Nowadays, it is quite easy to start an online business and sell your product or service all over the world just because of the improvements in technology when it comes to international money transfers.
We make many international money transfers every day without even noticing, whether it is for paying an online subscription like Netflix or buying something from AliExpress. However, when it comes to businesses, the situation is a bit different. Why? Well, businesses are all about profits, and the first step to making some money is proper money management solutions.
In other words, you should find a way to lower your expenses, especially the unnecessary ones like currency exchange fees and unfavorable rates. And if you have an international business, then you’ve definitely run into this problem.
So, what are the best practices when it comes to sending or receiving money abroad? Let’s find out.
Why Are International Money Transfers So Important for Businesses?
If you are a business owner, then you probably know that international money transfers are like a black hole for fees and expenses. The process feels like you’ll never stop paying money for transferring funds from a different country, and on top of that you have to deal with unfavorable exchange rates if you are paid in a different currency.
So, a lot of problems, basically for nothing. But there is a solution, and choosing the right method to handle international transactions can actually save you a lot of money in the long run.
But is this worth the trouble? Or should you continue paying the fees that traditional banks charge just to avoid additional headaches?
Well, there will be no headaches with solutions like multi-currency bank accounts. Remember, exchange rates can demolish your margins, and if you are not careful, you can end up paying 3-7% extra in fees. Ouch, right?
However, if you go with tools like Genome’s international transfer options you can receive, transact, and hold multiple currencies at once. So, you don’t have to exchange them in your local currency, and you don’t need to pay that expensive fee.
Best Practices for International Money Transfers
1. Watch Out for Exchange Rates
First and most importantly, you have to lower the exchange rates as much as possible. Banks have a sneaky strategy of overcharging you on currency exchange fees and they usually have unfavorable rates.
You can try this strategy if you don’t believe me. Instead of converting smaller chunks of money, try to go to the bank and convert a larger amount of money (more than $1,000). In the process, ask the person working there for a “favorable exchange rate”. They will most likely make a call, and give you a favorable exchange rate if you are their long-term customer.
I’ve done this myself. But if you want to forget about exchange rates, I suggest getting a multi-currency bank account. You don’t have to worry about exchange rates, and you can keep multiple currencies on the same account.
2. Understand Transfer Fees
Banks love to hit you with high fees, both for sending and receiving money. But what’s worse is when they tack on hidden fees. Nobody has time for that, right?
- Tip: Choose services that are transparent about their fees. For instance, InstaReM and CurrencyFair are both excellent options, showing fees upfront so you won’t get any nasty surprises.
3. Pick the Right Transfer Speed
Some businesses need the money to arrive ASAP, while others can afford a little patience in exchange for lower fees. Different services offer different speeds, so choose based on your needs.
- Tip: Services like InstaReM typically offer same-day or even instant transfers for certain countries. However, XE is another reliable option for its wide coverage and fast, transparent delivery.
Top Solutions for International Money Transfers
Alright, now that you’ve got some best practices under your belt, let’s talk about the tools. There are plenty of services out there, but not all of them are created equal. Below are a few that are making waves in 2024.
1. Wise (Formerly TransferWise)
Wise is the darling of the international transfer world, and for good reason. You’ll get the real, mid-market exchange rate, meaning no sneaky markups, and the fees are as low as they come—usually between 0.41% and 0.65%.
- Best for: Low-cost, transparent transfers.
- Fun fact: Wise is trusted by over 10 million people globally, with an impressive Trustpilot rating of 4.5/5(
2. Genome
This is a multi-currency bank account that is perfect for businesses. Basically, it is an online banking feature, where you can open multiple accounts, get favorable exchange rates, and great analytics overview just to have an idea of where your money goes.
- Best for: International businesses with transactions in different currencies.
- Fun fact: They offer both Business and Personal accounts.
3. XE Money Transfer
XE has been around for ages (since 1993), and they’re part of one of the biggest remittance networks in the world. They’re known for their competitive rates and transparent fees, plus the option to send money to over 130 countries.
- Best for: Businesses looking for a reliable, well-established service.
- Fun fact: XE moved over $115 billion last year, so they’re kind of a big deal.
How to Choose the Right Service for Your Business
Now that you know the big players, let’s get real—how do you pick one?
- Consider the transfer speed: If you’re in a rush, services like InstaReM offer faster transfers than banks.
- Check exchange rates: Always compare the rate you’re getting with the mid-market rate. Wise generally has the best rates.
- Factor in fees: Banks tend to charge higher fees than online platforms. Services like Wise and XE offer much lower fees than traditional banks.
Security matters: Make sure your provider is regulated. All the services mentioned here are regulated by authorities like the Financial Conduct Authority (FCA)
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