Banks. Everybody uses their services, but are they the most efficient way to transfer money internationally? Individuals and businesses tend to incur steep costs when using banks to transfer money internationally.
Banks charge high fees because they can. Only in recent years have clients started choosing non-bank alternatives for their international money transfer needs.
Most of us will pay attention to the bank services that we require, with negligible fees, but we don’t pay close enough attention to the international transfer prices and currency exchange rates that banks levy. The reason for this is clear: Most of us hardly ever contract the services of banks for international currency transfers.
For their part, banks have not missed a beat. They capitalize fully on these global money transfers by jacking up their fees, charges, commissions, and purportedly making the exchange rates as ‘unfavourable to the client’ as possible. Do banks do this intentionally? This question is up for debate, but banks certainly don’t go out of their way to make things easy for international money transfers.
When a bank transfers money from one country to another, it goes through multiple channels. For example, a central bank is needed which then transfers the money to another central bank, which in turn transfers the money to the receiving bank. Rumour has it that a minimum of 4 banks are involved in every international bank currency transfer.
Banks communicate with one another via SWIFT, which currently has 10,500 financial companies on its radar. Plus, SWIFT processes millions of daily messages. These messages come at a hefty price. Here are some of the fees that you can expect to pay with international wire transfers:
- Bank of America levies a foreign outgoing wire fee of $45, and a foreign incoming wire fee of $16
- Wells Fargo charges a foreign outgoing fee of $40 and a foreign incoming wire fee of $16
- Capital One charges a foreign outgoing wire fee of $50 and a foreign incoming wire fee of $15
- BMO Harris Bank charges a foreign outgoing wire fee of $45, while Santander charges a $40 outgoing wire fee.
Statistics show that international bank wire fees are becoming more expensive. The leading banks such as BB&T, Bank of America® and Chase have all increased their fees over time. Incoming wire fees are always cheaper than outgoing wire fees – but this doesn’t help people who are sending money abroad.
Bank customers can substantially lower the fees that they are paying on incoming and outgoing wire transfers by conducting their international transfers online, instead of in-bank. Repetitive wire transfers are also cheaper for clients than once-off transfers. In all cases, domestic wire transfers are cheaper than international wire transfers.
Since international wire transfers require one currency being exchanged for another, and there are multiple banks involved, there are higher fees involved.
Are there alternatives to banks for international money transfers?
One company that provides comparative analysis of the top international money transfer companies is International Money Transfers Org. All the service providers are fully vetted for reliability, affordability, customer service and efficiency of operations. They offer mobile friendly solutions to money transfers around the world.
The buy/sell rates offered by these service providers are midmarket rates, and there are minimal, or zero, wire fees associated with these service providers.
Many of them offer additional services such as personal dealers, and they cater to clients all over the world. Leading money transfer service companies include WorldFirst, TorFX, TransferWise, and CurrencyFair.
Banks are currently enduring tremendous stresses in terms of currency manipulation charges levelled against them by the US authorities. This rampant ‘theft’ has been brought to the attention of regulatory and oversight agencies, and this has facilitated a rise in the popularity of non-bank financial services.
Some of the fees that banks levy on clients can add charges between 4% and 15% when sending money internationally. Even banks that offer commission free financial transactions to clients often make up that shortfall by charging unfavourable exchange rates. The fact of the matter is that banks place all sorts of limitations on clients when it comes to transferring funds abroad.
Lengthy wait times, mounds of paperwork, and unfavourable exchange rates are some of the many problems that clients face. New-age thinking and technology means that banks are no longer the de facto choice for international currency transfers.
Non-bank entities are far more reliable and cost-effective, and they get the job done a lot quicker.
© 2017, Ruddigar Simpson. All rights reserved.