The globalization movement brought about by the internet spawned virtual teams, online freelancers, virtual workrooms, and global businesses. The dynamic online community and transactions resulted in a significant increase in international money transfers. The costs of transferring money from one country to another are expensive, and this has hit many businesses. To address the problem, several alternative options have surfaced.
First, let us discuss the costs of the traditional way of sending money internationally – through banks.
Service Fees – This is not something that is exclusive to banks. All international money transfer channels – banks, MTOs, and online money transfer platforms, charge service fees for their services. However, it is not unusual for banks to charge both the sender and the recipient, doubling the fees. The sender is charged with the outgoing bank fees are charged by the origin bank to the sender, while recipients are charged with incoming remittances by the receiving bank. The average bank service fee per transaction is $40 USD.
FOREX – Forex or foreign currency exchange is applied by most money transfer channels. This is the difference in the exchange rates between the local currencies applied. Currency exchange mark-up is also applied by banks. In essence, the origin bank is selling the sender the currency, say the USD at a profit, while the receiving bank is buying the sent USD at a prime rate. Many non-bank entities apply lowered or no forex in their transactions.
Express Fees – Ordinary international bank remittances take 3-5 business days to complete. If you want the money sent immediately, the banks will certainly accommodate your request, for a fee. Additional charges for the next business day option is from $5-10 USD.
Tracking Charges – If you want to track your remittances, you will have to pay for it. Although not all, many banks will charge extra for tracing and tracking your transaction. This service will let you know when the funds were received. Average tracking fee is $25 USD per request.
Other Charges – These charges are minimal, and some of them avoidable.
- Cancellation Fees – Something went wrong or changed your mind that you need to cancel the money transfer request? Of course, the bank will cancel the transaction, for a fee. The average money transfer cancellation fee is $25 USD.
- Amendment Fees – It is easy to commit mistakes putting in the bank details like the lengthy account number, the account name, or the bank’s IBAN. However, for an international money transfer to be successful, you need to provide banks with the correct information. The average amendment fee to correct a mistake in the transaction is $25 USD.
- Other Costs – Maintaining a bank account costs money as you must also pay for its annual service charges. The costs are significantly higher for international accounts. Although minimal, the maintaining balance money in the account is restricted money.
The trend of international money transfer is changing. Most of these costs are now diminished if not eliminated by alternative options to sending money abroad. Non-banking institutions, money transfer operators, and online money transfer platforms offer cheaper solutions to international money transfers. With the help of advanced technological tools, key charges like FOREX and tracking charges are eliminated. It is just a matter of exploring your options. Here are alternative ways of sending money internationally. 7 Ways to Send Money Internationally to Virtual Employees