Many people often wonder “How much do banks charge for international money transfer” when they send money overseas. This article will go into greater details.
Whether it’s an international business payment or a personal remittance, money is sent abroad for several reasons. Unlike a domestic bank transfer, international transfer isn’t free for the customer.
DNBC’s experts will figure out how much do banks charge for international money transfer and what factors impact the cost.
What is the international bank transfer fee?
International transfers aren’t often direct transactions. Intermediaries are required to get the funds from A to B (even from A to B to C to D) and different steps need completing to arrive at the final destination.
How much do banks charge for international money transfer?
Consequently, banks and other payment providers are likely to charge many fees for the customers making international money transfers.
This includes the cost of payment processing, foreign exchange rate, bank deductions, service fee and other charges.
In addition to the sender paying for these, the beneficiary is often charged a fee for receiving the money internationally as well.
What makes up the cost of an international bank transfer?
When transferring money internationally, the total fees depend on different factors, including the banks or providers themselves, whether the transfer is domestic or international, and from an intermediary bank.
Understanding 4 fees will help you feel assured to send money. Here are some of the popular types of money transfer fees you can meet with:
Foreign exchange rates
Foreign exchange conversion contributes an important part of international bank transfer fees. This won’t be the same as the interbank exchange rate because private banks and other money transfer services use different rates when buying and selling currency to get profits.
The customer will pay a currency conversion charge on top of the interbank rate. The rate at the transaction moment will determine how much the sender pays and the beneficiary receives.
Actually, the exchange rate is not really a fee. An exchange rate refers to how much a currency is valued against another currency.
Some banks can charge a higher markup when converting local currency with international transfers. This markup is a percentage of the amount of money sent, so it can really matter if you’re transferring a large amount of money.
Every bank or financial institution will have different fees for money transfers. Most banks and providers separate fees into sending fees and receiving fees for the domestic or international transfer.
Intermediary bank fees
Some money transfers will partner with a third-party (intermediary bank/service) that facilitates the money transfer between banks.
The intermediary bank/service can charge a transfer fee besides the transfer fees from the sending and receiving banks.
There can be additional fees in money transfer, such as: cancellation fees, correspondent bank fees, and more.
Before getting started with a money transfer, check with your financial institution/bank to get a quote on how much it will cost or what fees you are charged.
What factors impact the cost of international bank transfer?
There are some factors impacting the cost of international bank transfer. Here are some of them:
Time and speed of transaction
Transfer time really matters in international transactions. The foreign exchange rate fluctuates depending on every moment.
International transfer fees are also affected by how soon the beneficiary needs to receive the money.
Typically, international payments can take in 3 – 5 days, but additional charges will be applied if you need to speed up your transaction.
Currencies and countries involved
The currency is another factor involved, because the rates will depend on which pair of currencies are being traded.
Some certain locations are more expensive to send funds to than others, particularly in some countries without modern banking infrastructure and financial technology.
Also, the amount of money in transfers will influence the fees – the more funds you send, the better the rates can get.
The payment provider
This is the biggest element impacting the cost of international transfer fees. Every financial institution charges different fees.
For example, banks tend to charge more if they compare with online payment providers.
Online money transfer providers often offer good fees and competitive exchange rates. Also, all fees are shown obviously to customers.
How much do banks charge for international money transfer?
There are so many factors involved, so international transfer costs will vary depending on those.
Destination, currency, time and speed of transaction are main factors, with rates varying between providers according to their unique capabilities.
Therefore, the only way to know how much an international bank transfer costs is to contact your payment provider and find out what they charge to enable a specific transaction.
As it’s hard to give precise cost, it’s impossible to identify which provider offers the cheapest service.
This is the reason you should research and compare financial institutions/providers with suitable international payment services.
The international payment industry has been highly competitive nowadays, and customers can’t be loyal to any bank if they can choose a provider with the same services for a lower and favorable fee.
In order to gain competitive advantages, banks and financial institutions must find technological solutions in the Fintech industry that enable them to optimize their international payment processes and lower the costs down.
Information about DNBC Financial Group
DNBC Financial Group strives to boost the best business account for international payments with competitive exchange rates and reasonable fees.
By setting a high standard for innovation in the money transfer platform since 2017, DNBC Financial Group is a fast-growing startup in the Fintech industry and offers full online payment solutions, money transactions in over 173 countries with multiple currencies, being transparent and fast delivery speed.