Consult this guide for information regarding international transactions, programs and customers. _International_ and _foreign_ mean "outside the United States."
## International transactions
As desired, you can permit your cardholders to make transactions in foreign countries, meaning in countries other than the one where your sponsoring bank is located. For example, if your sponsoring bank is in the United States, then purchases made in Europe and South America are foreign transactions. If your sponsoring bank is in Mexico, then purchases made in the United States and Canada are foreign transactions.
### What counts as a domestic transaction
Card networks usually provide an indicator in authorization requests for domestic transactions. When a network determines whether a transaction is domestic, it can be as simple as comparing the country code of the issuing bank to the country code of the acquirer, and if they are the same, the transaction is domestic.
In the case of U.S. territories, the determination is based on whether the issuing bank is in the same territory or region as the acquiring bank. Transactions that cross regional boundaries may not be considered domestic. For Visa cards issued in Puerto Rico, for example, there may be special issuer reimbursement fees applied for non-domestic transactions. Consult the documentation from each card network for more information about how they determine whether a transaction is international or domestic.
When Galileo determines whether a transaction is international for the purpose of assessing fees, it first consults the indicator in the authorization request. If a valid value cannot be obtained in that way, Galileo compares the merchant's country code to the card's country code. You can also use the DOMCC parameter to specify which countries should be considered domestic for your program.
### International fees
Networks charge currency-conversion fees for international transactions. These fees are billed in a separate invoice rather than being included in the authorization amount. Issuing banks may also charge international transaction fees. Both fee rates will vary based on the card type.
As desired, you can charge fees to your cardholders when they use foreign ATMs or make purchases in foreign countries. See <a href="doc:about-fees" target="_blank">About Fees</a> for additional information about setting up fees.
### International transaction process
When a merchant obtains an authorization, the amount in the authorization request is the amount in the cardholder account's local currency. For example, if a cardholder who resides in Alabama goes to a gift shop in Rome, and the sale total is 50 Euros, the authorization amount will be expressed in the equivalent number of dollars. The card network performs the currency conversion automatically.
When the settlement arrives, the settlement amount is usually different from the authorization amount, because it reflects the currency conversion rate at settlement time instead of authorization time.
### Multicurrency BINs
In some cases, it's advantageous to have a different settlement currency than the billing currency, such as when international currencies experience high amounts of fluctuation between the local and billing currencies. See <a href="doc:multicurrency-bins" target="_blank">Multicurrency BINs</a> for more information.
If your sponsoring bank is in Mexico, see [Foreign exchange rate](🔗) for information on aligning your exchange rates with Banco de México.
Consult these examples of international transactions:
<a href="doc:card-transaction-examples#international-transaction" target="_blank">International transaction</a> in the _Card Transaction Examples_ guide.
<a href="page:scenario-13-international-authorization" target="_blank">Scenario 13: International Authorization</a>
<a href="page:scenario-14-international-reversal" target="_blank">Scenario 14: International Reversal</a>
<a href="doc:international-transaction-visa-simulation" target="_blank">International Transaction, Visa Simulation</a>
## International programs
If your sponsoring bank is located outside of the U.S., or if your account holders reside outside of the U.S., consult this section for information specific to international programs and accounts.
### Multicountry certification
Galileo completed the Mastercard certification for the following non-U.S. countries:
For Visa, Galileo is certified to operate in Canada and Mexico.
Coordinate with Galileo to set up programs that extend into any of those countries.
### Names on cards
Because of the naming customs in some countries, a person's full name might exceed the character limit on a physical or virtual card. See <a href="doc:design-a-card#names-in-latin-america" target="_blank">Names in Latin America</a> in the _Design a Card_ guide to see the rules that Galileo uses to present the name on a card, including truncation where necessary. You can ask Galileo to enable this functionality for your program.
### Setting PINs
Some jurisdictions require cards to perform offline PIN validation, meaning that the PIN is encoded on the embedded chip, and the card reader validates the PIN that is input on the keypad with the PIN on the chip. Galileo can help you determine if your use case involves offline PIN requirements.
Consult the <a href="doc:offline-pin" target="_blank">Offline PIN</a> guide for setup methods as well as the <a href="doc:pin-retrieval-service" target="_blank">PIN Retrieval Service</a> guide for one way to make PIN retrieval easier for your customers.
### Foreign exchange rate
This feature is still under development, so the information in this section may change without notice. Contact Galileo for more information.
If you partner with a bank in Mexico, you might need to apply a different foreign exchange (FX) rate for foreign currency conversion than the rate the Mastercard credit network usually applies.
During the settlement of foreign Mastercard transactions, the default Galileo behavior is to use the exchange rate as provided by Mastercard. However, your sponsoring bank might require that for settlement, the official conversion rate from Banco de México be used.
At your request, Galileo will use the FX rate from Banco de México for settlement by following this process:
You and your bank select an adjustment factor no higher than 1.005 for the authorization FX rate. The purpose of this adjustment is to improve the customer experience by reducing the difference between the authorization and settlement amounts.
In the authorization request, Mastercard provides the FX rate to convert the amount at the point of sale (local amount) to the currency of the cardholder account (billing amount).
Galileo recalculates the authorization amount by multiplying the amount from Mastercard by the adjustment factor.
Upon approving the authorization, Galileo places a hold on the account for the amount that Galileo recalculated.
When Galileo receives the settlement batch file from Mastercard, the settlement amount has been converted using Mastercard's FX rate.
Galileo retrieves the FX rate from Banco de México and recalculates the settlement amount according to the Banco de México FX rate, then posts the resulting amount to the account.
Because of fluctuations in exchange rates, it is possible for the settlement amount to be higher or lower than the authorization amount. However, by using the adjusted factor for authorization, the risk of higher settlement amounts is mitigated.
If Galileo cannot contact Banco de México at settlement time, it will use the last FX rate that it retrieved from them.
Galileo is obligated to post all settlements, regardless of whether the settlement drives an account negative.
Every day, Galileo will also provide you with a specialized <<glossary:CDF>> for reconciliation. It will contain all of the amounts and FX rates, from both Mastercard and Banco de México.
Luz Marina lives in Mexico and has a Mastercard account. She visits New York City and makes a USD$30 purchase. The authorization request arrives at Galileo over Mastercard's credit rails.
In the authorization request, Mastercard indicates that it used an FX rate of 17.9791 MXP per dollar. Luz Marina's card issuer has chosen 1.003 as the adjustment factor. Galileo recalculates the authorization amount as follows:
17.9791 x 30 = 539.37
Authorization amount from Mastercard is 539.37
539.37 x 1.003 = 540.99
New authorization amount is 540.99 MXP
Galileo approves the authorization and places a –540.99 authorization hold on the account.
A few days later, Galileo receives the settlement batch file from Mastercard. It shows a settlement amount of –541.22 with Mastercard's FX rate of 18.0406. Instead of using that rate, Galileo contacts Banco de México for their FX rate, which is 18.0221. Galileo recalculates the settlement amount as follows:
30 x 18.0221 = 540.66
Galileo backs out the –540.99 authorization hold and posts –540.66 to the account.
The new settlement amount is 0.33 less than the authorization, so that amount is returned to Luz Marina's account. If Galileo had used the Mastercard exchange rates for both authorization and settlement, the settlement would have been 1.85 more than the authorization, which would have risked driving the account negative.
##### Summary of rates
This table summarizes the example above.
|Difference from authorization