What Are Foreign Transaction Fees? A Simple Guide for Indians Who Shop or Travel Abroad
💡 Real-Life Story: Tanya’s Costly App Subscription
Meet Tanya, a fashion influencer from Delhi. As her Instagram presence grew, she decided to upgrade her content by subscribing to a premium video editing app priced at $9.99/month—a small cost for better-quality videos, or so she thought.
“I expected to be charged around ₹829 each month. But my credit card statement kept showing around ₹863, and I couldn’t figure out why,” Tanya recalls.
Initially, she blamed it on fluctuating exchange rates. But after a closer look, she discovered the real reason: foreign transaction fees. Her credit card had a 3.5% forex markup, plus 18% GST on that markup—charges that quietly inflated her monthly bill.
What seemed like a minor monthly difference eventually added around ₹411 extra per year—on top of the ₹9,950 she was already paying annually for the subscription (based on $119.88/year at an ₹83/USD rate).
Tired of these hidden charges eating into her budget, Tanya made a smart switch to a zero forex markup credit card, saving her over ₹500 annually—without changing a thing about her subscription or spending habits.
Tanya’s story is more common than you might think. If you’ve ever:
- Shopped online from a foreign site
- Subscribed to international apps
- Booked hotels or flights in foreign currency
- Or used your Indian card abroad
…you’ve likely paid this invisible fee too—without even realising it.
🌍 What Are Foreign Transaction Fees?
A foreign transaction fee is a charge ,your bank or card issuer applies when you spend in a foreign currency, either online or abroad. It typically consists of two parts:
- Forex Markup: A fee charged by your bank, usually between 2% to 3.5%, for converting Indian Rupees (INR) into foreign currency.
- GST on Markup: An 18% tax on the markup fee, as per Indian tax rules.
🧾 It applies to:
- Shopping on international websites (like Amazon US, ASOS, etc.)
- Subscriptions (like Spotify Premium US, Canva Pro, Netflix Global)
- Swiping your card abroad for travel, hotel bookings, or meals
🔍 Example: The Hidden ₹343 You Didn’t Notice
Let’s say you buy a $100 product online, and the exchange rate is ₹83. Logically, you’d expect to pay ₹8,300. But here’s what actually happens if your credit card has a 3.5% forex markup:
| Step | Description | Amount (₹) |
| 1 | Base transaction (₹83 × $100) | ₹8,300 |
| 2 | Forex markup (3.5%) | ₹290.50 |
| 3 | GST on markup (18%) | ₹52.29 |
| Total fee added | ₹342.79 | |
| Final amount charged | ₹8,642.79 |
That’s ₹343 extra, paid just for the privilege of using your own money across borders!
🧠 Forex Markup vs. Foreign Transaction Fee: What’s the Difference?
These terms are often used interchangeably, but here’s the subtle difference:
| Term | What It Means |
| Forex Markup | A percentage added by your bank to convert INR to another currency |
| Foreign Transaction Fee | The total charge, which includes markup + GST |
So, the actual fee you’re paying is not just the markup—it’s the markup plus tax.
🏦 What Do Indian Banks Typically Charge?
Here’s a snapshot of popular credit cards and their foreign transaction charges:
| Credit Card | Forex* Markup Fee |
| HDFC Regalia Gold Credit Card | 2% |
| YES Marquee Credit Card | 1% |
| SBI Elite Credit Card | 1.99% |
| Axis Magnus Credit Card | 2% |
| Axis Burgundy Private Credit Card | 0% |
| IDFC First Mayura Credit Card | 0% |
✅ Note: 1. Please note that these fees are subject to change. It’s advisable to consult the respective bank’s official website or customer service for the most current information. 2.*Additional GST is applicable on the forex markup fee.
✈️ Real-Life Story: Arjun’s Surprise Travel Fee
Arjun, a software engineer from Bengaluru, booked a $1,200 flight to London using his credit card. He expected to be charged around ₹99,600 (at ₹83/USD).
Instead, his bill showed ₹1,03,700.
“I was shocked. The extra ₹4,100 was just fees! I didn’t even buy anything extra.”
His card had a 3.5% markup with tax. That was the last time Arjun booked international travel without comparing card charges. He now uses a travel card with 0% forex markup, especially for big-ticket expenses.
✅ How to Avoid or Reduce Foreign Transaction Fees
Foreign transaction fees can quietly chip away at your savings—but the good news is, you can dodge them smartly. Let’s explore how, through real-life experiences and practical advice:
💳 Switch to a No Forex Markup Card
Tanya, whom we met earlier, learned this the hard way—₹411 a year may seem small, but over time, it adds up. The easiest way she cut down her extra charges? She switched to a zero forex markup credit card.
Here are a few popular options in India:
- Niyo Global (SBM/Equitas) – A zero forex markup card, great for international travel or app subscriptions.
- RBL World Safari Credit Card – Specifically designed for international use.
- BookMyForex Card – Works well for travel and education abroad.
Note : ✅ Always read the card’s terms. Some zero-forex benefits apply only to certain spends or user tiers.
💼 Preload a Forex Card Before Traveling
If you’re planning a trip abroad, prepaid forex cards (from Axis Bank, HDFC, or Thomas Cook) let you lock in a good exchange rate in advance—meaning no surprises later.
Pros:
- No markup while swiping abroad
- Safer than carrying wads of cash
- Accepted widely in most countries
Cons:
- Reload and inactivity fees
- Sometimes incompatible with international websites or app stores
Ravi, an engineering student studying in Germany, used an forex card to pay tuition and rent. “The ability to preload in euros saved me around ₹6,000 compared to my credit card,” he says. “Just had to remember to use it every few months to avoid dormancy charges.”
🌐 Compare Both
Many international services like Netflix, Adobe, and Spotify now offer local INR billing for Indian customers. Opting for INR billing helps you avoid foreign transaction fees, forex markups, and GST on those markups—making your costs more predictable.
However, INR billing isn’t always the cheapest option.
For example, some global websites allow you to choose between paying in INR or USD. While INR might seem more convenient, here’s what to keep in mind:
- 💳 Paying in USD with a zero-forex markup card can be cheaper, especially if your card provider offers competitive exchange rates.
- ⚠️ Paying in INR may sometimes involve Dynamic Currency Conversion (DCC), where the merchant or payment processor converts the currency using poor exchange rates and adds hidden fees.
👉 Pro Tip: Always compare both options before paying. And when abroad or shopping on foreign websites, choose the local currency (USD, EUR, etc.) and let your bank handle the conversion unless INR billing is clearly better.
📊 Track Your Statements Monthly
One of the most powerful tools? Awareness.
Regularly reviewing your credit/debit card statements is one of the best ways to catch hidden charges like foreign transaction fees, DCC, or even forgotten subscriptions.
You can use money apps like Money View, or your bank’s official app. These apps are commonly used in India and offer features like:
- Expense categorization
- Bill tracking
- Alerts for large/spike transactions
- Statement summaries
These can help you spot patterns and charges you didn’t notice earlier.
Tanya said, “It took me six months of billing statements to realize I was being charged an extra fee on every single subscription—an extra cost I hadn’t even noticed before.”
❌ Common Myths About Foreign Transaction Fees
Myth 1: “Debit cards don’t attract foreign fees.”
✅ Truth: Most Indian debit cards do charge foreign transaction fees—and in some cases, their forex markup is even higher than that of credit cards.
Myth 2: “If I shop from India, no fee applies.”
✅ Truth: If the billing currency is not INR, your bank will still apply foreign transaction charges—even if you’re physically in India.
Myth 3: “Banks will refund forex charges if I complain.”
✅ Truth: Banks will only refund charges that were applied in error. Legitimate forex fees (as per the card’s terms) are non-refundable.
🧾 Quick Recap: Know Before You Swipe
| Term | What You Should Know |
| Forex Markup | Typically 2%–3.5% fee on foreign currency transactions |
| GST | 18% GST is applied on the markup amount (not the full transaction) |
| Total Extra Fee | Roughly ₹300–₹420 per ₹10,000 spent in foreign currency |
| Best Solution | Use 0% forex markup cards to avoid these extra charges |
🔍 FAQs
Q1: Are foreign transaction fees illegal in India?
A: No, foreign transaction fees are legal and regulated by the RBI, banks, and payment networks (like Visa or Mastercard). However, these fees must be transparently disclosed in the card’s terms and conditions.
Q2: Can I avoid forex fees completely?
A: Yes. You can avoid or significantly reduce foreign transaction fees by:
- Using credit/debit cards with 0% forex markup
- Using prepaid forex cards
- Choosing INR billing when offered by international platforms
Note: INR billing avoids forex charges but may sometimes involve Dynamic Currency Conversion (DCC)—which often uses poor exchange rates. Always compare the INR total with the USD total (plus your card’s markup, if any) to decide the cheaper option.
Q3: Do international UPI transactions attract fees?
A: As of now, cross-border UPI is in early stages and supported in a few corridors like India-Singapore and India-UAE. Charges (if any) depend on:
- The countries involved (corridor)
- The banks or payment partners facilitating the transaction
For most consumers, international UPI is not yet widely available, and charges will vary based on implementation.
🏁 Conclusion: Spend Smart, Save More
Foreign transaction fees are small in percentage but big in impact—especially if you shop or travel internationally often. Understanding how these fees work, and choosing the right tools (like zero-forex cards or prepaid forex cards), can help you save thousands of rupees every year.
As we saw in Tanya, Arjun and Ravi’s stories, being aware of your card’s charges and reading the fine print can make all the difference.
💡 Final Tip: Always check the billing currency before making an online payment and compare multiple card options before picking one for global use.
After all, why pay more when you don’t have to?
Disclaimer: The information provided in this article is for general informational and educational purposes only and should not be considered as financial or investment advice. Please consult a qualified professional before making any financial or investment decisions. Information may change over time, so we recommend verifying information before taking any financial decision. Some links in this post may be affiliate links, meaning we may earn a commission if you apply for a credit card or financial product through them, at no extra cost to you. We do not endorse or recommend any specific credit card or financial product. For more information, please read our full Disclaimer here.
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