How to Save Money on International Transactions?

We live in a digitally connected world where we send and receive money from all around the world. On top of that, the Gig economy is booming at the moment and many people are living in one country and working remotely in another. 

This means that there are people who have frequent international money transfers, and most of them don’t know that the banks are eating a large portion of their profits.

Yes, international money transfers aren’t free. Payment processors and banks usually take a percentage for processing international payments. But managing those fees is a complete nightmare.

Why? Well, banks are not quite transparent when they highlight their international money transfer fees and for some of them, you’ll need to be a rocket scientist to figure out how much money the bank will take.

There are different fees associated with international money transfers. First, most banks have fixed money transfer fees or a percentage. Some banks even charge you money for adding the amount of money to your bank account. 

But that’s not all. Since we are talking about international money transfers, there is a good chance that the amount you send or receive isn’t the same currency. This means that you have to exchange that money into your local currency and face exchange fees and unfavorable rates.

So, calculating the real cost of a single international payment is quite complicated.

However, most people also don’t know that you can actually save money on international payments quite easily. As we mentioned before, we live in a digital world, where banks are not the only option for processing international payments.

Why Are International Transfers So Expensive?

Just so we can have a better understanding of how to save money, we have to know how the entire process works and why banks charge us so much money for international transfers. Banks charge large sums of money for international transfers for a couple of reasons.

First of all, they need to pay the staff that is working on your account and process the actual payment. Next, we have the cost of moving money from one bank to another. Even though no physical money is being transferred from one bank to another, it is still a procedure handled by people and we as customers pay for it.

So, how can you save money? Well, there are a few different ways.

Top Tips to Save Money on International Transfers

1. Compare Exchange Rates and Fees

The first and most obvious way of saving money is by comparing currency exchange rates and fees for processing international payments across banks and online financial platforms. Nowadays, you are not limited to the banks available in your country. You can always go for an online financial platform that offers lower fees and better exchange rates.

The best thing is that these online financial platforms are way more transparent than traditional banks. Platforms like Wise or Genome usually have a mid-market rate, which is the best transfer rate you can get. 

Transfer rates start at 0.35%, which is quite good, to be honest.

2. Avoid Banks When Possible

Most online payment platforms offer better exchange rates and fees than traditional banks. After all, these financial platforms specialize in international money transfers only, which is why they have more competitive fees.

3. Choose the Right Transfer Method

Did you know that not all international money transfer methods have the same fees? Some are fast and expensive, others are slow and have low fees. For example, some financial platforms like Genome offer SEPA transfers.

With Genome SEPA transfers, you’ll not only have smoother transactions in the EU and abroad, but also lower fees (only 1 Euro), and they usually take around 4 hours to process which is blisteringly fast.

For smaller amounts, you have PayPal or peer-to-peer apps like Cash Apps. Some of them even have minimal to no fees within certain limits. 

4. Timing Is Everything

Currency exchange rates fluctuate constantly. Monitoring these rates and transferring when they are favorable can save you a significant amount. Tools and apps that provide rate alerts can be invaluable here. Wise, for instance, allows you to set up alerts for the best times to transfer​​.

5. Be Aware of Hidden Fees

Hidden fees can turn a seemingly cheap transfer into a costly affair. Always read the fine print. Some services, for instance, might lure you in with low upfront fees but then hit you with a poor exchange rate or other hidden charges. Transparency is key, so look for providers that break down all costs clearly before you finalize the transfer​​.

6. Negotiate When Possible

If you’re making large or frequent transfers, don’t be afraid to negotiate the fees. Contact the service provider directly and ask if they can offer you a better deal. Sometimes, just asking can lead to substantial savings​​.

7. Consider the Payment and Delivery Methods

The method you choose to pay for the transfer and how the recipient receives it can impact the overall cost. Bank transfers might be cheaper for large sums, while credit card payments can add extra fees. Similarly, having the money delivered directly to a bank account is usually cheaper than cash pickups​​.