Tips for Cutting Costs When Receiving Money From Abroad

When receiving money from abroad, if you don’t want to lose a big part of the money during the transfer, you should research what the best options are and how you can cut the extra costs to a minimum. Bear in mind that transfer costs can get so high that you will be losing about $140 per every $1,000 and they will only get bigger for high-volume transactions.

What Are the Costs of Receiving Money from Abroad?

There is no clear answer to what the exact costs of an international money transfer are because they vary depending on several factors. The costs that you will have to pay usually include:

  • Currency exchange rate
  • Transfer company or bank transaction fee
  • Bank currency exchange fee

All things considered, the cost of receiving payments from abroad might be rather high. Average bank wire transfer fees might not seem like much at first. However, currency exchange itself, when conducted through a bank, will have the markup of 2-3% or more. Bank fees are unreasonably high by default and rather unpredictable. Therefore, you’ll need to contact several of them to find out exactly how much they charge. Bear in mind that the size of the transfer and location of where the money is coming from will also affect the total fee.

Sadly, it’s not the case when the more money you need to receive, the smaller the fee gets. The situation is often the opposite, so your losses might be big. This can pose a significant problem for freelancers who need to receive payments for their work from abroad. They can’t increase their fee to offset the loss caused by transfer costs because this will make their services too expensive to be competitive. However, paying the cost of the transfer can reduce their revenue margin by too much.

You also need to take into account the fact that bank transfers take a while. This means that you might be losing money or experiencing other problems because you can’t receive the payment from abroad fast enough.

How Much Money Can You Save Using Money Transfer Companies?

Like with the cost of a transfer, it’s impossible to calculate a standard rate for how much money you can save if not using the bank. It’s true that bank services are definitely expensive, but they aren’t your only option for international money transfers. Today, you can use a variety of specialized companies for receiving money from overseas with ease. These companies don’t charge the transaction fees that banks do and they don’t have an additional currency exchange fee.

In fact, the majority of the companies doesn’t charge any fees at all. Therefore, the only cost of an international money transfer for you is the currency exchange. When you use the help of a money transfer company the markup on the exchange can be as low as 0.2%, and it’s under 1% on average. Calculate your personal savings on receiving payments from abroad based on this information so you can approximate how much cheaper this method will be for you. And remember that in this case, you really do get to save more on larger transfers.

However, you need to remember that international money transfer companies differ greatly, and so do their rates and terms. They also have different terms for different countries, so you’ll need to research every option available to save the most money.

Another important factor to consider when you want to make receiving payments from abroad cheaper is the currency exchange rate. Money transfer companies use the rates on the foreign currency exchange markets, which fluctuate all the time. Therefore, you will need to keep a close eye on them to catch the most favorable rate for you.

Luckily, top services offer specialized solutions that can automate this process for you. It’s also possible to fix your rate for a certain period of time (up to a year). This option can be the best for investors and everyone who deals with irregular high-volume transfers.

Problems with Using Money Transfer Companies to Receive Payments from Abroad

Remember that no matter how amazing they seem, money transfer companies aren’t perfect. There are always some issues, which you will encounter when receiving payments from abroad. The most common problem is that some of the cheaper services are only available for Western countries.

You will also need to go through a comprehensive KYC process to use some of the services. This means providing your detailed personal information to the transfer company. You have to be 100% confident in their integrity as well as security to do this. That’s why it’s imperative to always research customer reviews of the service provider. Note that you need to look up not only professional company reviews but also verified customer testimonials posted on various consumer forums.

As to the security of your information, check the level of encryption and additional digital security measures the company uses. If they don’t offer a list of those measures, stay away from this provider and look for someone who truly has the best security.

While doing this, you should also pay very close attention to the Terms and Conditions the company has. Read the fine print to make sure that there are no loopholes that will allow them to charge you some hidden fees. This trick is quite common and it’s becoming more of an issue now that the number of money transfer companies has increased. Note that in this kind of business, it’s safer to bet on a provider with at least a few years of history.

Another issue to consider is that you can’t accept checks and some currencies aren’t supported by money transfer companies. Overall, you will need to take the sender into account as they might not be able to use the service of your choice easily. Never forget that a money transfer has to be equally easy and affordable for both parties. Unfortunately, this means that you might not be able to get payments from some countries at all as these services aren’t available there. In this case, you will have no choice but to rely on bank wire transfers.

Money Transfer Companies Vs. Bank Transfers

There can only be one answer to the question of whether international transfers are cheaper for banks or currency transfer companies, and it the latter. Bank transfers are expensive and you can’t do anything in order to make them less so.

The only way to make this deal more affordable is to become a VIP customer with special privileges, like these for example. However, even then the fees you pay and currency exchange rates you get from a bank might be higher than what’s offered by money transfer companies.

It also needs to be noted that exorbitant bank fees are largely unjustified. It’s true that banks need them in order to pay for the high costs they have. However, as a customer, you will definitely appreciate affordable services.

Whether you are someone who needs to receive money from abroad as personal transfers or as payment from business clients or partners, you can save a small fortune by choosing the right kind of money transfer company. You should use various solutions available today as well in order to make the most out of this deal. For example, you can benefit from currency converters that are tied to the foreign currency exchange market and show rate changes in real time.


Research your options thoroughly and remember that it might be best to have several accounts with various money transfer companies to handle different types of transactions. You also need to monitor their rates as those can change.

Jane Koval

Jane Koval

Jane Koval is a freelance writer. Her interests range from the latest e-Commerce trends to traditional folk culture and adventurous traveling. She always stays open to new ideas and expertise to make her writings handy and captivating for the readers.
Jane Koval

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