The hidden costs of receiving international payments

And how to avoid losing money!

In today’s fast-paced global economy, international payments are the lifeblood of many businesses. Whether you’re paying overseas suppliers, receiving funds from international clients, or managing a global team, smooth cross-border transactions are essential. But here’s the kicker—hidden costs tied to these payments can silently chip away at your bottom line.

Many businesses focus on the upfront figures but overlook sneaky charges like transaction fees, exchange rate margins, and intermediary bank fees. These seemingly small expenses can pile up, squeezing your profits and straining your cash flow.

In this blog, we’ll pull back the curtain on the hidden costs of receiving international payments and share actionable strategies to help you save money and optimize your payment processes.

Common hidden costs in receiving international payments

Let’s be honest—sending and receiving international payments shouldn’t feel like solving a mystery. But it often does. Below are some of the most common (yet frequently overlooked) hidden costs that can catch businesses off guard.

1. Transaction fees

At the top of the list are transaction fees. These are the charges banks or payment providers impose just for processing a payment. Depending on the provider, these fees can be flat rates or a percentage of the transaction amount.

But here’s the thing—beyond these upfront charges, there are often indirect costs lurking in the background. For example:

• Unfavorable exchange rates are quietly adding to your total expense
• Swift fees tacked on during cross-border transfers

Example:

A $10,000 international wire transfer might come with a $50 processing fee, but once exchange rates and intermediary fees are factored in, you could be losing hundreds more without realizing it.

2. Exchange rate margins

This one’s a biggie. When converting one currency into another, banks and payment providers rarely offer the real exchange rate you’d see on Google. Instead, they add a margin—or markup—on top of the mid-market rate to pad their profits.

• Markups can range from 0.5% to 7.5%, depending on the currency pair and provider.
• A 1% markup on a $50,000 transaction? That’s $500 straight out of your pocket.

Unfortunately, this margin is often hidden within the exchange rate itself, making it hard to spot unless you know what to look for.

3. Intermediary and receiving bank fees

International payments often pass through multiple banks before reaching their final destination. Each bank in the chain can deduct intermediary fees, typically between $10 and $30 per transfer, sometimes more.

And don’t forget about receiving bank fees! The recipient’s bank may also charge a processing fee just to credit the funds to their account. These can further shrink the amount your recipient ultimately receives.

Impact on businesses

Now that we’ve laid out the common culprits, let’s talk about why they matter. These hidden costs don’t just hurt your wallet—they can impact your business in several critical ways.

Reduced profitability

Transaction fees, exchange rate margins, and intermediary charges eat into your revenue. When you’re regularly making international payments, these costs add up. Small businesses sending $100,000 per month internationally could see $4,000 to $8,000 in hidden costs monthly. That’s money better spent on marketing, hiring, or product development.

Strained supplier relationships

Payment delays caused by multiple intermediaries or compliance checks can disrupt your cash flow and delay deliveries. Late payments can frustrate suppliers and damage relationships, potentially leading to:

• Loss of early payment discounts
• Less favorable contract terms
• Reduced supplier trust

Cash flow challenges

Unexpected deductions tie up valuable working capital. This can make it harder to meet payroll, restock inventory, or fund new projects. Over time, cash flow problems can stifle growth and undermine operational stability.

Strategies to avoid losing money on international payments

The good news? You’re not powerless. There are practical strategies you can implement to reduce hidden costs and keep more of your hard-earned money where it belongs.

1. Compare providers

Not all international payment providers are created equal. Traditional banks typically have:

• Higher exchange rate margins
• Multiple layers of fees
• Opaque pricing structures

On the flip side, fintech solutions often offer transparent pricing and mid-market exchange rates with minimal markups.

Top providers to consider:

• Wise (formerly TransferWise): Offers mid-market exchange rates with clearly displayed fees.
• Airwallex: Provides competitive FX rates and minimal intermediary costs via local clearing networks.
• OFX and Payoneer: Other reputable options for business payments with reduced fees.

2. Negotiate fees

If your business processes high volumes of international payments, use that leverage to negotiate better rates.

• Ask your bank or provider for custom pricing based on your transaction volume.
• Request tiered discounts or lower exchange rate margins.
• Negotiate for fixed transfer fees, so you can forecast costs more accurately.

Pro Tip: Providers are often open to negotiations—especially fintech platforms that compete on transparency and affordability.

3. Use fintech solutions

Fintech companies have transformed the way businesses make and receive international payments. Here’s how they can help:

• Direct payment networks: Providers like Currencycloud eliminate the middlemen by using local payment rails, reducing delays and intermediary fees.
• Multi-currency accounts: Services such as Revolut and Payoneer let you hold funds in multiple currencies, minimizing conversion costs.
• Real-time FX rates: Many fintechs offer exchange rates that closely mirror the mid-market rate, ensuring you’re not overpaying.

Saving money on international payments

International payments are essential for global business—but they come at a price. Hidden costs like transaction fees, exchange rate margins, and intermediary bank charges can add up fast. The key is being proactive about reducing these expenses.

What can you do?

• ✅ Compare providers and choose ones with transparent pricing
• ✅ Negotiate fees based on your transaction volume
• ✅ Leverage fintech solutions for lower costs and faster transfers

By making smarter choices about how you handle cross-border payments, you can boost your bottom line, strengthen supplier relationships, and free up cash flow for business growth.

Managing international payments doesn’t have to be a costly guessing game. By understanding where the hidden fees lie and adopting smarter strategies, your business can cut unnecessary expenses and focus more on what really matters—growth.

👉 Pro Tip: Always request a full breakdown of fees from your provider before confirming an international transfer. Knowledge is power!

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