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Businesses send money overseas for many reasons—paying suppliers, managing vendor contracts, or paying freelancers and contractors.
The problem is that convenience and cost rarely go hand in hand. Convenient methods often come with high transfer fees, while cheaper options can feel risky or unreliable.
In this blog, we’ll help you understand the international money transfer fees involved, compare popular transfer methods, and share the best options to balance fees, convenience, and safety.
What Is an International Money Transfer?
An International Money Transfer (IMT) is the process of transferring money electronically from one country to another. The money is sent in a specific currency and usually received in a different currency.
These transfers can be a small personal remittance to large business payments.
Personal transfers involve sending money to family or friends abroad, such as supporting parents or paying for tuition.
Business transfers include payments to contractors, freelancers, or suppliers in other countries for services or goods.
Is International Money Transfer Free?
The answer is no, international money transfers are never free, as they involve multiple processes, each with its own set of fees.
Even when a platform advertises "free transfers," there are often hidden charges, such as poor exchange rates or service fees.
What Are the Charges Included in Total International Money Transfer Fees?
The total cost of transferring money internationally involves several different charges, not all of which are always visible upfront. Let’s break them down:
Outgoing and Incoming Transfer Fees
Payment gateways, solutions, or banks charge fees for both sending and receiving money. These fees vary depending on the country and service provider.
• Outgoing Fees: This is the fee that the sender pays to initiate the transfer.
• Incoming Fees: These are the fees the recipient must pay to receive the funds, excluding any intermediary bank fees or exchange rate markups.
(We will discuss the charges of each service provider (PayPal, Wise, Karbon) and banks (SBI, Axis, HDFC) shortly!)
Intermediary Transfer Fees
In many international transfers, the money passes through one or more intermediary banks. Each intermediary charges a fee for processing the transfer. These charges are added to the cost of the transfer, and sometimes they aren't disclosed until the transfer is completed.
• How to Avoid: The best way to avoid intermediary fees is to use a direct payment service.
These platforms connect directly to the recipient’s bank or use a local payout partner in the destination country, bypassing intermediary banks entirely.
Exchange Rate Markups
An exchange rate markup is a hidden fee where a service provider offers a less favorable exchange rate than the actual market rate. This means the provider uses a rate worse than the true market rate, effectively increasing the total cost of the transfer.
Banks, PayPal, and similar providers set their own exchange rates, which are based on the market rate but adjusted for their own profit margins.
These rates are usually worse than the mid-market rate, as the providers add a markup for the currency conversion service which is different from their transfer fees.
Additional Transfer Fees
Certain services charge extra fees for things like processing payments quickly, sending money via specific methods (like credit cards), or offering additional services like tracking or insurance.
Different Ways of International Money Transfer and Fees of Each?
There are several ways to transfer money internationally, each with its own set of pros and cons. Let’s explore the primary methods.
Traditional Banks
Traditional banks are the most well-known method for international money transfers. They offer a secure and regulated way to send funds across borders, with a reliable infrastructure to process payments.
However, their services often come with lower exchange rates, and longer processing times compared to newer money transfer platforms.
• Pros: Trusted, regulated, widely accessible.
• Cons: High fees, poor exchange rates, slow processing times.
Different Banks and Their International Money Transfer Fees:
Fintech Platforms
Fintech platforms have changed the way we send money internationally, offering a faster, cheaper, and easier alternative to traditional banks. These platforms let you send money online or through an app, making it super convenient.
Platforms like Karbon, Payoneer etc offer virtual international bank accounts that you can open online without visiting a branch. This allows you to receive payments in multiple currencies and hold funds until you’re ready to convert.
They work by using digital technology to send funds directly, often cutting out intermediaries, which is why the fees tend to be lower.
• Pros: Low fees, competitive exchange rates, fast transfers, easy to use.
• Cons: Limited in some countries, and sometimes not ideal for very small transfers.
Different Fintech Solutions and Their International Money Transfer Fees:
Money Transfer Operators (MTOs)
Money Transfer Operators (MTOs) are services that help people send money internationally without needing a bank account.
They work by letting you send funds online or through a local agent, and the recipient can pick up the cash from a nearby location. MTOs are especially useful in areas where access to traditional banks is limited.
• Pros: Widespread availability of agent locations, fast transfers, cash pickup options.
• Cons: High fees, especially for small amounts, and poor exchange rates.
MTOs and Their Fees:
Cryptocurrency Transfers
Cryptocurrency transfers involve sending digital currencies like Bitcoin, Ethereum, or Ripple to someone across borders. These transfers use blockchain technology, which allows funds to be sent directly without the need for banks or intermediaries.
It’s a fast, low-cost way to send money internationally, but it requires both the sender and receiver to have a cryptocurrency wallet.
In India, cryptocurrency transfers have gained some popularity but are still in a gray area due to regulatory uncertainty. The government has yet to finalize clear rules, though cryptocurrency is not banned outright.
• Pros: Low fees, fast processing, decentralized, accessible anywhere.
• Cons: Volatility of cryptocurrency, lack of widespread adoption, and regulatory challenges in some countries.
Crypto International Money Transfer Fees:
How ₹1,00,000 Payment Gets Split When You Send It Abroad
The Winning Pick: Best International Money Transfer Fees
If you’re looking purely at the cheapest way to transfer money internationally, you might be inclined towards Bitcoin — as, fee-wise, it often comes out on top.
Fee-wise descending order (cheapest to costliest):
- Crypto
- Fintech platforms
- MTOs (Money Transfer Operators)
- Banks
That’s why the second-cheapest option becomes the true winner — fintech platforms like Karbon and Wise. They’re comparatively cheap, equally secure as banks, and faster than banks for processing transfers.
Between the two fintech options, we recommend Karbon for the lowest fees and mid-market rates, with Wise as a strong second choice for transparency and global reach.
Final overall ranking (considering fees, security, speed, and ease of use):
- Fintech platforms
- Banks
- MTOs – sometimes cheaper than banks, but less secure
- Cryptos – cheapest but high risk in India
FAQs
What factors influence the cost of international money transfers?
Key factors include bank charges, exchange rate increases, payment method, and country destination.
Is it possible to send money abroad without paying fees?
Some services might offer free transfers as a promotion, but usually, there are costs due to different expenses.
How can I ensure I get the best money transfer rate?
Keep an eye on rates, use services with live-market rates, and stay flexible with when you send money. Currency hedging is another option for advanced users.
Are online services for sending money safe?
Most well-known services use strong security. Always learn about the company and read reviews before sending money.
What’s the quickest way to send money abroad?
Online services often transfer money fastest, sometimes right away, but it depends on the service and the country.
Written by
Ramitha Ramesh
