BLOG

SUBSCRIBE

Streamline international payments: How to avoid intermediary bank fees

Streamline international payments: How to avoid intermediary bank fees

When you think of the fees often involved in international wire transfers via banks, it sounds incredulous. Incoming international wire fees. Outgoing international wire fees. Currency conversion fees. 

These fees add up quickly, and can inflate the cost of sending payments overseas. It’s helpful to understand some of the fees involved with cross-border payments so that when more cost-efficient international payments opportunities arise, you can take full advantage of them.

Intermediary banks fees

Imagine passing a basket of bread around at a restaurant. Each person takes a roll, and maybe two or three. Then, a person from another table comes over and grabs some rolls too. 

Why is this happening? Intermediary banks can step in during international wire transfers to complete transactions. If your bank doesn’t have a financial relationship with the recipient’s bank, then it requires other banks to complete the process. Sometimes there are several intermediary banks involved. Each one usually charges a flat fee for their participation.

Companies sending these international wire transfers often don’t know about these fees and may not be aware that they’re even being charged. 

A litany of international wire transfer costs 

Intermediary bank fees join the long list of ones charged by financial institutions for USD international wire transfers.  The fees and costs during the process can include: 

  1. The fee charged by your bank to send a USD payment overseas. This varies, but averages to $38 for outgoing international wire transfer fee charged by the top 10 US banks according to the FDIC, for payments in local currencies. This fee excludes currency conversion rates. 
  2. Lifting charges from intermediary banks, which may get passed on to your vendor. 
  3. Additional fees on the exchange rate charged by receiving banks to convert USD to local currency so that you may lose money in the conversion and through a conversion fee.
  4. The receiving bank may charge an incoming international transfer fee as well.
  5. Need to know the status of your payment? Banks may trace your payment – but for an additional fee.  

Save money and time by sending international payments in local currencies 

What’s the secret to saving money on international payments? Pay in a vendor’s local currency. For example, send payment in euros instead of dollars for a vendor based in Germany. 

Bill.com International Business Payments supports 137 countries and 106 currencies, allowing you to streamline the payment process. When you pay in local currencies, you pay your vendors more cost-effectively.  

Below are examples of international wire payments with Bill.com vs typical banks, comparing the process for sending in USD with the process for sending in your vendor’s local currency.

Streamline international payments: How to avoid intermediary bank fees

Streamline international payments: How to avoid intermediary bank fees

Bypass expensive bank fees: While banks may charge upwards of $38 for outgoing international wire transfer fees, Bill.com charges $0 for wire transfer fees when you pay in local currencies. Bill.com wires already includes all intermediary bank charges (BENE OUR payment instructions), so your vendor receives the full payment amount. If your vendor prefers to receive the payment in USD, the Bill.com wire transfer fee is only $9.99. (Like any other USD wire, intermediary banks may charge your vendor additional fees. Bill.com wires do cover intermediary bank fees when you send payments in USD.)

Competitive exchange rates: Bill.com gives you competitive exchange rates for local currency payments, saving you more money. We’ll even do the math for you with our currency converter. It converts your bill amount to a vendor’s local currency and shows the latest indicative exchange rates. 

No charge for global payment tracking: Bill.com provides detailed payment information, delivery times, and remittance information for vendors. You can track international payments at no additional charge.

International Payments VIP Program: Bill.com has an International Payments VIP Program for qualified customers sending more than $1M per year in local currencies. It gives you hands-on help starting cross-border payments, complementary analysis of current rates to determine how much you can save, and access to exclusive foreign exchange rates and expedited payments. Apply for the program here.

Save time by paying in local currencies: When you pay an international vendor in USD, funds need to be converted, and that usually occurs at the foreign vendor’s bank. With another financial institution converting the funds it can take longer to arrive in your vendor’s bank account. However, if your vendor’s bank account is in local currency, you should pay in local currencies, saving an extra step for the vendor’s bank to convert the payment to local currency (at rates the vendor may not have control over), so your vendors will likely receive funds faster.

Are you ready to reduce fees and streamline your international payments process? Bill.com is here to help. Sign up for a risk-free trial to get started or view our International Payments Product Overview to find out how to make cross-border payments with Bill.com.

 

February 5, 2020
Jenna Cheng
Senior Digital Marketing Manager, Bill.com
Jenna Cheng leads digital marketing strategy and campaigns for international payments at Bill.com. She has a passion for fintech innovation - especially helping businesses save time and money by streamlining their payment processes.