International money transfer costs can quickly add up for business owners, especially when they significantly vary from one country to another or if a company has to make many low-value payments.
FXC Intelligence collects extensive information about international transfer costs in multiple countries around the world, across a variety of sending amounts and currency pairs, and using that data, we can assess the impact of sending abroad from a selection of major nations.
In the chart above, we share some of our data that covers the cost of sending the local currency equivalent of USD 10,000 to the US (to be received in USD), a representative amount for an SME payment. We break out both the fees and FX margins applied by the top banks in some example markets – one Latin American country, two European countries and one country in the APAC region:
- Our regional example in APAC had the lowest margin when it comes to sending money abroad. This can be attributed to the ease of doing business in this country, with banks standing out in terms of customer experience due to recent efforts to expand their online channels and upgrade their mobile banking services.
- Providers had significantly different margins across Europe and even the countries in our sample. In EU Country B, margins were much higher, which could be due to the fact that the customer experience offered by banks in that country remain mostly branch-based. In most cases, business owners need to visit or phone their bank branch to learn the costs incurred for international transactions and actually make these transactions.
- Meanwhile, banks in EU Country C applied a relatively low margin. A highly competitive banking sector in this country – where savings banks, regional banks and commercial banks cohabitate – can explain the fact that costs do not escalate too much.
- The Latin American country was on the more expensive end of the spectrum. Thoughthis country has one of the most developed banking sectors in Latin America, it is dominated by a handful of banks and therefore remains very expensive to make international transactions, especially given the high fixed transfer fees in the country.
However, the rise of challenger banks and fintechs is changing the landscape and creating fresh incentives for the industry to innovate. Traditional banks can choose to compete either by leveraging their broader product sets – notably credit – or by improving their offerings through technological investments. The least desirable option is lowering their prices, simply because many of their customers are still not price sensitive enough or do not yet wish to use a third party provider.
If you’re interested in pricing data covering markets across the globe such as Brazil, China, France, Germany, Italy, Japan, Singapore and many more, get in touch.