MasterCard Cross Border Fee
Mastercard charges an assessment fee called 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 Michigan, the business will be assessed a cross border fee.
Let’s look closer at when you can expect to see this fee, and how much it will cost.
- Mastercard Assessment Fees
- Cross Border Fee
- Identifying the Cross Border Fee
- Lowering Mastercard Acceptance Costs
Mastercard Assessment Fees
Assessment fees, such as the cross border fee, are one piece of credit card processing costs. Assessments are non-negotiable and set by the credit card companies. Assessments are paid to Mastercard; your processor doesn’t make money from assessment fees.
Multiple assessment fees can apply to one transaction, including the cross border fee.
Cross Border Fee
You’ll be charged the cross border fee if the Mastercard transaction takes place in the US, but uses a Mastercard that was issued outside of the US.
MasterCard’s cross border fee is assessed as a percentage of the transaction amount. The amount of the fee depends on whether the transaction is settled in US dollars; there is a cross border (domestic) rate for transactions settled in USD and a cross border (foreign) rate for transactions settled in a different currency.
As of 2018, the fee is set at 0.60% of the transaction amount for transactions settled in USD. The fee was first introduce in 2006 as a 10 basis point charge, but has been increased a few times since then.
For transactions settled in a foreign currency, the fee is 1.00% of the transaction amount.
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, who ultimately pass the cost to businesses.
Identifying the Cross Border Fee
When you accept a Mastercard that was issued outside the US, you may not be aware of it at the time. You’ll realize it when you look at your monthly processing statement and notice that you’ve been charged the cross border fee. It will be listed with your other Mastercard assessment charges. Processors may abbreviate the fee or spell it out completely. In the statement snippet below, the processor abbreviated Mastercard and spelled out cross border, adding the notation "US" to indicate that the transaction was settled in US dollars and thus assessed the 0.60% fee.
The fee will be listed on interchange plus and tiered credit card processing statements, but you will typically not see it on a flat rate statement, as assessments are not broken down for you. However, you’re still paying the fee even if you’re on a flat rate pricing model. Read more about pricing models.
Lowering Mastercard Acceptance Costs
As noted earlier in this article, it’s not possible to negotiate assessments lower than the rates set by Mastercard. However, it’s important to note that some processors artificially inflate the assessment charges, hoping that you won’t notice. It’s important to work with a credit card processor that passes assessment fees to you at true cost.
If your processor does pass along assessments at cost, it may still be possible to lower your overall processing fees, even though you can’t lower assessments. The easiest way to do that is to secure a lower markup. You can use a processor comparison tool to get quotes from processors in a blind auction format. CardFellow offers a great, free resource for you to secure competitive pricing. Try it here!