How To Save Money On International Money Transfers
Whether you’re selling online or working with contractors overseas figuring out how to save on International money transfers is a big win.
If you run an international online business you are most likely sending and receiving numerous transactions each day. As banks often overcharge their clients, find out what the alternatives are and best tricks to save money on international remittance.
We live in the age of globalization. With two clicks of a button you can access and scroll through an offer from e-commerce stores from all over the world. Global shopping trends spread very quickly through social media and few weeks later this new hot item can be seen in USA, Portugal or Japan.
Moreover, the Internet allows lots of entrepreneurs to thrive, as one doesn’t need an office anymore. They can easily run a successful business from a tiny flat. A global freelancing marketplace and well-developed communication and co-working platforms allow to hire people from all over the world to work remotely. However, this may generate quite significant costs for international payment fees.
International money transfers, especially through banks, do cost more and because they require more effort than traditional methods often have a lot of fees tacked on, so it’s important to shop around.
A business bank account is a must-have for all business owners.
In some countries it’s actually mandatory to maintain such an account for your company. However, a quick look through transaction costs at most popular banks show how pricey it can be. While usually domestic transactions are free of charge, an international money transfer can generate costs up to $30. Moreover, it will take up to 3 days to process it. What’s more, some financial institutions charge you simply for receiving a payment from abroad. And what if you are handling hundreds of transactions each month? In fact, even the costs of few overseas payments each week can significantly affect the budget of your business.
It’s no surprise that people started to look for cheaper alternatives to expensive international bank wires. Online international money transfers are convenient, cheaper and faster. The remittance companies establish their own worldwide connections and in many cases have facilities in different countries, which allows them to offer even instant transfers.
Check out these 5 tips for sending international money transfers cheaper:
Even if your business requires you to handle the payments in an old school bank-based way, many online platforms offer direct transfer to bank accounts. It’s a convenient option, as you can send the money both within the online platform if your recipient also has such account, or order cheaper bank wires or card payments there. That’s how PayPal has become widely popular among online businesses, as it’s very adjustable to owners and customers’ needs.
There is a versatile choice of individual remittance services, as well as special business-oriented platforms. If you are handling more complex payments and need to manage hundreds of orders and invoices it may be better to open a special business account. You can check the current business-oriented offer on this Wirly.com list. This site specializes in gathering information about various remittance-related companies. Simply use the filters to find the cheapest or most reliable companies. While PayPal for Business is probably the most popular choice, there are other cheaper and more convenient platforms.
Some companies may lure you by offering “free transfers”. However, be careful as there is this popular trick pulled by remittance platforms, which often leads to higher fees at the checkout.
International money transfers often require currency conversions. Your clients may purchase a service or item and pay in their local currency. Then, depending on the transaction specifications, some system exchanges the currency. The same happens if you need to send a transaction to your employees or some partnered company. Let’s say that you are in the United States and need to send a payment to the Great Britain. 1 USD = 0.76GBP. You use this “free transfer” and send $100, but your recipient gets only 60GBP instead of 76. It’s because many remittance platforms put their own hidden margin on the exchange rates. You don’t pay any official transfer fees, but the money is converted by rates, which differ from the official ones you can find on Google.
Therefore, always check the exchanges rates before accepting the transfer order. Look for companies which offer rates close to the “midmarket” or “interbank” rates, as these are the values used by financial institutions and banks to trade currencies among each other.
A neat trick to save some money on international transactions is to try different currency pairs.
What does it mean?
Well, some companies have established better connections and routes for sending particular currencies. So it may simply be cheaper to send EUR to Europe instead of USD. Actually, some transfers between European countries can be even free of charge.
There are also companies which specialize in handling money transfers in certain regions. For example – Remit2India (as the name indicates) offers very cheap transfers particularly to India. Or Caribe Express which focuses on Dominican Republic and its nearest islands. So adjust the platform and currencies based on the region you are most active in.
A brave option, which can pay off, may be to try out these new purely digital coins known as cryptocurrencies.
You must have heard about Bitcoin, as it’s been covered by most of the mainstream media in the last couple years. Putting aside any potential controversies, the sole technology behind cryptocurrencies allows to send money quickly and at the cost of a couple cents. And it’s not even an exaggeration – it costs literally $0.5 to send any amount of BTC to any place in the world and the recipient will get it in less than 10 minutes. Other cryptocurrencies have transaction times of just a few seconds. It’s all thanks to blockchain, which is the technology behind them.
Some remittance platforms are already testing how to incorporate blockchain to regular international transfers and make them faster. There are already a few companies who adopted this technology and successfully lowered transaction fees and increased processing speed.
Maybe the future of remittance is the combination of this digital power and classic banking? Or maybe these new developments will soon replace old school currencies and transfers…