Cut the Fat: The Real Cost of Cross-Border Payments

In today’s globalised world, cross-border payments are essential for freelancers, small businesses, and multinational corporations alike. Whether you're paying overseas vendors or remote employees, understanding the true cost of sending international payments is vital to protecting your margins.

Yet, most companies are paying far more than they realise.

A Breakdown of Hidden Fees in International Payments

1. Intermediary Bank Fees

When you send a wire transfer internationally, it often doesn't go directly from your bank to the recipient’s. Instead, the money passes through intermediary banks, and each one may charge a fee for handling the transaction, usually between $10–$50. These fees are deducted from the transfer amount, meaning your recipient may receive less than you sent

Example: If you send $10,000, your recipient may receive only $9,900 or even less without any explanation upfront.

But here's the key: Modern payment providers, including EMIs (Electronic Money Institutions), often bypass SWIFT by using local payout rails like SEPA, ACH, or Faster Payments, avoiding those intermediary deductions altogether.

2. FX (Foreign Exchange) Markups

While your provider may only charge a small transfer fee, the bigger cost often lies in the foreign exchange (FX) rate markup. This is the difference between the mid-market rate (the true market rate) and the rate you're given. Banks and some payment providers charge hidden margins on exchange rates, sometimes as high as 4%. That means you're not only paying a transfer fee, but also getting a worse exchange rate than what’s available in the market.

You can’t buy currency at the mid-market rate, it’s an interbank benchmark, but it serves as a vital reference. If the mid-market rate is 1 USD = 0.93 EUR, and your provider offers 0.90, you're paying a 3.2% FX margin or $320 lost per $10,000.

Tip: Use services like XE.com or Google to check the mid-market rate and spot how much markup you're being charged.

What Most Providers Won’t Tell You

Flat fees are only part of the picture. A low headline fee might distract you from a 3–4% FX markup.

FX margins aren't always disclosed. Some providers show “estimated rates” without revealing how far they deviate from the market.

Not all transfers are equal. A $10,000 wire from your bank may lose $400–$600 in combined FX and SWIFT fees. That’s money gone forever, not reinvested in your business.

How to Audit Your Current Setup

You don’t need to be a financial analyst to spot inflated costs. Here's how to review your international payment provider:

1. Compare FX rates - Look at the mid-market rate vs. your offered rate. A margin over 1% is costly.
2. Ask how your payment is routed - If it goes through SWIFT, expect deductions. Ask about local payout options.
3. Check actual receipts - Ask your recipients: Did they receive the full amount, or were fees deducted?
4. Run a test transfer - Try sending a small amount through two different services and compare speed, cost, and received value.

Your Money Should Work as Hard as You Do

Every dollar wasted in hidden FX costs is a dollar not reinvested in growth, operations, or your team. Stop letting international payment fees silently erode your bottom line.