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I want to know what are the fees involved when we pay online using Visa/MasterCard to a service which accepts payment in some other currency. I have very little knowledge related to this.

I am from india and my Visa card is with my bank which transacts in INR. I want to buy something from a website which accepts Visa/MasterCard payments in USD/EURO. So my questions are :

  1. Is it even possible to pay there using my INR ViSA card?
  2. If yes, how would the conversion happen from INR to USD/EURO?
  3. What are the fees involved?
  4. If not, what are the other ways i can use to buy from that website?

I have tried searching on the net for hours but couldn't find anything related to this.

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It all depends on your credit card company, and maybe on the nature of the transaction.

I recently used a debit card to withdraw cash at an ATM in a foreign country. I was charged an ATM fee by the bank that owned the ATM, another ATM fee by my bank, and a currency conversion fee by my bank. All told these fees added up to almost 7%.

On the other hand, while in that country I used a credit card -- a different card -- a number of times to pay hotel bills and restaurants, and I was charged zero fees, and as far as I could see was given the full current exchange rate. Oh, and I've made on-line purchases from foreign companies with my credit card a few times and I've never been charged any fees, though there may be hidden fees somewhere.

I have seen other places that give a "modified" exchange rate. If the current rate is, say, 50 foos to the bar, they give you only 45 foos for each bar and then they keep the difference.

Check the details on the web site or paperwork from your credit card company to see what fees they charge.

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In general, payments will be in the currency denominated by the seller. Your bank will automatically convert a balance of INR from your card to whichever currency you chose to pay in (be it USD or EUR) based on the bank's current exchange rate of that currency pair and some currency exchange fees will be charged on top. Fees involved is something only your bank can answer but in general at least for European banks that amount is usually small.

  • (+1) The commission is typically 2-3%, which is not that small actually. – Relaxed Dec 14 '17 at 9:50
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    It indeed depends on your bank. I have three credit cards, two Visa and one Mastercard (Beobank and Keytrade). The costs with Beobank is 2,10% while the transaction cost with Keytrade is 1,40 %.Most of the time if you search "[your bank] fees or transaction costs" you should find a pdf with all the costs. – reaper_unique Dec 14 '17 at 10:08
  • @Relaxed Popular online payment gateways like Paypal, Skrill etc all charge a 5% commission at best, and lets not even go to the amount of premium paid to exchange in physical locations, so all in all bank conversions is imo still relatively small. In other words I would take a bank handling the conversion any day. – Leon Dec 14 '17 at 11:11
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    @Leon Well, yes, it's one of the best option, I certainly do not advocate cash but that doesn't make them small. 3% is not insignificant and adds up pretty quickly (incidentally, commission-free cards also exist) . – Relaxed Dec 14 '17 at 13:16
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Is it even possible to pay there using my INR ViSA card?

Yes it is possible.

If yes, how would the conversion happen from INR to USD/EURO? What are the fees involved?

The conversion will be done by Visa and your Bank will add a markup fee. Generally 2% of transaction value.

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One thing that you need to check is whether you have a debit card or a credit card. Both kinds of cards generally have the VISA or MasterCard logo on them, but they can have different restrictions. For example, I am not a citizen or resident of India but when I opened an NRE and NRO account with an Indian bank some years ago, I received two debit cards linked to the NRE and NRO accounts respectively; for use outside India, and for use within India respectively. This was a few years ago, and perhaps now with the liberalized rules for foreign exchange, it is possible to use a debit card linked to an ordinary savings account (as used by residents of India) for purchases made in nonIndian currencies.

That being said, then, as Leon's answer says, if you charge an amount in a currency that is not the currency in which your card account is denominated, then the network and the credit/debit card issuer will charge a fee of 2 to 3% on the transaction as a foreign currency transaction. There can be additional charges that are hidden from you in the exchange rate. For example, some banks charge the rate corresponding to the amount of the transaction: generally, small amounts have poor rates compared to larger amounts. Other banks will aggregate all the foreign currency transactions (say INR to USD, since the merchants have to be paid in USD) for the day (made by all the users), and charge the rate available for this larger sum. Still others will give you the interbank rate for the currency conversion (can't do any better) but charge that 3% foreign transaction fee on top. And the greediest banks will charge you the small amount conversion rate (even though the bank gets a better rate for itself by doing the aggregation mentioned above) and put a 3% charge on top.

So, be aware of the various ways that the bank/credit-card issuer can extract more money from you, and don't get carried away by slogans such as "No Foreign Currency Transaction Fees". What you gain on swings you might lose on the roundabouts.

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