What is the ISA fee?

Fees are a necessary cost of doing business for globally ambitious merchants.

Nevertheless, it’s important to understand the different elements that constitute the overall cost of accepting international payments, so that you can factor them into your global strategy. 

Visa’s international service assessment (ISA) fee is one such element, which is charged by the card network to account for the higher risk of taking payment from cards issued in a different country to where the merchant is located. 

In this article, we explain the ISA fee, when it’s charged, how it’s calculated, and whether or not you can avoid or reduce it. 

What is the international service assessment (ISA) fee?

Visa charges merchants an international service assessment (ISA) fee every time a business accepts a payment from a customer who’s using a credit or debit card that was issued in another country. 

The ISA fee was introduced in 2008 to cover the increased costs and risks associated with processing cross-border transactions. Mastercard, American Express, and Discover also charge their merchants  cross-border fees. 

ISA fees are a type of card scheme fee, and are charged in addition to interchange fees, which are charged by the card issuing bank, and processing fees, which are charged by your payment processor. 

When are ISA Fees Charged?

As a merchant with a US-based acquiring bank, whether or not an ISA fee is charged on a transaction will depend on where the customer’s card issuing bank is based.

rate. Be aware that this could be as low as 0.3% and up to 2.3%. 

How are ISA Fees Calculated?

Using the US as an example - as of 2023, the Visa ISA fee here is between 1% and 1.4%.

ISA fees vary depending on the currency that the transaction is settled in.  So a transaction made with an international card that’s settled in USD will incur a lower end ISA fee. However, if the customer chooses to not settle the transaction in their domestic currency, the fee will be 1.4%. 

On top of the ISA Fee, Visa also charges an International Acquirer Fee (IAF) of 0.45% for cross border transactions. There is a higher rate of 0.9% for some specific higher risk MCCs.

That means, for any foreign card payment your business accepts, you could be charged between 1.45% and 1.85% (2.3% for specific higher risk MCCs).

As mentioned earlier, it’s not just Visa that charges this type of fee. They might fall under different names, but all the other major card networks charge you to accept cards issued by non-US banks. 

Here’s a quick breakdown:

Mastercard 

Mastercard charges you two fees specific to international cards: the International Cross Border Fee and the Acquirer Program Support Fee. The latter is only charged for transactions settled in foreign currencies.

• International Cross Border Fee - between 0.6% and 1% (depending on whether the transaction takes place in USD)
• Global Acquirer Program Fee - 0.85%

American Express

American Express charges a cross-border fee of 0.4% on all international transactions, but this varies significantly depending on a range of factors.

Discover

Discover’s fees for international cards are:

• International Processing Fee - 0.55%
• International Service Fee - 0.80%

Who is responsible for paying ISA fees?

Merchants are solely responsible for ISA fees. Visa doesn’t pass any additional charge onto the customer. 

Typically, when a card issued overseas is used, Visa will charge your payment processor, who will then pass those fees onto merchant in some form (which we’ll explore later in the article). 

ISA fees for online payments

Visa makes no distinction between online and offline transactions when it comes to ISA fees. If a customer makes an online payment on your website using a foreign card, you’ll be charged between 1.25% and 1.65%. The only factor that influences the fee is the currency used. 

What is the difference between ISA fees and IAF fees?

Both ISA fees and IAF fees are types of assessment fees. They are charged at a flat rate and stacked on top of each other for every payment you accept that’s made using a card issued by a foreign bank. 

However, unlike the ISA, which is either 1% or 1.4%, the IAF is consistently 0.45% (except for some higher risk MCCs where it is consistently 0.9%).

Can I reduce or avoid the cost of ISA fees?

If you accept international payments, there’s no way to avoid ISA fees entirely, and as they’re set at a standard rate by Visa, there’s no room for negotiation either. 

The one measure you can take, if you’re not already on it, is to switch your business to an interchange-plus pricing structure. 

On the interchange-plus model, the fees are broken down into the interchange fee, which varies depending on the card used, and the markup charged for processing. For every transaction, you’ll still be charged the same for processing, but you’ll be charged the variable interchange.

Understanding foreign transaction fees

There are two other possible foreign transaction fee setups: tiered or flat pricing. 

Exactly how tiered pricing works will depend on your PSP. Different PSPs will have different tiering structures. Some may also charge a fee specifically for cross-border transactions, whereas others will not. For these reasons, tiered pricing can be considered less transparent than interchange plus. 

With a flat rate, you’ll pay the same fee regardless of whether the underlying interchange rate has changed. A flat rate is more predictable than both an interchange plus or a tiered pricing structure, which makes it easy to factor the cost of these fees into your financial projections. However, it does mean you’ll be paying unnecessarily inflated fees on some transactions. 

As the fees can appear under different names, it’s not always clear which fee setup you’re on, and how your total foreign fees are calculated. To work it out, you might have to carefully investigate your merchant processing statement. 

Here’s what to look out for:

• Interchange fee -  you will probably see your ISA fee itemized under an assessment fees section. If you can’t, scan the fees line by line to find it
• Flat rate - the ISA will probably be bundled together with other charges on your statement, rather than being itemized separately
• Tiered - the ISA could either be under listed assessment fees or not itemized at all

Optimize payment processing with Checkout.com

When it comes to trading internationally, you might not be able to decide which fees you’d like to be charged but you can choose a payment processing partner that helps you capture more value from every transaction and optimize your overall costs. 
Checkout.com’s payment processing solution offers more reliable payments in every major market, more than 150 currencies, and dozens of local payment methods. We can help you grow your international revenue while giving your customers a frictionless experience wherever they are in the world. 

Find out more about why Checkout.com is the smart solution for international payment processing. 

For example, you’ll be charged an ISA fee if a visiting tourist makes a transaction with your business using a card issued by a bank registered in their home country, even if that bank has a US branch. 

You’ll also be charged an ISA if someone uses a foreign card to make a purchase with your ecommerce store, regardless of whether they’re shipping to a US or an international address.