What’s the best way to transfer money abroad from the UK?

Paying suppliers and staff across borders can incur hefty transfer and exchange fees unless you do your research. As companies move towards a borderless future, business owners are looking for better ways to transfer money abroad. 

You might be tempted to use a high street bank when making a global money transfer, simply because you’ve banked with them for years. But the Big 4 actually offer some of the least competitive rates on international transfers, with transaction fees of up to £25 per transfer, and exchange rates that can reach 3.5% above the interbank rate. 

That means if you pay your US suppliers $100k per year, you could end up forking out over £3,500 to the banks, just for the privilege of sending money abroad!  

There are cheaper ways to transfer money across borders, and even swerve currency exchange fees altogether. Read on to find out more. 

How international bank transfers work 

Since the 1970s, banks have used the SWIFT network to transfer money between countries. 

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It’s a system that allows banks to communicate financial information with one another.  

When you transfer money via the SWIFT network, your bank will send a message to the recipient’s bank. If the recipient’s bank is not part of the SWIFT network, and your bank doesn’t have a direct relationship with them, the message will go via an intermediary bank. 

This process can take up to five business days, and each bank will charge a handling fee, which is why SWIFT transfers are so expensive. Banks usually charge between £15 - £25 for SWIFT transfers, that’s on top of exchange rates, which can be up to 3.5% above the interbank rate.  

How to bypass the SWIFT network and send money globally with zero transfer fees

SWIFT was revolutionary for its time, but it’s now around 50 years old. It’s outdated, expensive, and lacks transparency, leading modern businesses to search for an alternative solution.  

Fintechs like Airwallex have developed systems that allow you to bypass the SWIFT network and send money abroad with zero fees. This is done using a network of local bank accounts and payment routes, which enable businesses to receive and send money around the world in multiple currencies without bureaucracy or associated fees.  

Airwallex allows businesses to receive, hold and send money in 11+ currencies—including USD, AUD, GBP, Euros and Hong Kong Dollars—quickly and easily with zero transfer fees. 

How to get the cheapest currency exchange rate

In addition to transfer fees, businesses need to consider currency exchange when sending money internationally.  

How much you pay for currency exchange depends on which provider you use to transfer your money. UK high street banks charge between 2.6 - 3.5% above the interbank rate. Which, when you’re making big money transfers, is a sizable wad of cash that will quickly eat into your profit margins  

Here again, it pays to shop around. Airwallex charges a more favourable 0.5 - 1% above the interbank rate for currency exchange.   

Aside from choosing the right provider to transfer your money, getting the best deal on your currency exchange depends on when you make the transfer. Currency values are in constant flux, and change second by second depending on a range of political and economic factors. 

To protect against currency fluctuations, some providers allow you to lock in exchange rates for a period of time. So you can be sure you’re sending the right amount to your recipient and keeping your money safe.

How to avoid currency exchange fees

Believe it or not, there are ways to avoid currency exchange fees altogether when sending money abroad. This is a clever trick that businesses use to save thousands in revenue each year.

First, you need to set up a global business account. Global accounts (sometimes called multi-currency accounts) allow you to receive, hold and send multiple currencies across the world without charge. Here’s how it works: 

Say your business is based in the UK but a chunk of your customers are in the EU and pay in Euros. You also have EU suppliers that need to be paid in Euros. With a global account, you can collect Euros from your EU customers, hold them in your account, then use those Euros to pay your EU suppliers when the time comes. 

Because these transactions do not require you to exchange currencies, you will not be subject to any fees. This is by far the cheapest way to manage your money across borders.   

How long will international money transfers take to clear?   

This question is particularly pressing for businesses that employ staff around the world. Paying employee wages up to five days late is not a great look! 

Transfers sent via the SWIFT network will take between 1 - 5 working days, so are not the most efficient way to send money on a deadline. 

If you use a global business account that bypasses the SWIFT network, you will be able to make same-day transfers in most cases.   

Transfer money abroad faster and cheaper with Airwallex

At Airwallex, we’ve built our own network of local payment systems that allow you to bypass the big banks and keep more of your money. 

With an Airwallex global business account, you can receive, hold and send multiple currencies across borders without excessive charges, putting thousands of pounds back into your bottom line.  

If you need to make a currency exchange, you’ll benefit from competitive rates of 0.5 - 1% above the interbank rate—up to 90% cheaper than the high street banks. 

If you’re looking for an alternative to slow and expensive money transfers, apply for a free account today.