How to Save Money On International Transactions
![How to Save Money On International Transactions](/content/images/size/w1200/2024/06/Medium-Banner---Save-Money-on-International-Transactions.jpg)
The world of business is becoming increasingly globalized. Companies of all sizes are working with partners, vendors, and employees located all over the world. This opens exciting opportunities for growth, but it also introduces the challenge of making international payments. Sending money overseas can be a complex process and can come with hefty costs that eat away at your profits.
Here's the good news: there are smart ways to save money on international transfers. Read on to find tips on how to beat down the costs of international payments and keep more money for your business.
Ways to Send Money Internationally
1. Traditional Banks
While familiar and convenient, banks often have high transaction fees and unfavorable exchange rates for international transfers. They may also charge additional fees for intermediary banks involved in the transfer process.
2. Money Transfer Services
These services specialize in international payments and can offer faster transfer times than banks. However, they can also have high fees and mark-up exchange rates, reducing the amount of money your recipient receives.
3. Online Platforms
Newer online platforms offer a more streamlined and potentially more cost-effective way to send money internationally. They often boast lower transaction fees and more competitive exchange rates compared to traditional banks and money transfer services. However, it's crucial to choose a reputable platform with a strong track record for security.
Cost of Sending Money Internationally
No matter which method you choose, there are three main cost factors to be aware of:
1. Transaction Fees
This is a flat fee charged by the service provider for making the transfer. It's important to compare these fees between different providers.
2. Hidden Fees
Beware of additional fees that may not be readily apparent upfront. These can include charges for currency conversion, intermediary banks, or international payment processing. Always read the fine print carefully!
3. Exchange Rates
The exchange rate determines how much foreign currency your recipient receives for your original amount. Not all providers offer the best exchange rate. Some may mark up the rate, giving you less value for your money. Furthermore, exchange rates constantly fluctuate, so being aware of current market rates can help you optimize your transfer timing.
Tips for Saving on International Payments
1. Negotiate Rates
If your business makes frequent or large transfers, don't just accept the exchange rate and fees your bank or money transfer service offers. Think of it like any other business expense – there's room to negotiate.
By showing them you're a frequent customer transferring significant amounts, you might be surprised by what they're willing to do to keep you happy.
Here's how to approach the conversation:
- Gather your info: Find out how much you typically transfer and how often. The more business you bring them, the stronger your negotiating position.
- Research the market: Use online tools or talk to other currency exchange services to get a sense of competitive rates. This arms you with knowledge of what a fair deal looks like.
- Be polite but firm: Explain your business needs and that you're looking for a more competitive rate on international transfers. Mention the research you've done, and be clear that you're open to exploring other options if they can't offer a better deal.
Remember, the worst they can say is no. But with a little legwork and a confident approach, you could save your business a significant amount of money on those international transfers.
2. Compare Providers
It's tempting to stick with your regular bank for everything, but international transfers can be an area where loyalty can cost you money. For one, traditional banks aren't always the most competitive. Many banks add a markup to the exchange rate, meaning you get less foreign currency for whatever currency you’re exchanging. They may also have hidden fees that can add up quickly, especially for frequent transfers.
Plus, there's now a whole universe of online money transfer services out there, and many specialize in international transfers. The cherry on top is that they typically offer much more competitive exchange rates and lower fees than traditional banks.
Here's how to find the best deal:
- Shop around: Don't be afraid to compare rates and fees from different providers. Many services offer online quote tools that let you see exactly how much your transfer will cost upfront.
- Look beyond headline rates: Focus on the total cost of the transfer, including any hidden fees. Some providers may advertise a low headline rate but then surprise you with additional charges.
- Consider your business needs: Do you need super-fast transfers or the ability to send large amounts? Some providers specialize in specific speed or volume requirements.
3. Use Local Currency Accounts
Multi-currency or foreign bank accounts, offered by some banks and online money transfer services, allow you to hold balances in various foreign currencies. This removes the need to convert your entire holding to the recipient's currency every time a transfer is needed.
Some multicurrency accounts offer reduced transaction fees, especially for transfers between your held currencies. This can be particularly beneficial if you often make international transfers.
Several services, like Graph, allow you to take advantage of multi-currency accounts. These services often partner with banks around the world, enabling you to open foreign bank accounts denominated in various currencies directly through their platform. This way, they allow you to hold and transfer funds in various currencies, giving you more control over exchange rates and transaction fees.
4. Make Bulk Transfers
Whenever possible, try to combine multiple small international payments into fewer, larger transfers. This strategy can significantly reduce the overall transaction fees you incur. Many money transfer services, including banks, charge a flat fee per transfer. By grouping payments, you spread this fixed fee across a larger sum, effectively lowering the fee per recipient.
Many online money transfer services offer features specifically designed for bulk payouts. Graph, for instance, allows you to efficiently send payments to multiple recipients in a single transaction, potentially saving you money on fees.
5. Monitor Exchange Rates
Exchange rates constantly change, just like stock prices. By keeping an eye on these changes, you can save your business money on international transfers.
Many free websites and apps offer live exchange rate tracking with alerts. Set these up for your chosen currency pair to get notified when the rate reaches a target you set. This way, you don't have to constantly monitor the rate yourself.
When the rate dips and the alert triggers, that's your cue to make the transfer. Let's say the euro is usually strong, but right now, it's a bit weaker compared to the dollar. This is a good time to send your money because you'll get more euros for your dollars, saving your business money.
While monitoring exchange rates can be helpful, it's not always a sustainable cost-saving strategy. Fluctuations can be unpredictable, and waiting for the perfect rate might delay business operations.
Make Cheaper and Faster International Payments with Graph
Saving money on international transfers can improve your bottom line and free up more funds to grow your business. You just have to look out for smart ways to do this without introducing inefficiencies into your operations.
At Graph, we understand the importance of efficient and cost-effective international money transfers. That's why we offer US dollar accounts, allowing you to receive and make international payments in USD – a widely accepted and stable currency – potentially saving you on conversion fees. We also offer competitive exchange rates and bulk payout options. Get started on Graph today.