People send money overseas for different reasons, such as settling bills like overseas mortgages or foreign investments. Also, business owners who ship products regularly send cash internationally to suppliers to cover delivery costs. Luckily, in this growing era of digitization, there are several ways to send and receive money internationally. Financial technology has made the transfer process faster, easier, and more secure.
However, there are costs involved in cross-border money transfers. For instance, you can be charged a transfer or remittance fee, which may be a fixed amount or a percentage of the transfer amount. Also, some destination banks or countries may have laws that impose delivery charges on international remittances hence reducing the overall payout. Fortunately, there are still affordable ways to transfer cash overseas. This article highlights five tips to minimize charges:
- Compare Money Transfer Companies To Get Cheaper Transfer Rates
It’s vital to choose your money transfer provider carefully. You’d want to determine the transfer rates for various currencies, primarily if most of your overseas recipients use different currencies. Find out if a provider charges a flat fee, a percentage rate, or offers zero transfer fees. Essentially, it’s best to work with a company that provides zero or low transfer fees to minimize your charges and increase the payout.
And since many providers advertise free transfers on their websites, you can effortlessly search for them online. Alternatively, you may ask for recommendations from your peers or fellow business owners who regularly make international money transfers. They’re more likely aware of a money transfer company offering reasonable rates.
Also, if you regularly purchase products from China, an online money transfer service like Airwallex can help you pay suppliers in China quickly and cost-effectively. You can instantly convert your cash to CNY in a single online platform and make payments anywhere and anytime. Additionally, you can enjoy the best foreign exchange (FX) rates and avoid high transaction fees.
- Take Advantage Of Offers, Discounts, And Promo Codes
Money transfer companies occasionally offer discounts or promotions to their customers. It can be seasonal, for instance, during holidays such as the New Year or specific periods throughout the year. Therefore, you’d want to use such deals to send money internationally cheaply. You can check for promo codes or coupons on the company website or ask them directly via email, live chat, or other options.
Also, many online money transfer services have special offers for new customers, and this may comprise zero transfer fees. For that reason, it’s best to sign up for such offers so you can transfer money without paying high fees. It can save you a lot of money, especially if you’re transferring large sums.
- Select A Cheaper Delivery Method
The delivery method is the option you choose to send money to your overseas recipient. It determines how the money transfer service will remit the funds to your receiver. For example, you may opt for bank deposits, mobile wallet credits, cash pickups, or card transfers. Other companies may also offer door-to-door cash delivery to your recipient’s address.
Money transfer companies charge different prices for the various delivery options they offer. But generally, you’d want to use electronic delivery methods like mobile wallets or bank accounts. These online payment solutions involve less processing overhead, making them cheaper. Notably, the more affordable it is for your provider to move funds, the more benefits they translate to you in terms of lower fees.
- Check For Hidden Fees
Some financial institutions may charge a high FX markup on their exchange rates, reducing the final payout. The cost of inflated exchange rates is sometimes not obvious, so they’re referred to as ‘hidden costs.’ For instance, the bank may charge you unexplained miscellaneous interbank fees if you make a bank transfer. While these unexplained charges may seem less significant for smaller transactions, they can significantly impact business owners who make numerous international payments.
You can find out if there are any hidden fees involved by calculating the FX markup on the rate quoted by your money transfer company. A good rate has a small FX markup of about 1%. In case of high markups, say 9-10%, it’s best to explore other cheap alternatives. On the whole, you’d want to avoid companies with unexplained or questionable charges. Most importantly, you should be able to calculate the money that your overseas recipient gets accurately.
- Avoid Multiple Transfers
You’ll incur different transfer costs for each transaction by making money transfers in small bits. Therefore, you’d want to aggregate your small payments into one large transaction that can save you vast amounts of money. Also, you can benefit from offers and promotions associated with lump sum transfers since some companies can waive the transfer fees.
Depending on your requirements, various money transfer companies charge different rates for cross-border payments. Even so, international money transfers shouldn’t be an expensive process. Above are some tips to consider to minimize charges. Also, remember to research the best money transfer services, compare the rates, and choose the most efficient solution.