International money transfer: Compare methods and costs

Key takeaways

• International money transfers vary significantly on cost, speed, and reliability depending on whether the provider uses SWIFT or local payment networks.

• The biggest hidden cost is usually the exchange rate markup, not the headline transfer fee. So comparing total cost matters more than comparing fees alone.

• Airwallex routes over 94% of transfers through local payment networks rather than SWIFT, which helps businesses save on FX fees and receive funds faster.

While global expansion offers numerous opportunities for business growth, it also brings the challenge of managing frequent international money transfers. This is especially pertinent for eCommerce businesses dealing with large orders and lengthy processing times. 

This suggested the importance of choosing the right international remittance method while taking different details into account, including transaction fees, processing times, exchange rates, transfer limits, and bookkeeping demands. In this article, we'll walk through how international transfers work, what they cost, and how to choose the right option for your business.

How international money transfers work

An international money transfer is a payment instruction sent between financial institutions to debit one account and credit another across borders. The instruction may pass through intermediary banks. Each stop can add time and cost, so fewer intermediaries usually mean faster, cheaper transfers.

SWIFT vs local payment networks

There are two main ways these instructions travel. SWIFT is the traditional messaging network banks use to send payment instructions internationally. It works, but each correspondent bank on the route can add a fee and a delay.

Local payment networks work differently. They move money within a country's domestic system. Networks like ACH in the US, SEPA in Europe, or FPS in Hong Kong are built for speed and low cost inside their own borders. So when a provider can route your transfer through a local network at the destination, instead of sending it through SWIFT, the payment will usually arrive faster and cost less. That's the reason FinTech platforms can often beat banks on both speed and cost.

What information do you need to send an international transfer?

Before you send an international transfer, you'll need to collect a few details about the recipient:

• Recipient's full name: This must match the name on their bank account exactly.

• Bank account details: Depending on the destination, this could be an account number, IBAN, or both.

• Bank identifier: For SWIFT transfers, you'll need the bank's SWIFT/BIC code. For local rail transfers, you may need a bank code and branch code instead.

• Transfer amount and currency: Confirm whether you're sending in your currency or the recipient's.

What you need can vary by destination country and provider, so check with your chosen platform before you start the transfer.

What are the main methods for international money transfers?

There are various options available for international money transfers, including transfers handled by online money transfer service providers, traditional or online banks, and money changers. It’s crucial to compare these services to find the one that best fits your business needs.

Online money transfer services

Online platforms offer a convenient and user-friendly solution for international money transfers. They usually boast quicker processing times and reduced fees compared to traditional methods, such as bank telegraphic transfers. Some notable examples on the market include Wise, PayPal, Remitly, and WorldRemit. 

Among the group, Airwallex, an all-in-one financial platform, provides interbank exchange rates and clear fee structures under its top-level security regime. As an intermediary between senders and recipients, it ensures that digital transactions are executed swiftly and securely, with approximately 93% of funds delivered within the same business day.

Traditional and online banking transfer services

Traditional bank transfers present a straightforward option, especially for those who already hold an account. While traditional banks offer a high level of security and reliability, they may incur higher costs on international money transfers due to service charges, exchange rate markups, and other additional fees. In addition, transfers via SWIFT have longer processing times compared to other online transfer platforms. It usually takes around 1–5 working days to complete a transfer. This can potentially cause delays when funds are urgently needed.

Money changers

Third-party providers, such as money changers that offer transfer services, strike a balance between cost and convenience, making them ideal for smaller businesses that have to execute transactions timely. However, security concerns arise as there’s a risk of fraud when less established or lesser-known providers are selected. Also, larger transactions may not be supported due to transfer limits.

What should be considered when comparing international money transfer methods?

When selecting an international money transfer method, it is essential to take the following factors into consideration:

• Transaction fees and hidden charges: Businesses often face various expenses, such as bank service fees, disadvantaged foreign exchange costs that can exceed interbank rates by 4–5%, and additional hidden charges related to transfer processing, such as messaging, which may cost you HK$100–200 per transaction. These expenses diminish profit margins and hinder business scalability.

• Exchange rates: Fluctuations in currency values can significantly affect profitability, especially when there is a delay between price quotations and transaction completion. A depreciation in the customer’s currency during this interval may result in a devastating loss.

• Processing time: Traditional bank transfers through SWIFT typically require 24–48 hours, and can extend up to 5 days depending on the complexity of the transaction. This delay can hinder cash flow and worsen liquidity issues for businesses handling substantial orders or credit arrangements.

What does an international money transfer cost?

There are various potential expenses linked to international transfers:

• Transfer fee: Financial institutions and money transfer service providers usually impose service fees, with banks typically levying higher charges. These include additional telegram charges for complicated international transfers that require more than one SWIFT code, remittance status enquiry fees, and fees for making changes or cancelling the foreign transaction.

• Exchange rate markups: Remittance service providers usually charge a markup on top of the interbank exchange rate.

• Intermediary fees: Fees charged by third-party banks involved in tee transfer.

• Additional charges: These include additional telegram charges for complicated international transfers that require more than one SWIFT code, remittance status enquiry fees, and fees for making changes or cancelling the foreign transaction.

How to send international money transfer: A step-by-step guide

The exact process varies by provider, but the main steps are much the same:

1. Choose your provider and compare total cost. Look at the exchange rate you're being offered, not just the transfer fee.

2. Set up an account if you haven't already. Online platforms usually require identity verification before your first transfer.

3. Enter recipient details. You'll need their name, account number, and bank identifier (SWIFT code or local bank code).

4. Enter the amount and check the exchange rate. Confirm the rate you're being offered and the total amount the recipient will receive.

5. Confirm and track the transfer. Most providers offer tracking so you can see when the funds arrive.

Online platforms usually let you do all this in minutes through a web or mobile interface. Bank wire transfers may require branch visits or extra verification for large amounts.

How Airwallex handles international money transfers

If you're making regular international payments, the costs and delays of traditional bank transfers add up fast. Airwallex fixes that by routing transfers through local payment networks wherever possible, pricing FX at rates close to interbank, and offering multi-currency Global Accounts so you can collect payments and manage funds in the currencies you need.

We route over 94% of transfers via local rails rather than SWIFT. Approximately 93% of transfers arrive within a few hours or the same day, around 45% are instant, and businesses typically save up to 80% on FX fees compared to traditional banks. We price transfers at or near the interbank rate with a transparent markup starting from 0.2% on major currencies, with no hidden costs built into inflated rates.

Frequently asked questions

Is it safe to send money internationally with Airwallex?

Yes. Airwallex is a licensed and trustworthy platform that implements robust security measures to protect transactions and funds.

What are the fees for sending money internationally with Airwallex?

Airwallex charges no transaction fees via local rails. It applies a markup of as low as 0.2% above ‌interbank exchange rates.

What are the differences between Airwallex and other money transfer service providers?

Over 94% of transactions through Airwallex go through local rails, instead of SWIFT. 90+ trade currencies are supported at interbank rates, helping businesses save up to 80% on FX fees. Approximately 93% of transactions can be completed within the same day.

In contrast to conventional banks and certain competitors, Airwallex uses local payment networks to eliminate SWIFT fees and minimise delays. Furthermore, it offers multi-currency Global Accounts, smooth accounting integrations, and robust security features, making it an effective and transparent option for international businesses.