What is a SaaS Cross-Border Fee?

A SaaS cross-border fee is a charge that applies when a payment goes from one country to another, involving currency conversion, international banking networks, or foreign financial institutions. For SaaS businesses, these fees apply any time a customer is from a different country, a vendor invoice is in a different currency, or international payroll is processed.

SaaS cross-border fees need to be considered because they affect profits and the profitability of international expansion. If not well-managed, they can quietly take away a company’s capability to expand globally.

SaaS cross-border fees are of different types. Knowing them is important for companies selling products and services worldwide.

Here are the common types of SaaS cross-border fees: 

• Foreign Transaction Fees (FTF): Additional costs applied by the credit card network (like Visa or Mastercard) for managing data across borders, often around 1% to 1.4%.
• Currency Conversion Fees: The markup added when converting the customer’s local currency into the merchant’s settlement currency, typically 0.5% to 2%.
• Wire Transfer & SWIFT Fees: Flat fees for bank-to-bank transfers, often costing $15 to $50 per transaction plus potential intermediary bank deductions.
• Interchange Adjustments: Higher rates charged for international cards compared to domestic ones, which can increase the base processing cost by another 1%.

SaaS cross-border fees can have a serious impact on each part of the SaaS company’s financial health and here is how: 

One of the key ways to ensure control over SaaS cross-border fees is to partner with a payment solution that can help in multiple areas. 

• Local Acquiring: It is important that your payment partner has a strong local bank network and can process international payments at the same cost or a similar one to domestic ones. 
• Payment Routing Systems: Payment partners like PayPro Global have smart routing set in place, which means that transactions are sent to the most cost-effective local gateways. 
• Lokale betaalmethoden: ensure customers have access to a diverse range of local payment methods. 

Having local-currency accounts is a way to keep cross-border SaaS fees under control. With a partner like PayPro Global, a merchant of record for SaaS, software, and digital goods, this is possible. 

Local currency accounts allow SaaS businesses to receive and hold foreign currency without an immediate conversion. This eliminates the conversion fee on receipt entirely and allows strategic conversion when exchange rates are favorable. 

Voorbeeld: 

For a company billing €200,000 per month in Europe, switching from a bank conversion at a 2% spread to a platform rate of 0.4% saves roughly $3,200 every month—over $38,000 annually.