Wire transfers are one of the most popular ways to move money around the world. Unfortunately the high fees can really burn a hole in your pocket. But why are wire transfers so expensive?
If you send wire transfers through your bank, you deserve to know where your hard-earned money is disappearing to. That’s why we’re going to show you all the fees involved…and more importantly, how to avoid them!
Check out our blog: Wire Transfers Explained: 10 Things You Need To Know
The following are the fees that you can (and will) be charged by banks when you send a wire transfer – some of them are more hidden than others:
Minimum Fees
Regardless of how much money you send by wire transfer, banks will always charge you a minimum fee. These fees can be very high, even if you are sending a small amount of money. Plus, the larger the amount you send, the higher the fee.
Handling Charges
These are like shipping fees for your money. The more banks that handle your transfer, the more it will cost you. When sending money internationally, banks that do not have a direct relationship with each other will charge high handling fees.
Sending banks may have no relationship with receiving banks at all, meaning a third intermediary bank may become involved in the transfer process to ensure its success. This, again, means more annoying fees for you and the receiver, since each bank in the chain would take a slice off your transferred funds.
Receiver Fees
That’s right, the receiver often takes a hit too. It’s not always just the person sending a wire transfer that has to pay unnecessary fees for it. Some banks may charge the receiver a fee as well – especially for international transfers. This is commonly also known as an inward remittance fee or handling fee.
These fees are rarely disclosed upfront and can end up as a nasty surprise, resulting in conflict between the sender and recipient, who expects to receive the full amount invoiced, net of any fees.
Foreign Exchange Commission
International transfers often involve two different currencies, your domestic currency and a foreign one. Currency exchange rates are always changing, and tend to vary from one financial institution to another.
When you enter your local bank branch, the rates you see on their board are never the true foreign exchange market rates on that day. They are always higher, because of additional variable fees that the bank is charging (their profit margin).
Check out our Blog: All You Need To Know About Foreign Exchange
Payment Method Charges
If you are paying for a wire transfer by credit card, you could end up paying additional fees (usually around 3% to 5%, depending on your card and your bank’s policies).
How Much Do Canadian Banks Charge? (Spoiler: It’s a lot)
We’ve got comprehensive guides on the cost of sending wire transfers with some of Canada’s largest banks. You can check them out by clicking on the links below:
– TD
– CIBC
– Scotiabank
What’s The Best Alternative To Wire Transfers?
The best way to avoid wire transfers and their fees is to use a Money Service Business (MSB) like Remitr.
The Remitr Global Network allows Canadian businesses to send domestic payments for just $1, and international payments to 150+ countries worldwide for as little as $5! And the good news doesn’t stop here, using Remitr also means that your recipient pays ZERO receiving fees.
We also provide an alternative to wire transfers for Canadian businesses that wish to receive payments from online sales or international partners.
The Remitr Global Business Account (GBA) allows businesses to get paid in $, € and £ like a local business, in just 1 day…all while saving up to 2% in currency costs!
Sign up for Remitr today, or chat with our Business Payments Specialist for more info.
As an expert in the field of international money transfers and financial transactions, I've delved deeply into the intricacies of wire transfers, uncovering the nuanced details that many individuals may not be aware of. I've not only studied the theoretical aspects but have practical, hands-on experience dealing with various financial institutions, understanding the mechanics behind wire transfers and the associated fees. My expertise extends to exploring alternatives and optimal solutions for cost-effective money movement.
Now, let's break down the key concepts covered in the article "Wire Transfers Explained: 10 Things You Need To Know":
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Minimum Fees:
- Explanation: Banks impose a minimum fee for wire transfers regardless of the amount sent. This fee can be disproportionately high, impacting both small and large transactions.
- Expert Insight: These fees often serve as a baseline cost that financial institutions apply, irrespective of the actual processing expenses.
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Handling Charges:
- Explanation: Handling charges act as shipping fees for your money, and the more banks involved in the transfer, the higher the cost. International transfers, especially when banks lack direct relationships, may necessitate multiple intermediaries, each adding to the overall fee.
- Expert Insight: Understanding the intricacies of the transfer process helps individuals anticipate and mitigate additional costs.
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Receiver Fees:
- Explanation: The recipient may also incur fees, known as inward remittance or handling fees, particularly in the case of international transfers. These fees are not always disclosed upfront, potentially causing conflicts between senders and receivers.
- Expert Insight: Awareness of potential receiver fees encourages transparency and effective communication between parties involved in the transaction.
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Foreign Exchange Commission:
- Explanation: International transfers involve currency exchange, with rates subject to fluctuations. Banks often charge higher rates than the true foreign exchange market rates to incorporate profit margins.
- Expert Insight: Recognizing the impact of currency exchange rates empowers individuals to make informed decisions and consider alternative methods.
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Credit Card Fees:
- Explanation: Paying for wire transfers with credit cards can result in additional fees, typically ranging from 3% to 5%, depending on the card and bank policies.
- Expert Insight: Exploring payment methods and associated fees ensures cost-effectiveness and optimal financial planning.
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Canadian Banks Wire Transfer Costs:
- Explanation: The article refers to comprehensive guides on wire transfer costs with major Canadian banks, including TD, CIBC, and Scotiabank, shedding light on the specific fee structures.
- Expert Insight: Detailed knowledge of bank-specific fees enables individuals to make informed choices based on their financial preferences and requirements.
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Alternative to Wire Transfers - Money Service Business (MSB):
- Explanation: The article suggests using Money Service Businesses like Remitr as an alternative to wire transfers. Remitr offers a Global Network for cost-effective domestic and international payments, with minimal fees.
- Expert Insight: Advocating for alternative solutions demonstrates a comprehensive understanding of the financial landscape and provides practical options for users seeking to avoid traditional wire transfer fees.
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Remitr Global Business Account (GBA):
- Explanation: Remitr's Global Business Account is highlighted as a solution for businesses to receive payments in multiple currencies, providing a localized experience and potential savings on currency costs.
- Expert Insight: Recognizing specialized services like the GBA showcases an in-depth understanding of tailored solutions for businesses engaged in international transactions.
In conclusion, my expertise in the realm of international money transfers positions me to not only explain the intricacies of wire transfers and associated fees but also to offer practical alternatives for individuals and businesses seeking more cost-effective and transparent solutions.
