How international payments are processed
Merchant processors route a cross‑border card transaction through the card network and an acquiring bank or local partner. The card network flags the sale as international, which can trigger different interchange rates and additional screening for fraud or sanctions.
- Currency conversion: The card network typically sets the base exchange rate; processors or acquirers often add a conversion spread or fee on top of that.
- Settlement currency: You can settle in your home currency or in the cardholder’s currency if your processor offers multi‑currency accounts. Settlement choice affects timing and reconciliation.
- Dynamic Currency Conversion (DCC): Some terminals offer DCC to show customers the charge in their currency; it can increase convenience but often costs more for the cardholder.
- Cross‑border considerations: Expect extra interchange or cross‑border fees, possible additional KYC checks, and sometimes longer holds while verification occurs.
Practical tips: enable multi‑currency support if you sell internationally, compare effective exchange rates (not just advertised fees), clearly disclose any DCC options to customers, and work with processors that have local acquiring partners to reduce costs and settlement delays.