We still live in a FIAT-driven world, where unfortunately, we still have to deal with expensive bank fees, especially for cross-border transactions.
The dream of introducing Blockchain technology in the world of banking is still far from reality, which means that our best option is to learn how to manage it.
Fees, although they might look small, can add up costing you a lot of money that you don’t need to pay. For example, if you transfer $3,000 each year to a friend or a family member in a different country, you’ll likely pay around $150. So, why give the bank your $150 when you can use the money to buy some new shoes?
The situation is even worse when we talk about businesses, especially in modern times where we work in a global economy and in many cases, businesses have cross-border transactions.
But is there really an option to sneak through the system and avoid paying these fees? Well, yes, and that’s why we’ve decided to cover some of the best strategies that will help you lower your fees.
Why Do Money Transfers Cost So Much?
So, you decided to send some money, and your total ended up being more than you anticipated. Now you are wondering, why these transfers cost so much.
Well, there are several factors that come into play. Plus, there are different kinds of fees, which most people don’t understand that depend on the transfer you are initiating and the country that the money goes to.
First, we have the most common transaction fees. These can range from $15 to $50 per transaction, and in some cases, if you are transferring more than $10,000, you’ll end up paying a certain percentage from the transaction (2-3%) which is a lot of money!
Next, we have currency conversion fees, where banks and payment provers often add a margin of 1-3%to the mid-market exchange rate. In other words, the bank sees your money as less valuable when converting to a different currency.
Lastly, we have intermediary fees, and these often pop up when your transfer goes through multiple banks or “intermediaries” before reaching its final destination, and the more banks it goes through the bigger the fee just because each bank gets a cut. These range from $10 to $30 per transaction
As you can see, these fees can quickly add up and eat most of your profit, which is why you want to avoid them. But is there a way to do that?
Yes, here are some strategies you can deploy.
Strategies to Reduce Money Transfer Fees
It’s clear the costs can’t be ignored. But what can you do about it? The good news is there are plenty of strategies to cut down on fees and make your transfers more cost-effective.
1. Use Digital Payment Platforms
Fintech companies are shaking up the money transfer industry, and for good reason. They offer transparency, lower fees, and competitive exchange rates compared to traditional banks. They let you transfer money at the mid-market rate with minimal fees. For example, a typical Genome transfer might cost 0.5% of the transaction amount—significantly lower than most banks.
Why does this work? These platforms operate without the same overhead costs as banks, and they cut out intermediaries, making transfers quicker and cheaper.
These online payment platforms usually have lower fees and favorable exchange rates, which is perfect if you are initiating a business money transfer.
2. Consolidate Transfers (Batch Payments)
If you’re making multiple payments to suppliers or employees across borders, consider batching these payments into one transaction. Instead of paying fees for every single transfer, consolidating them reduces the frequency of charges.
Think of it like grocery shopping—buying in bulk saves money compared to multiple trips for single items. The same principle applies to money transfers.
3. Negotiate with Banks and Providers
Here’s a tip that many businesses overlook: banks and financial institutions are often open to negotiations. If you’re a loyal customer or handle significant transaction volumes, ask for reduced fees or better exchange rates.
It might feel intimidating but think of it this way: these institutions want to keep your business, and negotiating gives you leverage. If they don’t budge, remind them that fintech alternatives are on the table.
4. Multi-Currency Accounts
A multi-currency account lets you hold, send, and receive money in different currencies without converting them unnecessarily. For instance, if your business earns revenue in Euros but also pays suppliers in Euros, you can bypass conversion fees entirely.
How It Works:
If you use a service like Genome Business, you can receive Euros from customers in Germany, pay your suppliers in Spain, and only convert the leftover amount to your home currency when it’s advantageous.
5. Blockchain and Cryptocurrencies
Blockchain technology is transforming how businesses think about cross-border payments. Unlike traditional systems, blockchain removes intermediaries, making transactions faster and cheaper.
For instance, blockchain-based payment solutions like Ripple have been shown to reduce fees by up to 60%. While this isn’t mainstream yet, it’s worth keeping an eye on—especially if your business frequently deals with international transactions.
The good thing is that there are plenty of options to save money on fees, and it is up to you to do your own research and find a model that works best for you.
This post was originally published on here
