International Service Assessment

The International Service Assessment (ISA) is a fee that Visa charges on cross-border transactions, meaning those where the country of the card issuer differs from the country of the merchant's acquirer. It is levied as a percentage of the transaction value and applies to purchases and cash withdrawals made abroad, as well as to online purchases from foreign merchants. The ISA is one of the main reasons that cross-border card payments cost more than domestic ones. The equivalent Mastercard fee is called the cross-border assessment.

The ISA belongs to the family of scheme fees that networks charge their members for using the network. Visa typically charges the ISA to the issuer, while a related fee, sometimes called the international acquiring fee, is charged to acquirers on the merchant side. Both are eventually passed on: issuers through foreign transaction fees or account pricing, and acquirers through the merchant's processing rates.

Whether a transaction is cross-border depends on where the issuer and the acquirer are located, not on where the cardholder is. A cardholder buying from a website whose merchant uses an acquirer in another country pays an international transaction even if they never leave home. A traveller paying at a shop abroad also triggers the fee. Conversely, if a foreign merchant processes through a local acquirer in the cardholder's country, the transaction may be treated as domestic and avoid the ISA.

Visa applies different ISA rates depending on whether the transaction requires currency conversion. A transaction in a currency different from the card's billing currency usually attracts a higher rate than one settled in the same currency, for example a US-issued card paying in US dollars at a merchant abroad. Rates also differ between regions and may be set differently within regions such as the European Economic Area. Visa publishes fee schedules to its members, and rates change from time to time.

• Currency conversion. Visa converts the transaction into the billing currency at its daily rate; any additional conversion margin is applied by the issuer as part of the foreign transaction fee or exchange rate.
• Cross-border interchange. Interchange rates for international transactions, paid by the acquirer to the issuer, are separate from the ISA and are often higher than domestic rates. See cross-border interchange.
• Dynamic currency conversion. When a merchant converts the price into the cardholder's currency at the point of sale using dynamic currency conversion, the transaction is still cross-border and still subject to network fees, even though no conversion is needed at the issuer.
• Foreign transaction fees. Issuers commonly combine the ISA and their own margin into a single percentage fee charged to the cardholder.

The general term for all these charges is cross-border fee.

For cardholders, the ISA explains part of the foreign transaction fee on many credit and debit cards. Some issuers absorb it on travel cards and premium products as a competitive feature. For merchants selling internationally, the corresponding acquirer-side charges raise the cost of acceptance for foreign customers. Large merchants often reduce these costs by using local acquirers in key markets, a strategy known as local acquiring, so that more transactions are processed domestically.

Network fees such as the ISA are not usually visible to cardholders or merchants as a separate line, which makes them hard to compare. Merchant groups and some regulators have criticised the complexity and level of scheme fees, including cross-border fees, and the European Commission and the UK's Payment Systems Regulator have examined scheme and processing fees in market reviews. Networks argue that the fees fund the infrastructure, risk management and currency settlement required for international acceptance.

Because the ISA is set by Visa and changed through its own fee announcements, issuers and acquirers must update their pricing models when the schedule changes, and merchants on pass-through pricing see the effect directly.

Issuers designing cards for travellers or international use need to account for the ISA when setting pricing. Fintechs issuing cards in one country to customers who spend mainly in another may find that network fees outweigh their interchange income on those transactions. Merchants can identify ISA-related costs by reviewing interchange-plus-plus statements from their acquirer, which separate network fees from interchange and acquirer margin, and can then decide whether local acquiring or alternative payment methods would be cheaper.