International money transfer: What is the best payment method?

While global expansion offers numerous opportunities for business growth, it also brings the challenge of managing frequent international money transfers. This is especially pertinent for wholesalers dealing with large orders and lengthy processing times. 

This suggested the importance of choosing the right international remittance method while taking different details into account, including transaction fees, processing times, exchange rates, transfer limits, and bookkeeping demands.

What are the best ways for international money transfers?

There are various options available for international money transfers, including transfers handled by online money transfer service providers, traditional or online banks, and third-party providers. It’s crucial to compare these services to find the one that best fits your business needs.

Online money transfer services

Online platforms offer a convenient and user-friendly solution for international money transfers. They usually boast quicker processing times and reduced fees compared to traditional methods, such as bank telegraphic transfers. Some notable examples on the market include Wise, PayPal, Remitly, and WorldRemit. 

Among the group, Airwallex, the all-in-one financial platform, provides interbank exchange rates and clear fee structures under its top-level security regime. As an intermediary between senders and recipients, it ensures that digital transactions are executed swiftly and securely, with approximately 90% of funds delivered within the same business day.

Traditional and online banking transfer services

Traditional bank transfers present a straightforward option, especially for those who already hold an account. While traditional banks offer a high level of security and reliability, they may incur higher costs on international money transfers due to service charges, exchange rate markups, and other additional fees. In addition, transfers via SWIFT have longer processing times compared to other online transfer platforms. It usually takes around 1–5 working days to complete a transfer. This can potentially cause delays when funds are urgently needed.

Third-party providers

Third-party providers, such as money changers that offer transfer services, strike a balance between cost and convenience, making them ideal for smaller businesses that have to execute transactions timely. However, security concerns arise as there’s a risk of fraud when less established or lesser-known providers are selected. Also, larger transactions may not be supported due to transfer limits.

What should be considered when comparing international money transfer methods?

When selecting an international money transfer method, it is essential to take the following factors into consideration:

• Transaction fees and hidden charges: Wholesalers often face various expenses, such as bank service fees, disadvantaged foreign exchange costs that can exceed interbank rates by 4–5%, and additional hidden charges related to transfer processing, such as messaging, which may cost you HK$100–200 per transaction. These expenses diminish profit margins and hinder business scalability.

• Exchange rates: Fluctuations in currency values can significantly affect profitability, especially when there is a delay between price quotations and transaction completion. A depreciation in the customer’s currency during this interval may result in a devastating loss.

• Processing time: Traditional bank transfers through SWIFT typically require 24–48 hours, and can extend up to 5 days depending on the complexity of the transaction. This delay can hinder cash flow and worsen liquidity issues for businesses handling substantial orders or credit arrangements.

What are the costs of sending money overseas?

There are various potential expenses linked to international transfers:

• Upfront service charges: financial institutions and money transfer service providers usually impose service fees, with banks typically levying higher charges. These include additional telegram charges for complicated international transfers that require more than one SWIFT code, remittance status enquiry fees, and fees for making changes or cancelling the foreign transaction.

• Exchange rate markups: Remittance service providers usually charge a markup on top of the interbank exchange rate.

• Intermediary fees: Fees charged by third-party banks involved in tee transfer.

• Hidden fees: These include additional telegram charges for complicated international transfers that require more than one SWIFT code, remittance status enquiry fees, and fees for making changes or cancelling the foreign transaction.

How to send international money transfers cost-effectively?

To reduce the cost of international school transfer:

• Evaluate packages of different providers: It is essential to choose a provider that communicates their fees transparently. Users should leverage online comparison platforms to identify the most favourable exchange rates and fees.

• Opt for online platforms: Online money transfer service providers typically offer lower fees compared to conventional banks.

• Look for fixed fees if the transaction volume is large: When transferring large funds, seek out providers that charge fixed fees instead of those based on a percentage scale.

• Choose local currency accounts: A multi-currency account can help you avoid unnecessary conversion fees by offering you the function of “like-for-like settlement”.

Case study: meat and seafood wholesaler

Taking a meat and seafood distributor in Hong Kong as an example, they source lobsters from Australia (AUD) and abalones from South Africa (ZAR) on a weekly basis. The traditional remittance process requires the weekly conversion of HKD to AUD and ZAR, which results in bank and transfer, and takes 24–48 hours for processing. 

If the distributor uses Airwallex, he/she would be able to achieve savings of up to 80% of FX fees. International money transfers can be completed in as little as one business day, enhancing cash flow management. Airwallex’s fast, economical, and secure international money transfer services enable businesses to simplify global payments and discover new opportunities for growth.

Frequently asked questions

Is it safe to send money internationally with Airwallex?

Yes. Airwallex is a licensed and trustworthy platform that implements robust security measures to protect transactions and funds.

What are the fees for sending money internationally with Airwallex?

Airwallex charges no transaction   and no monthly fees. It applies a markup of as low as 0.2% above ‌interbank exchange rates.

What are the differences between Airwallex and other money transfer service providers?

Over 90% of transactions through Airwallex go through local rails, instead of SWIFT. 60+ trade currencies are supported at interbank rates, helping businesses save up to 80% on FX fees. Approximately 90% of transactions can be completed within the same day.

In contrast to conventional banks and certain competitors, Airwallex uses local payment networks to eliminate SWIFT fees and minimise delays. Furthermore, it offers multi-currency accounts, smooth accounting integrations, and robust security features, making it an effective and transparent option for international businesses.