Understanding Money Transfer Fees
Before you transfer any money abroad, there are a few things you should be aware of—least of all, some of the basic fees associated with making an overseas transfer. There are a few types of fees that are common across nearly all money transfer service providers. Having the knowledge to recognize and assess these fees can go a long way in helping to determine which service best fits your needs.
Administrative and Processing Fees: Some providers simply call these “transfer fees.” Though they may go by another name, these are the most common fees you’ll see when you transfer money abroad; almost every provider will charge some sort of administrative and processing fee.
These are the fees that make the transfer worthwhile for the provider; simply put, the cost that the provider has to put forth to make the transfer happen, including the time and effort on behalf of their staff. Administrative and processing fees are usually fairly low, generally not exceeding $5 to $10 per transaction.
Currency Conversion Fee: This type of fee is only relevant when you send money to a country or region that uses a different local currency than your own. A currency conversion fee covers the cost that a provider incurs by changing one currency to another. Most providers will provide an online conversion calculator so you can see precisely how much is going toward conversion fees, and how much is being sent to your beneficiary.
Many providers will set a flat conversion rate that already includes the fee. Conversion fees are usually incurred on each dollar sent, which is why they are sometimes called “on-the-dollar fees.” If you’re using a provider’s calculator, you should always check their conversion rates against a non-provider conversion calculator, like xe.com, so that you can see how much they’re charging for the conversion fee.
Delivery Fees: The third type of fee is associated with a delivery method. This is a fairly universal practice among transfer providers, because even if you don’t use a bank to make an international transfer, the money must still come from a bank account and end up in another bank account. These fees include any amount that the remitter’s bank may charge, an amount that the recipient’s bank may charge, or an amount that the transfer provider might charge to ensure that the transfer takes place within a specific time frame. For example, a faster delivery method like a direct wire transfer might be the quickest method, but will likely incur higher delivery fees.
Knowing about these fees and what they represent before you make a transfer can go a long way. You should always shop around for the best rates and fees before you decide to make a money transfer abroad, to avoid wasting any time or money.