The best way to do business money transfer to Canada from the US

You’re probably looking for the most efficient and cost-effective way to transfer business money as an international business. Here we’ll look at how you can send business money to Canada from the US to pay your employees, suppliers, and vendors in the smoothest way possible. 

We’ll help you determine the right method to avoid high foreign exchange (FX) rates and supply chain delays to keep your business running effectively. 

Transfering business money through a global business account

The best option to transfer business money to Canada from the US is through a global business account. 

Opening a global multi-currency account with Airwallex gives you the best benefits compared to the other business money transfer methods mentioned above. The ability to transfer business money to more than 30 countries at market-beating FX rates (expect only 0.5% above interbank) will help your business manage its operations cost-effectively. For example: 

Compared to the SWIFT network, Airwallex relies on a network of local bank accounts for transfers. We send your business money where it needs to go within one business day, and our global accounts are free to open with zero monthly account fees. You won’t see any “gotcha” charges from us. 

Opening a foreign currency account with Airwallex also means you can collect various currencies (essentially wherever you do business) without exchanging them. For example, you can receive payments from your Canadian customers in CAD, hold them in your account, and then transfer them to your Canadian employees when the time is right to avoid double conversion. 

[Related: 15 signs you should switch to an online business account]

Using the SWIFT network

If you choose to use a large retail bank for your international money transfers, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) might be the right method for your business. 

The SWIFT payment network works with over 10,000 financial institutions around the world to provide a consistent and reliable method of transferring business money. SWIFT will first create a payment order for your transfer. It’s then sent through several financial institutions before arriving at its destination. 

Businesses choose SWIFT because they want to continue working with the same bank to maintain their relationship with it. The process of sending SWIFT payments is quite simple, too. 

If you prefer SWIFT, you can set up a wire transfer with your US bank and find your relevant Canadian SWIFT code (also known as a Business Identifier Code [BIC]). A BIC is an international standard for identifying a specific bank and branch to route your transactions. 

However, there are a couple of drawbacks to SWIFT that you should consider before choosing this method for your transfers to Canada. 

Cost

When making a SWIFT payment, you'll encounter several fees. Each bank your business money transfers to on its way to its destination will likely charge a handling fee or a service commission. 

Due to the international nature of SWIFT, a set of fees is difficult to predict. The financial institutions through which your transfer is processed likely differ from those of another business. Fortunately, your bank might charge one flat fee to cover the transfer costs. But you’ll have to contact your bank and speak with them directly to find out for sure. 

And since your transfer will involve changing currencies from USD to CAD, there are exchange rates as well. Large retail banks don’t always offer ideal FX rates for SWIFT transactions – they’re often 5% higher than interbank FX rates. 

[Related: Are you paying too much to be global? How to sell in foreign markets without paying too much in fees]

Wait time

SWIFT payments also aren’t the fastest. They can take up to four business days to clear, which is often frustrating for your business and the business you’re sending money to. A lengthy wait time could harm your business if you’re on a tight deadline with vendors and suppliers. It also fuels uncertainty for employees who expect to see payroll money deposited into their accounts on a certain day.  

These wait times might also affect the flow of your supply chain. Vendors and suppliers must wait for payments to clear before they can send products and services, which creates hurdles in your overall operations. 

[Related: Six surprising reasons your bank transfer is delayed]

Lack of Transparency

A lack of transparency is another factor to consider if you opt for transfers through SWIFT. 

It’s generally well known that large retail banks aren’t the clearest about their service fees and FX rates. They’re also not the easiest to understand. Sometimes, you won’t know what the exchange rate was or the amount of the service fee until after the transfer was made, and you see them on your statement.

Using a business money transfer service

A money transfer service is another way to send money to Canada from the US. 

Western Union and MoneyGram are just a couple of examples of businesses that provide money transfer services. These services are specifically designed to help people and businesses send money internationally.

You won’t have to rely on a bank to transfer the business money, and a bank account isn’t needed to receive it either. Additionally, transferring business money through this service is significantly faster and cheaper than going through a bank. 

However, the most common users of this service are individuals sending money abroad to friends and family. You should also expect a $50,000 transfer limit, which might create problems down the road as your business grows and expands and starts to generate more money.

[Related: How to pay globally distributed teams]

Using PayPal or peer-to-peer transfers

Another way to transfer business money to Canada from the US is through PayPal or peer-to-peer (P2P) transfer platforms such as Interac. Unfortunately, the most common P2P platforms in the US – including Venmo, Zelle, and Cash App – aren’t available in Canada.  

PayPal

PayPal is a reliable payment platform that millions of people use worldwide. It’s easy to use, has secure technology to protect users from fraud, and has a notable dispute resolution process.  

However, PayPal Business charges several fees for payments, especially international ones. These fees include transaction fees, conversion fees, and general fixed fees, which reduce the platform’s appeal. 

For example, depending on the amount, PayPal charges between 1.9% and 3.5% per transaction, plus an additional 1.5% for international transfers. You can typically expect a 4% fee for international transactions involving a currency conversion. 

Using PayPal also puts your business at risk of account holds, lengthy payment times, declined payments, and canceled payments. This is detrimental to companies that can’t afford to lose time by dealing with various payment difficulties. 

P2P currency transfers

P2P transfers are much faster and less expensive than setting up a transfer through a bank. 

However, one risk of using them is that they’re not always safe. There usually isn’t a great security system in place to protect users from fraud and hacking. The exchange rates aren’t ideal either. E-transfers can also grow stale much faster than a check.

Interac, for example, cancels e-transfers after 30 days if they’re not accepted. There are also some other rules that Interac requires its users to follow that might not suit well for certain businesses. You can only send up to: 

• $3,000 in a 24-hour period

• $10,000 in a seven-day period

• $30,000 in a 30-day period

Though sending a payment through a P2P platform is incredibly fast, it can take days for those payments to clear in a user’s bank account. 

Which option is right for your business?

Opening a global business account with Airwallex is the smartest option if you regularly make international transfers to Canada and any other country you do business in. 

Cutting the cost of currency conversion fees, as well as eliminating surprising transfer and exchange fees will significantly improve your profit margins. Airwallex also makes it much easier for eCommerce businesses to expand thanks to our various partnerships with other fintech platforms. 

If you want to create a borderless business account with Airwallex, sign up for free today.