Why your international payments are costing you 23% more than they should

International payments can eat away up to 10% of your transaction amount through currency conversion fees alone. In fact, when sending INR 837,657, you could lose more than INR 16,753 just to intermediary bank charges.

Additionally, traditional bank transfers and wire services often hide these costs behind complex fee structures. SWIFT transfers can cost between INR 1,675 and 3,375, while payment platforms like PayPal charge up to 4.4% for cross-border transactions.

This guide explains why you're paying more than necessary for your international transfers and shows you how to reduce these costs. It also introduces modern payment alternatives and practical strategies for keeping more of your hard-earned money.

Hidden costs in international bank transfers

SWIFT transfers involve multiple layers of fees, which often remain undisclosed until after the transaction. The base fees alone can cost between INR 2,109 and INR 4,219 for a typical international transfer.

Understanding SWIFT fees and markups

The basic SWIFT transfer structure includes sending bank fees, receiving bank charges, and exchange rate markups. Banks typically add a margin of 2-3% to the exchange rate. Furthermore, sending bank fees range from INR 2,531 to INR 4,219 for standard transfers.

Impact of intermediary bank charges

Intermediary banks play a crucial role in routing international payments. However, each bank adds its own charges, which typically range from INR 843 to INR 2,531 per transaction. Moreover, a single transfer might pass through multiple intermediary banks, with each one deducting its fee from the transfer amount.

The payment processing codes determine who bears these costs:

• OUR: Sender pays all fees
• BEN: Recipient covers all charges
• SHA: Fees are shared between sender and recipient

Currency conversion losses explained

Currency conversion often creates the largest hidden cost in international transfers. Banks apply a markup of 3-4% over the market exchange rate, which can significantly reduce the final amount received. For instance, sending INR 843,804 might involve multiple currency conversions, each incurring a 1.57% loss.

The total impact becomes more apparent with larger transfers. A study revealed that people sending money to India paid over INR 21,900 crores in foreign exchange fees during 2020, with approximately INR 7,900 crores hidden in exchange rate markups. Consequently, these hidden costs can reduce your transfer amount by up to 23% through combined fees, markups, and conversion losses.

Why traditional bank-to-bank transfers fail modern businesses

Traditional bank transfers present significant operational challenges for businesses. A standard international transfer takes 3-5 business days to process, whilst urgent payments demand premium fees that can reach INR 4,219.

Speed vs cost tradeoffs

Bank transfers require strict cut-off times, with transactions outside business hours, holidays, or weekends facing delays until the next working day. Although same-day delivery exists on major routes, businesses must choose between faster processing at higher costs or slower, cheaper transfers. Large transactions often require branch visits, creating additional time burdens.

Lack of transparency in pricing

Banks apply complex fee structures that mask the true cost of transfers. Rather than providing upfront pricing, many institutions embed hidden charges within exchange rates. Foreign exchange markups can reach 3-4% above market rates, whilst processing fees vary based on:

• Transfer amount and destination
• Processing speed requirements
• Number of intermediary banks involved
• Currency conversion stages

Limited tracking and visibility

Traditional bank transfers offer minimal transaction visibility compared to modern courier services. Primarily, this creates three key business challenges:

1. Payment status uncertainty between initiation and completion
2. Difficulty tracking funds through intermediary banks
3. Limited ability to resolve issues promptly

While the SWIFT messaging system facilitates transfers, it does not actually move funds. Instead, it serves as a communication network between banks, offering restricted tracking capabilities. This lack of real-time visibility particularly affects businesses managing multiple international payments.

Banks recognise these shortcomings, specifically in meeting modern business needs for speed and transparency. Certainly, the growing demand for cross-border payments, projected to reach USD 290 trillion by 2030, highlights the urgency for improved solutions.

Common mistakes costing you extra

Small oversights in managing international payments can lead to substantial financial losses. A study revealed that 68% of business owners pay unnecessarily high transaction fees.

Poor timing of transfers

Initiating transfers outside bank operating hours or just before holidays creates avoidable delays. Bank transfers are processed only on business days, meaning a Friday transfer might not be completed until Tuesday. Meanwhile, currency conversion adds extra processing time, primarily with less common currencies.

Wrong choice of payment method

Selecting unsuitable payment methods often stems from focusing solely on upfront costs. Hidden fees can include transaction charges, setup costs, and monthly fees. Payment gateway selection requires careful consideration of:

• Transaction volume and business size
• Integration with existing systems
• Security infrastructure
• Success rates and reliability

Inadequate currency risk management

Currency fluctuations pose a significant threat to profit margins. A recent study showed that companies lost an average of 2% of revenue to payment processing fees. Primarily, businesses face three types of currency exposure:

Transaction risk affects day-to-day operations through payment timing. Translation risk impacts foreign-owned assets, whilst operational risk influences cash flow predictability.

To minimise these risks, work with fully convertible currencies like USD, EUR, JPY, and GBP. Forward contracts, which lock in rates for future transactions, offer protection against exchange rate fluctuations.

Smart risk management starts with understanding your exposure types and setting clear objectives. Regular monitoring of exchange rates against budget rates helps identify opportunities to increase efficiency. Furthermore, businesses should avoid speculating on currency movements, as this can lead to unexpected losses.

Modern alternatives for international payments

Payment technology has evolved beyond traditional banking systems, offering businesses faster and more cost-effective ways to handle international transactions. Modern payment solutions now process cross-border transfers in multiple currencies and serve over 175 alternative payment methods worldwide.

Digital payment gateway comparison

International payment gateways enable businesses to accept payments in over 100 currencies. These platforms incorporate advanced security protocols, including encryption and tokenisation, to protect sensitive customer data. Primarily, businesses achieve 75% higher success rates on secure transactions through these gateways.

Fintech solutions for cross-border transfers

Fintech providers have introduced innovative solutions that address traditional transfer challenges. Notable companies like TransferMate and Wise offer competitive exchange rates with transparent fee structures. These platforms support multiple currencies and provide robust reporting capabilities, enabling businesses to track payments effectively.

Cross-border payment volumes through fintech platforms are projected to reach INR 371.27 trillion by 2024. Accordingly, businesses can now access:

• Real-time payment tracking and notifications
• Integration with accounting software
• Local currency accounts in multiple countries
• Automated compliance checks

Cryptocurrency payment options

Cryptocurrency adoption for business payments continues to grow, with over 37% of businesses now using blockchain and stablecoins for cross-border transactions. Notably, stablecoin settlements reached approximately INR 675.04 trillion in 2022, surpassing volumes of major card networks.

Stablecoins offer distinct advantages over traditional cryptocurrencies for business transactions. These digital assets maintain price stability while providing 24/7 operation and near-immediate settlement. Overall, about 30,000 merchants worldwide, including major brands, now accept cryptocurrency payments.

Modern payment platforms essentially combine multiple solutions, offering businesses flexibility in payment collection. Payment success rates through these platforms reach 97.3%, increasing to 99.1% with intelligent retry systems. Furthermore, 76% of international consumers prefer paying in local currencies, making these modern alternatives increasingly vital for global business growth.

How to optimise your payment strategy

Selecting the right tools and strategies for cross-border transactions can reduce your payment costs by up to 23%.

Choosing the right payment gateway for international payments

A reliable cross-border payment platform forms the foundation of cost-effective international transactions. Primarily, look for these essential features:

• Multi-currency support across 45+ countries
• Transparent fee structures
• Real-time currency conversion capabilities
• Strong security protocols
• Integration flexibility with existing systems

Henceforth, consider your specific business needs, customer base, and growth strategy when selecting a platform. The gateway should support the regions where you operate and offer local payment methods that match customer preferences.

Negotiating better rates with providers

Payment providers often adjust their rates based on transaction volumes. Undoubtedly, businesses handling large volumes of cross-border payments can secure reduced charges through direct negotiations.

Regular high-value transactions may qualify for bulk currency conversion rates. Consolidating multiple small payments into fewer, larger transactions simultaneously helps reduce individual transaction fees. This approach also strengthens your position when negotiating with providers.

Implementing cost-tracking systems

A comprehensive monitoring system helps validate deposits and verify billing charges. Presently, cloud-based data and reporting platforms capture transaction data across channels, providing actionable insights for cost management.

Strategic currency holding in multi-currency accounts allows you to wait for favourable exchange rates before converting. Regardless of your business size, implementing automated payment systems reduces operational costs and minimises errors in payment processing.

Forward contracts and rate alerts enable you to lock in specific currency rates for future purchases. This proactive approach helps protect your business against adverse currency fluctuations and reduces payment cost uncertainty.

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In a nutshell

Smart international payment management starts with understanding the true costs and available alternatives. While traditional bank transfers are common, they often conceal fees that can reduce the transfer amount by up to 23%.

Modern payment solutions offer significant advantages over conventional methods. Digital payment gateways, fintech platforms, and even cryptocurrency options provide faster processing, better exchange rates, and enhanced visibility into your transactions.

Your business can cut international payment costs through three key actions:

• Choose payment gateways that match your specific business needs
• Negotiate better rates based on your transaction volume
• Set up proper tracking systems to monitor costs

Remember that seemingly small decisions about payment timing, method selection, and currency management significantly impact your bottom line. Rather than accepting standard bank rates and traditional transfer methods, take control of your international payments through modern alternatives that offer transparency and better value.

The future of cross-border transactions lies in digital solutions that combine speed, security, and cost-effectiveness. By implementing the strategies outlined in this guide, you can reduce transfer costs while ensuring smoother international payment operations for your business.

Disclaimer: This guide provides general insights into international payment fees. Before transactions, verify costs with financial institutions. We assume no liability for financial decisions or outcomes.

Contributed by Denila Lobo

Denila is a content writer at Winvesta. She crafts clear, concise content on international payments, helping freelancers and businesses easily navigate global financial solutions.