What happens when you pay in foreign currency?

Picture yourself in front of the payment terminal in a small Japanese restaurant hidden in the backstreets of Tokyo. It’s time to settle the bill: you insert your Qonto card and type your PIN code. After a few seconds of holding awkward eye contact with your server, the receipt begins to print from the machine - the payment has been approved.

A very interesting question, especially when one is traveling abroad. Let’s examine this process more closely.

Even though you seem very nice, the waiter at this Japanese restaurant will want to check that you’re not a fraudster. It’s nothing personal - he does it for everyone. He’ll use his payment terminal to make sure everything is in order. For example, he can check that the PIN code you just entered is the correct PIN code for the payment card.

He can also compare your payment card with all the cards that have been used on the terminal's network. In general, these are large networks, with tens of thousands of terminals. So if your card has already been used fraudulently with one of them, your transaction will be rejected immediately.

After having made these few checks, the transaction authorization request may be sent to your finance management solution. That’s us.

Mastercard acts as the intermediary between us and the server’s payment terminal. Think of their role as that of a mailman. But a very fast mailman because they deliver their messages in a matter of a few seconds.

Mastercard's role is to forward the transaction authorization request (sent by the Japanese restaurant’s terminal) to your payment institution (in other words, us). This is normally straightforward, except in this case you chose to pay for your meal in Yen, whereas you only have euros in your Qonto account.

In this instance, Mastercard will switch from the “mailman” role to that of a foreign-exchange broker. It will convert the restaurant bill into euros. And like any foreign-exchange broker, it will apply a commission to pay itself (around 1%).

Once this adjustment has been made, Mastercard acts as the mailman once again to deliver the transaction authorization request. And that’s where we come in.

By the time we receive the transaction authorization request, it will have already been a few hundredths of a second since it left the Japanese payment terminal. We need to make a decision, and fast - otherwise you won't be able to pay and may have to do some washing up.

The question is: do we accept the transaction or not?

Throughout this process, we ask ourselves a series of questions:

We only respond to the authorization request after performing all of these checks. If everything comes back good, we block the amount on your account (this is when ‘In progress’ is displayed on the payment terminal).

Mastercard comes back to inform the payment terminal that the payment authorization request has been approved. A few seconds after having entered your PIN code, your payment is then (finally) accepted.

Making purchases abroad incurs a transaction fee, but that depends on the type of Qonto card you have in your wallet.

Generally, if you have the One card, it means that you only occasionally travel abroad. In this case, a 2% fee is applied to your foreign currency payments: 1% to offset the Mastercard commission and another 1% to cover the cost of the card (which is free to you).

For those who travel on business more frequently (even to Tokyo), we also offer the Plus Card. Here the foreign currency payment fees are 1% to cover the Mastercard commission.

The X Card, on the other hand, has a 0% foreign transaction commission.