Hidden Fees in Money Transfer Apps

New money technology has made sending money around the world easier, faster, and safer. But one thing that has yet to change is that sending money to other countries can still be really expensive.

There may be hidden additional costs on top of what you pay to banks or online payment systems to send money. These hidden costs can cost you a lot of money, especially if you’re a business owner who often receives money from clients in other countries.

There are some hidden costs when you receive money from clients in other countries

Not a good exchange rate.

One of the hidden costs when converting money from one currency to another is not getting a good deal. Different banks and remittance services use different exchange rates when sending money abroad.

When you receive money from a customer in another country, they send it in their currency, and you receive it in your local currency. This means that the exchange rate at the time of the transaction will determine how much money you actually get.

Exchange rates can make it more expensive to send money to other countries because banks add extra costs, making transactions more expensive. In fact, a recent study showed that 96% of the funds the UK’s top banks earn from remittances come from exchange rate surcharges.

Here are some important things to remember when looking at exchange rates for your money transfer:

Each bank uses its exchange rate to send money to another country. Make sure you check not only the rate but also their fees for converting currency. This fee can be a fixed amount or a percentage of the total amount you are expecting.

When banks exchange money with each other, they use a rate called the “real exchange rate.” The exchange rate they tell you is the actual rate plus their fee. They usually don’t tell you the fee, and you just see the rate they’re going to use.

Some money transfer services like PayPal, Bitcoin, and Payoneer often have lower fees than banks. But if you are regularly receiving huge amounts of money from customers in other countries, there may be better options. For example, PayPal sometimes freezes accounts without warning. Bitcoin may have very high transfer fees depending on the currency.

Choose the right time to transfer your money.

Timing is everything when you get money from a distance. Sometimes, waiting a little can earn you more. It’s like waiting for your favorite jacket to go on sale!

Group payment at once

If you often receive money from a foreign country, it may be better to wait and get the money all at once rather than a little later. It’s will earn you more 

Know the true value of your money.

When banks change one type of money to another, they use a special rate called the “interbank rate.” This rate tells you how much your money is worth compared to money from other countries. You can find this rate online. 

Shop around for the best deal.

Different banks give you different amounts when you convert it from one type to another. So, before you decide where to get your money, make sure you check which place gives you the most. There are websites that can help you do this. 

Every bank has its own rules.

Different banks have different rules for different people. For example, a bank may lend more money to a business than to an individual. So, make sure you check the bank’s rules before you decide. 

Some places cost more.

Some places may cost more to get money than others. For example, getting money from Africa can cost more than getting it from other places. There are many reasons for this, such as how much money people send there and how much they buy from other countries.

Make sure every payment is worth it

Sometimes, getting a little money away can cost more than it’s worth. So, try to get only the big amount that makes the price worth it. 

Some companies only charge you if you get a little money at a time. If you are expecting a lot of money, check if this is an option. 

Time Your Transfers Strategically

Timing is everything when you get money from far away. Sometimes, waiting a little can make you earn more. For instance, a good career opportunity is worth the wait. So is the timing of your transactions.

Batch Payments Together

If you get money from a foreign country, it can be smarter to wait and get all the payments at once. You might want to wait a little for favorable exchange rates.  It’s like saving up your allowance to make an asset instead of buying a liability. 

Know the Real Value of Your Money

When banks change money from one type to another, they use something called the “interbank rate.” This is the real value of your money compared to money from other countries. You can find this rate on the internet. It’s like knowing how much your money values. What’s its actual buying power?

Shop Around for the Best Deal

Different banks give you different amounts of money when you change it from one type to another. So, before you choose where to get your money, make sure you check which place gives you the most. Some websites can help you do this.

Every Bank Has Its Own Rules

Different banks have different rules for other people. For example, a bank might give more money to a business than to a regular person. So, make sure you check the rules of the bank before you decide.

Some Places Cost More

Getting money from some places can cost more than others. For example, getting money from Africa can cost more than getting it from other places. This is because of many reasons, like how much money people send from there and how much stuff they buy from other countries.

Make Sure Every Payment Is Worth It

Sometimes, getting a small amount of money from a foreign country can cost more than it’s worth. So, try only to get big amounts of money that make the cost worth it. 

Some companies only charge you if you are transferring very little money. They often provide fee-free transactions when the money exceeds a certain amount.  If you’re expecting a lot of money, check if this is an option. 

Conclusion 

Funding from international clients often incurs substantial costs. Both clients and business owners alike often overlook transaction fees. However, by being more savvy in choosing a money transfer service, you have the ability to reduce these fees and increase your income significantly.