Wire transfers are one of the most popular ways to move money around the world. Unfortunately the high fees can really burn a hole in your pocket. But why are wire transfers so expensive?
If you send wire transfers through your bank, you deserve to know where your hard-earned money is disappearing to. That’s why we’re going to show you all the fees involved…and more importantly, how to avoid them!
Check out our blog: Wire Transfers Explained: 10 Things You Need To Know
The following are the fees that you can (and will) be charged by banks when you send a wire transfer – some of them are more hidden than others:
Regardless of how much money you send by wire transfer, banks will always charge you a minimum fee. These fees can be very high, even if you are sending a small amount of money. Plus, the larger the amount you send, the higher the fee.
These are like shipping fees for your money. The more banks that handle your transfer, the more it will cost you. When sending money internationally, banks that do not have a direct relationship with each other will charge high handling fees.
Sending banks may have no relationship with receiving banks at all, meaning a third intermediary bank may become involved in the transfer process to ensure its success. This, again, means more annoying fees for you and the receiver, since each bank in the chain would take a slice off your transferred funds.
That’s right, the receiver often takes a hit too. It’s not always just the person sending a wire transfer that has to pay unnecessary fees for it. Some banks may charge the receiver a fee as well – especially for international transfers. This is commonly also known as an inward remittance fee or handling fee.
These fees are rarely disclosed upfront and can end up as a nasty surprise, resulting in conflict between the sender and recipient, who expects to receive the full amount invoiced, net of any fees.
Foreign Exchange Commission
International transfers often involve two different currencies, your domestic currency and a foreign one. Currency exchange rates are always changing, and tend to vary from one financial institution to another.
When you enter your local bank branch, the rates you see on their board are never the true foreign exchange market rates on that day. They are always higher, because of additional variable fees that the bank is charging (their profit margin).
Check out our Blog: All You Need To Know About Foreign Exchange
Payment Method Charges
If you are paying for a wire transfer by credit card, you could end up paying additional fees (usually around 3% to 5%, depending on your card and your bank’s policies).
How Much Do Canadian Banks Charge? (Spoiler: It’s a lot)
What’s The Best Alternative To Wire Transfers?
The best way to avoid wire transfers and their fees is to use a Money Service Business (MSB) like Remitr.
The Remitr Global Network allows Canadian businesses to send domestic payments for just $1, and international payments to 150+ countries worldwide for as little as $5! And the good news doesn’t stop here, using Remitr also means that your recipient pays ZERO receiving fees.
We also provide an alternative to wire transfers for Canadian businesses that wish to receive payments from online sales or international partners.
The Remitr Global Business Account (GBA) allows businesses to get paid in $, € and £ like a local business, in just 1 day…all while saving up to 2% in currency costs!