International money transfers are a big part of business operations in 2023. With trillions crossing the border each year, the market for business money transfers continues to grow. Though, given the previous status quo of pricey wire transfers, it seems finding the cheapest way to transfer money abroad is a specific point of competition from providers in 2023.
The price to pay for a complicated system
Business transfers, like individual transfers, are complex. Banks rely on systems like SEPA (in Europe) and SWIFT (rest of the world). Countries tend to have their own protocols, regulations, working hours, and their own domestic banks. Add on top of that some fairly old (albeit secure) messaging systems, and this is the reason why sending money overseas can travel across several banks, span over several days, and then ultimately – cost several percentage points in an exchange spread (often between 2-4%). Additionally, SWIFT bank transfers often incur a fixed fee too, which can be anywhere between £0 to £30.
So a supplier invoicing for €20,000 could mean as much as £830 in fees. Per invoice.
Modern day transfer apps
In the 21st century, much of the fintech attention has been on solving this problem. And, whilst there hasn’t been a proper replacement to the systems like SWIFT, there have been some workarounds, and a focus on speed and cost.
The improvement offered by modern apps begins with user design. These polished apps offer lightning speed UX, meaning you can physically set up a payment, or an exchange of currency, in a few seconds. Depending on the company, the method itself is more flexible, with it sometimes using SEPA/SWIFT, but other times using P2P or treasury balancing methods.
The result has been a race to the bottom, with exchange rate spreads now normalized between 0-1% in many cases.
When looking to transfer money to a business abroad, currency brokers are another option. These take the more traditional values of customer service and bespoke solutions (something that banks also fail at when it comes to SMEs), and combine it with modern technology and expectations.
While you may think the previously mentioned modern apps are the obvious choice, TopMoneyCompare says otherwise. This is because currency brokers, which focus more on over-the-phone service, are able to offer a wider variety of services, like hedging, auditing, market orders, and general advice around how to optimize transfers.
These can often begin at a higher cost (between 1-2%), but more preferable rates can be achieved the higher the transfer amount is. In other words, the spread is negotiable and – for repeating business – they may be able to beat the price of the likes of Revolut and Wise.
4 Large Currency Brokers to Consider
Wise is a big player when it comes to the modern transfer app pool of options. They won a lot of hearts early on into their journey by being ultra transparent with fees, something that consumers were not used to. Whilst these fees have crept up slowly over time, it remains a cheap option to pay a business abroad when it’s small amounts. It’s super fast to open up virtual currency accounts, and it’s a good way to spend money abroad when on a corporate trip.
OFX is another option, with 115 bank accounts on offer around the world. OFX is a little older, and it has a very good global presence as a result – which helps when receiving a globalized service. It’s not quite as modern of an experience and there can be delays in transfers, but it offers very cheap rates, local client support, and a reliable service.
Revolut followed in the footsteps of Wise with its focus on user app experience and cheap rates. In fact, the spread on currency exchange can be as little as 0% on weekdays. Multiple currency accounts around the world can be set up, making it a good place to receive money from abroad. The business account steps up in terms of offering a few more services, such as API access to your account activity/statements, integration with accounting software, company cards, and better invoicing tools.
Key Currency is the odd one out of the four, because this is a brokerage currency broker. However, as already mentioned with brokers, they’re a little more “manual”, but they scale better. Key Currency doesn’t even have a mobile app, but it doesn’t have any transfer fees either… They have a dedicated account manager (free) that can help set up regular transfers, limit orders, and forward contracts. They become more worth it with the more money you’re sending.
As always do your research first and pick the best option for your business!
The landscape of international money transfers has been constantly evolving over the past 2 decades. It’s reached a point where fees are as close to the bottom as they can be without inventing new systems entirely, like overhauling SWIFT. As a result, it comes down to choosing reliable and honest companies as opposed to seeking out fringe technology or solutions like crypto.
Money transfer companies can service both tech savvy businesses and traditional businesses and make the process better in every sense. Cheaper, more streamlined and with better customer care.