MasterCard began charging a cross border fee on all transactions acquired in the United States that involve a credit card issued outside of the United States. For example, if a cardholder uses their Canadian-issued MasterCard to make a purchase from a business in Montana, the business will be assessed a cross border fee.
MasterCard’s cross border fee is assessed as a percentage of the transaction amount. The fee was first introduce in 2006 as a 10 basis point charge, but has been increased a few times since then to 30 basis points in 2007, and then to its current level of 40 basis points in 2008.
The cross border fee is 40 basis points (0.40%) only if the transaction is settled in U.S. dollars. It is increased to 80 basis points if the transaction is settled in foreign currency.
The cross border assessment fee is one of two volume-based fees that MasterCard charges on transactions involving credit cards issued in another region than where they are acquired. The other fee assessed on this type of transaction is MasterCard’s acquirer program support fee.
The cross border fee is charged to acquirers that ultimately pass the cost to merchants.