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Foreign Transaction vs Foreign Currency Transaction

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Differentiate between a foreign transaction and a foreign currency transaction. Please give an example of each.

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Solution Summary

The solution contains an indepth description of the difference between the two.

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Foreign Transaction: A transaction which is made outside the US, even if denominated in US dollars. For example, you are shopping for a plane ticket to Malaysia, and you buy one from Malaysia Airlines for $700. You are sitting in your office in LA, and you use your Wells Fargo credit card. Since you bought from a foreign company who processed the charge where they are located, it's a foreign transaction. It would also be a foreign transaction if you walked into a Malaysia Airlines counter in Malaysia and purchased it with your Wells Fargo card, in person and paid dollars.

Foreign Currency Transaction: This, is actually a little bit ...

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