at a cost. The DCC may not be a good exchange rate, plus an additional service charge is added. You could end up paying up to 12% on the transaction cost.

On the other hand, if you decline DCC, and make your payment using your credit card, then the currency conversion rate is the rate charged by your card provider, which is generally a good conversion rate. However, in your credit card statement, it may be hidden in the foreign transaction fee.

If you decline DCC, then you must ensure that you have a currency conversion app handy so that you know how much your purchase is in your home currency. If not, you will only discover the price when you get your credit card statement.

We highly recommend having a currency conversion app handy or at least you should know the approximate current exchange rate. This will help you do a quick mental calculation to know how much your purchase costs in your home currency.

Credit card companies are supposed to show exactly how much is charged. So if the statement shows a foreign transaction fee of 3%, 2% would be the actual foreign transaction fee, and 1% would be the currency conversion fee.

Typically, DCC is much higher than going through currency conversion offered by your credit card processor.

Should I Decline DDC?

It is a better option to decline DDC to avoid extra charges. Better than that, use a currency converter app to convert the price of your purchase at a foreign store into your home currency so you have an idea of the price of your purchase in your home currency. Why pay the extra DDC charges?

Remember, credit card companies negotiate competitive exchange rates for foreign currencies, so you get a good conversion rate. This is much better than opting to use DDC.

Even better, try and make your purchase in the local currency, if possible.

To make purchases in a local currency, either you need to have enough local currency or you should find an ATM of a reputable bank to get a good exchange rate. Make sure you do not make too many visits to an ATM as you get charged each time to use it. Make sure you withdraw enough cash in one time to cover purchases you may make.

How Does a Cross Currency Conversion Fee Operate?

In order to understand how the CCY conversion fee works, we first need to understand the foreign transaction fee. A foreign transaction fee is a fee that is charged on purchases made using a credit card in a currency that is not the home currency of the card.

It is an extra amount that banks or card companies add to the CCY conversion fee for transactions that are done abroad. Although the foreign transaction fee may vary, it is usually charged at about 2% to 3% of the transaction.

For instance, when you make withdrawals of purchases oversees worth $1000 using your credit or debit card, you will get a $30 surcharge. This is supposing your card issuer charges a 3% foreign transaction fee. This is also true if you make transactions on ATM transactions that charge a transaction fee.

In some instances, the CCY conversion fee can be hidden in the foreign transaction fee. Both the currency conversion fee and the foreign transaction fee can be combined to give what is called a single foreign transaction fee.

Nonetheless, there are some credit cards and card providers that have cards that do not charge a foreign transaction fee. You need to check with your bank to see if your provider has the option of not charging a foreign transaction fee.

Some common purchases that incur a foreign transaction fee include:

  • Flight tickets from an international airline
  • Shopping online from an international site
  • Using international ATMs

How to Avoid Paying Foreign Transaction Fee?

Now that you know what constitutes international transaction fees, you are probably wondering how to avoid them. Yes, there are ways that can help you avoid paying foreign transation fees. They include:

  1. Exchange Currency Locally

It is a good idea to exchange currency before traveling to avoid international or foreign exchange fees. If possible, calculate the expected cost for your travel or purchase and plan ahead of time by exchanging currency at a local bank. You may be fortunate enough to find a bank or credit union that has a fair exchange rate and you won’t need to pay extra exchange rate fees. If you are traveling to countries like China however, with advanced mobile payment practices and is a largely cashless society, this advice would not apply. You may be better off using a card like AP-1, which allows QR code payments and direct SGD to RMB conversion (using the funds available in your AP-1 virtual card) at point of purchase.

  1. Identify Foreign-Friendly Banks

The best way to avoid paying the foreign transaction fee is by identifying foreign-friendly banks that forgo foreign transaction fees. It is worthwhile to inquire with your bank whether they have the option of issuing a card that does not charge this fee. Some cards do not charge you the foreign transaction fee.

  1. Avoid Foreign ATM

Another way to avoid paying the foreign transaction fee is to try and make payments in a foreign land using the local currency. However, this may not be possible because there are limitations on how much currency you can carry in a foreign land.

A good alternative is to use a local ATM of a reputed bank to withdraw local currency which you can use to make payments locally. Try as much as possible to avoid foreign banks and check if your local bank has a partnership with a foreign bank. Also, it is best to make huge transactions at once than doing several transactions.

  1. Acquire a Fee-Free Credit Card

Another easy way to forgo hefty foreign transaction fees is to get a credit card that does not charge you international transaction fees. With these cards, you can shop overseas and make transactions without worrying that you will pay more.

You could also use a reputable credit card from a reputable company that forces vendors to comply with proper CCY charges. Also, we suggest you use a currency conversion app so that you know how much your purchase is in your home currency, rather than using DCC.

How Much are the Fees and Who Charges Them

To give you an idea as to the rates of the different fees and who charges them, here are some details:


Imposed on

Imposed by

Approximate rate

Foreign Transaction

Overseas credit card transactions


2% - 3%

Currency Conversion

Overseas Currency conversion



Dynamic Currency Conversion

Overseas point-of-sale conversion


3 - 12%

Be careful when purchasing in a foreign country. Understand what the different types of fees are, who levies them, and what the rates are like so that you have more control over what you are paying for on your overseas trip.

When making purchases in a foreign country or online from an international store, CCY conversion fees are unavoidable. In some cases, you can overcome the foreign transaction fee. But that only happens if your card processor waives the foreign transaction fee. Check with your card processor before making an international purchase.

And, we would like to warn you that you should always decline DCC because that will only inflate your purchase price. Decline DCC and you may just have to contend with CCY conversion fees and a foreign transaction fee which can add up to just 3 to 4% of the purchase price.

For transactions in China or payments to China, there is a good option that is affordable and simple to use.

An Affordable, Transparent Alternative: AP-1 Business

If you are looking for a simple and effective way to pay into China, you need a multi-currency card like the AP-1 Business virtual card. Here’s what it can do:

  • AP-1 Business is fast, your payment to your supplier or vendor in China bypasses intermediary banks that typical telegraphic transfers in banks use. Your money is directly deposited into the recepient’s UnionPay account and only takes T+1.
  • AP-1 Business is comparable to what banks charge, but with competitive and direct exchange rates from UnionPay (no double conversions from SGD to USD to RMB, as some banks do).
  • AP-1 Business is convenient to setup , do it all from your phone.

AP-1 Business card is the only digital business account that is issued outside of China to enable payments at T+1. It is faster than telegraphic transfers issued by banks, which are normally incur multiple fees and may facilitate payments up to T+5.

This allows you to easily make online or offline payments into China just like a Chinese local would. It is very easy to load and top up funds in your AP-1 account and the AP-1 card integrates with UnionPay. You can send money to a UnionPay personal account-holder in China or globally within 60 seconds.

Currently, AP-1 supports USD and SGD, but more currencies are expected to be integrated soon.

For more information on AP-1 Business virtual card, visit the website.


When purchasing or making transactions in a foreign location, you will be charged a CCY conversion fee and a foreign transaction fee. The CCY conversion and foreign transaction fees are two different fees and the terms cannot be used interchangeably. However, some cards waive the foreign transaction fee. Check with your provider regarding this.

The AP-1 Business virtual card allows you to transfer money into China much faster than what banks can. If you are a business looking to make payments to China, do not hesitate to get your AP-1 Business virtual card today!

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