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Transaction Fees: The Silent Killer for E-commerce Sellers

These days, business is global.

According to the Cross-Border Payments and E-commerce Report for 2020-2021 by The Paypers, the global cross-border B2C e-commerce market will reach €3.9 trillion by 2027. (That’s a trillion with a ‘t’.)

Now, consider the fact that every single one of these cross-border transactions involves multiple fees — transaction fees, exchange fees, bank fees — and that’s before you account for the extortionate exchange rate markups charged by most banks and payment platforms.

For e-commerce sellers with a global footprint, sending and receiving money internationally is slow, expensive, and a major pain in the you-know-what.

If you sell your products abroad, or pay suppliers and staff in other countries, you’re likely paying a hefty price in cross-border transaction fees — and while solutions like Paypal, Revolut, and Wise can offer some helpful (if clunky) workarounds, these are consumer financial products and simply weren’t designed with e-commerce in mind.

Today, we’re going to shine a floodlight on the many hidden fees for e-commerce businesses operating across borders. We’ll dive deep into Paypal’s fee schedule and explore some better ways to make payments and receive marketplace payouts when working in multiple currencies.

What Are Transaction Fees? (And Why Are They So Hard for Cross-border Sellers to Navigate?)

If you’ve been in the e-commerce game for long, you’re likely already aware of the damaging impact transaction fees can have on your end-of-year financial results.

In the day-to-day, it’s easy to overlook these small fees as just another cost of doing business. But over time, they can become a serious drain on your profit margins. For businesses that operate in multiple geographies and currencies, transaction fees coupled with hefty currency exchange costs can feel like death by a thousand cuts to your P&L.

So what are we talking about exactly when we talk about ‘transaction fees?’ Here’s a straightforward definition from Investopedia:

“A per-transaction fee is an expense a business must pay each time it processes an electronic payment for a customer transaction. Per-transaction fees vary across service providers, typically costing merchants from 0.5% to 5% of the transaction amount plus certain fixed fees.”

Between the transaction fee charged by your payment processor and/or merchant service provider, the interchange fee charged by the credit card provider and/or bank, the additional per-transaction charge, the foreign transaction fee, and the (usually bad) exchange rate from one currency to another, simply being a global seller can cost you big time.

It’d be impossible to review all the fee schedules out there for the dozens and dozens of different payment processors and merchant platforms, so to help you understand what the most common transaction fees are for global e-commerce businesses, we’ll stick with a classic example: Paypal.

Paypal Transaction Fees: What Are Global Purchases Really Costing Your Business?

As one of the longest-standing payment processors in e-commerce history, Paypal is a mammoth-sized player in the global online merchant community. As of 2019, the platform boasts over 277 million users and 22 million merchants.

The benefits of using Paypal’s robust e-commerce infrastructure are many, but even members of Paypal’s Commerce Platform may find themselves spending too much money on transaction fees.

For a full list of the latest Paypal Merchant Fees, you’ll always want to check out the official Paypal website directly, but here are the standard domestic fees as of the time of this article:

  • Standard rate for receiving domestic transactions = 3.40% + fixed fee
  • Receiving domestic transactions using Advanced Credit and Debit Card Payments
    • Blended Pricing Fee Structure: Visa, MasterCard, or Maestro card types = 1.90% + fixed fee
    • Interchange Plus Fee Structure: Visa, MasterCard, or Maestro card types = Interchange Fee + 1.90% + fixed fee
    • American Express card types = 3.50%

The above schedule is simple enough and for domestic orders, calculating the per unit cost of these fees may be fairly straightforward. But what happens when you take your business global?

Does Paypal Charge Foreign Transaction Fees?

In a word: Absolutely. As with most other payment processors and marketplace platforms, Paypal’s fee schedule becomes much more complicated as soon as cross-border transactions enter the picture.

Paypal charges an additional percentage-based fee for international commercial transactions based on the sender’s country. Here’s the current breakdown as of January 2021:

  • Canada & US = 2.00%
  • Europe I = 0.50%
  • Europe II = 2.00%
  • Northern Europe = 0.50%
  • Rest of the world = 2.00%

You’ll have to check Paypal’s Country/Territory Grouping Table to find out exactly which category you and any of your overseas suppliers and customers fall into. Again, if you’re working with only a few countries (as either payer or seller) juggling the multiple fee schedules can be totally manageable. But as soon as you start sending and receiving payments across multiple territories, foreign transaction fees get much harder to forecast.

Then, there’s the issue of Paypal’s currency exchange rates.

A platform as large and influential as Paypal simply doesn’t need to compete on low currency exchange rates the way newer brands like Stripe, Square, Revolut, and Wise do. The only way to know for sure if Paypal offers a fair rate on a currency you commonly use is to simply crosscheck the rate with that of your bank or payment processor to see which one is lower.

More often than not, you’ll find that most banks and payment platforms do not use the real exchange rate which can cost you multiple figures on each transaction. Also, keep in mind that most banks have an additional fee for depositing funds from Paypal or any other third-party platform in another currency.

In order to avoid the costly impact of multiple currency exchange and transaction fees, many sellers look to alternative options, including credit cards with no foreign exchange fees.

What About Credit Card Transaction Fees?

Disillusioned by bad exchange rates and hidden fees, many e-commerce owners are actively on the hunt for credit cards with no foreign transaction fees — and there are some solid options out there. But which one makes the most sense for your business?

Luckily, there are several trustworthy review sites that have already done the homework for you.

Here’s a quick roundup of some of the top articles reviewing business credit cards that have low to no foreign transaction fees. Note that not all cards are available in all countries, so you’ll want to check the eligibility criteria before spending your time filling out an application.

Top 3 US-based reviews of business credit cards with no foreign transaction fees

  1. Credit Card Insider’s list of 2021’s Best Business Credit Cards With No Foreign Transaction Fees
  2. The Points Guy’s list of Best Credit Cards with No Foreign Transaction Fees (with info on bonus point plans included)
  3. NerdWallet’s Best No Foreign Transaction Fee Credit Cards of February 2021 (includes pros, cons, and recommended credit scores)

Top 3 UK-based reviews of business credit cards with no foreign transaction fees

  1. MoneySavingExpert’s guide to Travel Credit Cards with “near-perfect exchange rates worldwide”
  2.’s list of Cards That Don’t Charge For Overseas Transactions (with a sortable table, default sorted by representative APR and promoted deals first)
  3. MerchantSavvy’s list of Best Business Credit Card Providers includes their choice for the top 10 options with a detailed summary of the terms of each one.

Top 3 CA-based reviews of business credit cards with no foreign transaction fees

  1. GreedyRates’s review of the Best Credit Cards With No Foreign Transaction Fees
  2. Credit Card Genius’s summary of Canadian Credit Cards With No Foreign Transaction Fee
  3. RateHub’s ranking of Canada’s 13 best no foreign transaction fee credit cards for 2021

Top 3 AU-based reviews of business credit cards with no foreign transaction fees

  1. Point Hacks’s card guide on No overseas transaction fees credit cards
  2.’s list of No Foreign Transaction Fee Credit Cards
  3.’s review of Credit cards with no international fees

Despite the solid variety of credit card options out there, it’s rare to find a card that charges less than 15% APR. If you’re not only paying but also receiving money in other currencies, you also still have the problem of getting stung by additional fees when you withdraw the funds to your bank account.

So, apart from putting your profits at the mercy of high-interest rates or hefty transaction fees, what can global sellers do to keep growing their global presence without breaking the bank?

Look for a Truly Global Solution for Sending and Receiving E-commerce Payments

If you’re fed up with expensive cross-border transaction fees and pricey exchange rates, we get it.

To ensure you limit the downside as much as possible on your global transactions, look out for payment platforms that offer:

  1. The ability to hold and convert payments in multiple currencies
  2. Zero cost for withdrawing funds to your account
  3. Low, transparent fees and currency exchange rates

E-commerce is becoming more and more global by the minute. An ideal payment platform will be able to keep up with the changing e-commerce ecosystem by offering affordable, transparent, and flexible options that allow you to do business wherever you need to.

The SellersFi’s Digital Wallet and Prepaid Business Card: Low-Cost Global Transactions Made for E-commerce

At SellersFi, e-commerce is the air we breathe. And as a global company with offices in more than three countries and customers all over the world, we know just how painful it can be to lose money on cross-border transactions.

Our Wallet solution was designed to solve this problem. With Wallet, you can manage your payouts and fulfill invoices in multiple different currencies from one simple payment platform.

Simply launch your Wallet and receive all your marketplace payouts directly in one location, even from multiple platforms, in multiple currencies, or countries. You can hold your payments in over 37 currencies (for any amount of time with no fees!) and convert them all under one roof, saving multiple figures per month on unnecessary transaction fees.

You can also pay inventory costs, shipping fees, and suppliers in over 180 countries without overspending on expensive exchange rates. When used in combination with our 1% cash back Prepaid Business Card, you can make payments in multiple currencies anywhere Visa is accepted.

Get your Wallet today and see how easy it can be to send and receive money, no matter where in the world your business runs.


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