Summary of this article
Overseas credit card spends include markup, tax and conversion costs
Forex markups of up to 3.5 per cent raise bills
Paying in INR abroad can push charges beyond 10 per cent
Making a payment with an Indian credit card in foreign countries or even on global websites is almost frictionless. The payment is accepted immediately, and the price shown at checkout appears as final. The difference shows up days later on the credit card statement. International transactions attract multiple charges that are applied after settlement, making the final amount higher than expected.
Processing International Credit Card Transactions
When a credit card issued in India is used overseas or on a foreign website, the transaction is first processed in a foreign currency. That amount is converted into Indian rupees using a card network exchange rate applicable on the settlement date. This rate may also not be the same as the rate on the day of the transaction because of the changes in currencies and timelines involved in processing.
After the conversion is done, the issuing bank bills the cardholder after adding the relevant charges. Due to such steps, the cost that users see when buying the product might change after the payment.
Mark-Up Fees on Foreign Currency
The foreign currency markup fee is the biggest expense. The Indian credit cards attract a markup of between 2 per cent and 3.5 per cent to the converted value of the rupee. This is applicable to the international point of sale transactions, shopping online at foreign websites and foreign currency subscriptions.
For example, a purchase value of $100 translates to Rs 9,016,79; this means that an increase by 3.5 per cent would increase the bill by approximately Rs 316 (as of January 06, 2026, $1 is equal to Rs 90.22). This is not a voluntary fee, and it is imposed automatically on all international transactions.
GST on Forex Markup
Besides the markup, an additional tax, Goods and Services Tax (GST) at 18 per cent, is imposed on the foreign currency markup fee. The tax is imposed on the markup price, and not the full transaction value.
Now, transactions above a certain threshold attract TCS (Tax Collected at Source). Following the Finance Act 2025, the threshold for LRS (including credit cards) was increased to Rs 10 Lakh per financial year. Spends above this limit attract 20 per cent TCS.
On the same example, GST is approximately Rs 57 on a markup fee of Rs 316. While this may seem small, it increases the overall cost and often goes unnoticed because it is bundled into the final billed amount.
Fluctuating Currency Change and Bigger Payments
Other foreign traders give clients a choice of paying in Indian rupees rather than foreign currency. This is what is referred to as dynamic currency conversion. Although it may seem convenient, it tends to lead to an increase in the overall cost.
Payments by merchants or payment processors will have their own exchange rate and usually have a markup. This margin can range from 3 per cent to 6 per cent, making the transaction more expensive than paying in the local currency and letting the card network handle the conversion.
In some cases, dynamic currency conversion can push the total costs far beyond 6 per cent, and may cross 10 per cent, depending on the exchange rate and additional margins applied at currency conversion terminals.
