I was going through some payment gateways to find a good gateway to process my local currencies online. Almost all of them charge a fee called "currency conversion fee" which is like 3% to 5%. Can someone tell me what is a currency conversion fee and how its charged? Will it be charged from the customer or he merchant?
There are two main use cases when it comes to multi-currency processing. In your case it sounds like you want to authorize in one currency and settle in another. Such transactions are going to involve additional costs due to the cross-border assessments charged by card associations. The amount is usually not as high as what you quote, so probably the amount of the currency conversion fee increases because gateways surcharge an additional fee on top of association charges. You might find cheaper options (depending on your volume) if you shop around. You can also choose to authorize and settle in the same currency to avoid such fees. It is just a brief explanation. If you need more detailed explanation you can check out the article ‘Accepting Credit Card Payments in Different Currencies’ on Paylosophy http://paylosophy.com/accepting-credit-card-payments-different-currencies/ Hope it’ll help.
A currency conversion fee is a charge by banks and credit card companies on transactions that are carried out in a foreign country. These fees are charged in addition to foreign ATM fees. The fees can also stack, with currency conversion fees charged both by the card company, like Visa or MasterCard, and the bank that issued the card. Banks and card providers usually structure a currency conversion fee as a percentage of a transaction. Visa and MasterCard charge a 1 percent fee, and banks add a fee to that number. The total is usually about 3 percent. It will be charged from the merchant.