What is a cross-border fee? Definition, examples and costs
Last update:
If your UK business pays overseas suppliers, sells to international customers or receives revenue from global marketplaces, you have almost certainly paid a cross-border fee, often without realising it.
These fees can quietly add up, often making international payments much more expensive than domestic ones. In fact, the Bank of England notes that a cross-border payment can cost up to 10 times as much as a comparable domestic payment.
For UK businesses trading internationally, from importers and exporters to online sellers, understanding cross-border fees is increasingly important. Overseas transaction charges and hidden currency conversion markups reduce margins over time and can make it harder to compete in global markets.
This article explains what is a cross-border fee, the typical costs charged by UK financial institutions and payment processors and how these fees affect UK businesses in practice.
Key takeaways:
- Cross-border fees are layered and often hidden: Cross-border fees build up through FX markups, transfer fees, card interchange costs and intermediary bank deductions, which is why international payments can cost far more than domestic ones
- These fees directly affect margins, pricing and cash flow: For UK businesses trading internationally, higher payment costs can reduce margins, force price increases or delay cash flow when settlements take days instead of hours
- Transparency remains a real challenge for businesses: Regulators continue to flag cases where providers fail to show total costs upfront. Businesses often only discover deductions after funds arrive, making reconciliation and planning harder
- The payments landscape is improving, but change is gradual: Fintech providers, faster payment infrastructure, better tracking tools and regulatory pressure are helping reduce costs and improve visibility
- WorldFirst gives businesses practical control over cross-border costs: With a World Account, UK businesses can hold and pay in multiple currencies, avoid forced conversions, reduce intermediary fees and choose when to convert funds
Find out how WorldFirst helps UK businesses handle international payments more efficiently.
What is a cross-border fee?
Cross-border fees are charges that apply when you send or receive money internationally or when you make transactions across countries.
In practice, it’s usually a percentage surcharge on the payment amount (sometimes with a flat minimum) that covers the extra costs of processing an international transaction.
It’s important to distinguish cross-border fees from standard domestic transaction fees. For example, UK customers using a debit or credit card abroad often encounter a foreign transaction fee, which is essentially a combination of cross-border charges and currency conversion costs.
Fees for foreign currency transactions with credit cards may vary by provider, typically averaging around 3%.
On the merchant side, card networks such as Visa and Mastercard apply cross-border interchange fees on international card payments.
After Brexit, UK–EU online transactions increased from 0.2% to around 1.15% for debit cards and from 0.3% to around 1.5% for credit cards, with these costs typically embedded in card processing fees and often passed on to customers.
Types of cross-border fees
To illustrate the range of costs, the table below compares typical cross-border fee components across different payment methods in the UK:
| Fee type | Typical cost (UK) | Who charges it and when |
| Outgoing international transfer fee | £0–£25 (online)Up to ~£35–£40 (priority or branch) | Charged by the sending bank per transfer. Many UK banks charge around £15–£25 for standard SWIFT payments, with higher fees for urgent processing |
| FX exchange rate markup | ~2%–4% (high-street banks)~3%–4% (online platforms) | Hidden margin added to the exchange rate. Banks commonly mark up rates by a few percent above the market rate |
| Card foreign transaction fee (consumer) | ~2%–3% of transaction value | Charged by card issuers on purchases in a foreign currency. Many UK cards apply around 2.75%, although some premium cards waive this fee |
| Card network interchange (business) | 1.15%–1.5% (UK–EEA online) | Charged by card networks on cross-border card payments |
| Intermediary bank fees | ~£10–£30 per intermediary | Deducted by correspondent banks handling an international transfer. A payment may pass through multiple banks, each taking a fee, often without upfront visibility |
| Receiving fee (UK inbound) | £0–£6 | Charged by some UK banks to process incoming international payments, particularly non-GBP or non-SEPA transfers |
All values are approximate; exact fees vary by institution and corridor.
How cross-border fees affect UK businesses
Cross-border fees influence how UK businesses price internationally, manage cash flow and plan overseas growth. In 2026, cross-border payment challenges continue to affect companies trading across borders:
1. Cost and pricing concerns
Industry analysis shows that multiple fee layers continue to push international payment costs well above domestic fees. These layers include FX markups, transfer fees and correspondent bank charges, which affect smaller businesses most.
On card payments, interchange fees for UK–EEA online transactions remain elevated after Brexit, with charges rising sharply compared with pre-Brexit levels when EU price caps applied.
The UK Payment Systems Regulator is reviewing these increases and has proposed reforms to limit cross-border interchange fees charged by schemes such as Visa and Mastercard. However, outcomes remain under consultation as of late 2025.
2. Transparency and hidden fees
UK regulators continue to highlight the opacity of pricing in international payments. In 2025, the Financial Conduct Authority observed that additional charges, including intermediary bank fees, are not always disclosed upfront, making it difficult for businesses to understand the full cost of a transfer before they send it.
This lack of transparency affects cash-flow planning and reconciliation. Businesses may only discover deductions after funds arrive, which can delay supplier payments and complicate accounting, especially for smaller firms without dedicated treasury teams.
3. Speed and cash-flow impact
Although global payment infrastructure has improved, many traditional cross-border payments still take several days to settle, particularly when routed through correspondent banks and the SWIFT network.
These delays continue to affect businesses that rely on predictable payment timing to manage suppliers and overseas revenues.
4. Competitive pressure on margins
With cross-border payment costs often several percentage points higher than domestic equivalents, UK SMEs may need to raise international prices or accept lower margins to remain competitive.
FX spreads, fixed transfer fees and card processing charges accumulate quickly, especially on frequent or lower-value transactions.
5. Market and regulatory response
Regulatory scrutiny of cross-border fees has increased. In 2024 and 2025, UK authorities advanced consultations focused on interchange fee caps and more transparent pricing disclosure, while payment providers continue to invest in faster settlement and more transparent fee structures.
These developments show that cross-border payment costs remain a material issue for UK businesses in 2026, shaping pricing decisions, competitiveness and financial planning.
Regulatory insights: Transparency and fairness in cross-border fees
Given the significance of cross-border payments to the economy, regulators and central authorities have taken an interest in ensuring these transactions are efficient and fair.
1. FCA and transparency requirements
The UK Financial Conduct Authority has pointed to ongoing weaknesses in how firms present international payment costs.
Under the Consumer Duty, the FCA expects providers to show fees clearly and avoid pricing that could mislead customers. In a 2025 review, the FCA found that some providers clearly displayed fees, exchange rates and recipient amounts, but many did not apply this standard consistently across the market.
In response, the FCA published guidance setting out what good practice looks like. This includes displaying total fees, clearly showing FX markups and warning customers when intermediary charges may apply, so businesses can compare providers more easily and avoid unexpected deductions.
2. PSR action on card interchange fees
The UK Payment Systems Regulator has focused on the sharp increase in UK–EEA card interchange fees after Brexit, when Visa and Mastercard raised charges significantly.
In response, the PSR proposed capping fees back at previous EU levels, stating that the market was not working well due to limited competition between the two networks, which together process almost all UK card transactions.
3. Bank of England and G20 reforms
The Bank of England supports international efforts under the G20 cross-border payments roadmap, which aims to lower costs, accelerate settlement, expand access and achieve complete fee transparency by 2027.
The roadmap aims to reduce average retail cross-border payment costs to 1%, ensure no corridor exceeds 3% and require providers to disclose total costs and delivery times upfront.
Alongside this, the Bank of England is upgrading domestic payment infrastructure, such as RTGS and CHAPS, extending operating hours and exploring new settlement models that could support faster, cheaper international payments over time.
Reducing cross-border payment costs: trends and innovations
The good news is that sending money internationally in 2026 is, on average, slightly cheaper and faster than it was a decade ago and ongoing innovation promises further improvements.
Here we highlight some key trends and developments that are helping reduce cross-border fees or could do so in the near future:
1. Fintech and non-bank alternatives
Many UK businesses now reduce cross-border fees by using fintech providers rather than relying solely on bank transfers. Payment service providers, e-money institutions and FX specialists have become common alternatives.
These providers usually offer more straightforward pricing and smaller FX markups. Rather than routing payments through several correspondent banks, they often collect funds locally and pay out from accounts in the destination country.
Pro tip: World Account
WorldFirst offers a multi-currency account, the World Account, designed for UK businesses trading internationally. By holding, receiving and paying out funds in multiple currencies, businesses can reduce the need for repeated FX conversions and avoid specific intermediary bank fees.
This setup is particularly useful for companies receiving overseas marketplace payouts or paying international suppliers regularly, where small percentage savings can add up quickly over time.
2. Faster payments and new infrastructure
The payments industry is also working to reduce delays in cross-border transfers.
In several regions, domestic instant payment systems now connect across borders. Europe’s SEPA Instant allows near-real-time euro transfers, while countries in Asia have linked real-time systems to support instant international payments.
In the UK, Faster Payments already enables instant domestic transfers and authorities are exploring ways to connect it with overseas systems. The Bank of England and the European Central Bank have also considered extending operating hours to prevent payments from stalling over weekends or across time zones.
Faster settlement improves cash flow and can lower costs by reducing the need for intermediaries.
3. Better tracking with SWIFT gpi
Even traditional bank transfers are easier to track. SWIFT gpi allows businesses to track international payments from start to finish.
Many UK banks now offer this service and show when funds move, which banks handle the transfer and where banks deduct fees.
This visibility helps businesses identify costly payment routes and avoid unexpected deductions.
4. Regulation and pricing pressure
Regulators are also pushing for lower costs and more transparent pricing.
In the UK, authorities have reviewed sharp increases in card interchange fees and signalled a willingness to intervene where competition remains limited.
Transparency rules also play a role. When providers must clearly show FX markups and total costs, businesses can more easily compare options, which puts pressure on prices.
In the EU, banks must charge the same fee for cross-border euro transfers as for domestic ones. While this rule no longer applies directly to the UK, many UK businesses still benefit by using EUR accounts and SEPA transfers offered by fintech providers.
5. Blockchain and digital currency trials
Banks and fintech firms continue to test blockchain-based payment systems designed to move money more directly across borders. Central banks are also exploring digital currencies that could enable faster, cheaper international transfers.
The Bank of England is assessing a digital pound and international coordination could enable more efficient cross-border conversions of digital currencies in the future.
These solutions are still developing, but even in the private sector, stablecoin arrangements and fintech blockchain networks (like JPMorgan’s Liink or IBM and Stellar’s World Wire project) are in trials to move money at lower fixed costs.
How WorldFirst helps UK businesses reduce cross-border fees
Cross-border fees rarely come from a single charge. They build up through repeated currency conversions, opaque FX pricing and payment routes that rely on multiple intermediaries. For UK businesses trading internationally, reducing these costs starts with control and visibility.
WorldFirst helps UK businesses reduce cross-border fees by removing unnecessary FX conversions, limiting intermediary charges and giving businesses more control over how they handle international payments.
At the centre of this is the World Account, a multi-currency business account designed for companies that trade internationally.
With a World Account, UK businesses can:
- Receive and hold funds in 20+ currencies, reducing the need to convert money immediately on receipt
- Pay suppliers in 100+ currencies using local and international payment routes
- Avoid forced FX conversions by holding balances in local currencies until conversion is needed
- Choose when to convert currencies, rather than converting automatically at the point of payment
- Withdraw funds to UK bank accounts when required, without maintaining multiple single-currency accounts
This structure shortens payment routes and reduces reliance on correspondent banks, which often deduct fees mid-transfer. Fewer intermediaries mean clearer settlement amounts and fewer unexpected deductions.
In practice, UK businesses use WorldFirst to pay suppliers in key sourcing markets such as China and the USA, receive marketplace and payment gateway payouts without unnecessary currency conversion and manage international cash flow from a single platform.
By giving businesses control over when conversions occur and how funds move internationally, WorldFirst helps them actively manage cross-border fees rather than treat them as an unavoidable cost.
Now that what is a cross-border fee and how it applies should be clearer, the focus shifts to managing these costs.
Open a World Account to manage international payments in multiple currencies and reduce unnecessary cross-border fees.
Sources:
- https://www.bankofengland.co.uk/markets/g20-roadmap-for-enhancing-cross-border-payments
- https://www.psr.org.uk/our-work/market-reviews/market-review-into-cross-border-interchange-fees/
- https://www.fca.org.uk/publications/good-and-poor-practice/consumer-duty-international-payment-pricing-transparency-good-poor-practice
- https://www.fsb.org/work-of-the-fsb/financial-innovation-and-structural-change/cross-border-payments/
- https://www.swift.com/our-solutions/swift-gpi
- https://www.bankofengland.co.uk/markets/rtgs-renewal-programme
- https://www.bankofengland.co.uk/the-digital-pound
- https://www.ecb.europa.eu/paym/integration/retail/sepa/html/index.en.html
- https://www.jpmorgan.com/onyx/liink
- https://www.ibm.com/blockchain/solutions/world-wire
- https://www.worldfirst.com/uk/
Abdul Muhit has 17 years' experience in banking and payments, spanning across regulation, payment networks, acquiring, issuing and treasury. He has served across strategic and delivery roles in product, technology and operations functions at global companies including JP Morgan, KPMG and Visa."
Abdul Muhit
Author
Continue reading
Subscribe
The Weekly Dispatch
Get the latest news and event invites. Signup for our weekly update from the worlds of fashion, design, and tech.
You might also like
Choose a product or service to find out more
E-commerce guides
Doing business with China
Exploring new markets
Business Tips
International transactions
E-commerce expansion guides
Doing business with China
