International payments are a crucial part of doing business across borders, but they often come with frustrating hidden costs. From poor exchange rates to surprise bank fees, these extra charges can quietly erode your bottom line over time. If you’re managing payments for your business, understanding these fees—and how to avoid them—can save you money and improve your cash flow.
In this guide, we’ll break down the most common hidden fees in international business payments and share actionable tips to help you avoid them.
What Are Hidden Fees in International Payments?
Hidden fees are charges that aren’t always disclosed upfront when transferring money internationally. These costs can take several forms, such as:
- Poor exchange rates (inflated FX margins)
- Intermediary bank fees on the SWIFT network
- Receiving bank charges
- Unexpected compliance or handling fees
Even if you pay a flat fee to send money, the recipient may receive less than expected due to these invisible deductions. Let’s look closer at how these fees work and, more importantly, how you can eliminate them.
1. Watch Out for Inflated Exchange Rates
A common hidden cost in international payments is inflated exchange rates. Many banks and payment platforms advertise “no wire fees” but quietly mark up the exchange rate by 2–5%. This markup, also known as the FX margin, is how they make money—and it often costs more than the wire fee itself.
How to avoid inflated exchange rates:
- Ask for the mid-market rate and compare it to the rate being offered. The mid-market rate is the true exchange rate between two currencies, without any markup.
- Partner with a transparent FX provider, like Monex USA, that offers competitive and clear pricing.
2. Understand Intermediary Bank Fees
When using SWIFT wires, your money may pass through multiple intermediary banks before reaching the recipient. Each bank along the way can deduct a fee from the transfer amount, leaving the recipient with less than expected—often without your knowledge.
How to avoid intermediary bank fees:
- Use payment providers that work with local payout networks or pre-funded accounts to bypass intermediary banks.
- Choose solutions that offer guaranteed delivery amounts, like Monex USA’s full-value payments.
3. Clarify Receiving Bank Charges
Even after you’ve paid all upfront fees, the recipient’s bank may charge additional fees to credit the funds to their account. These unexpected deductions can strain vendor relationships or cause dissatisfaction.
How to avoid receiving bank charges:
- Communicate with your recipient to understand their bank’s fee policies.
- Choose a payment provider that provides full transparency about fee structures, so you can anticipate these costs in advance.
4. Beware of Double Currency Conversion
Sometimes, the recipient’s bank will convert currency at their own (often less favorable) exchange rate—even when the sender has already converted the funds. This double conversion can lead to significant loss of value.
How to avoid double currency conversion:
- Send funds in the recipient’s local currency using a provider like Monex USA.
- Confirm with the recipient that their account can receive payments in the desired currency.
5. Use a Dedicated Business Payments Partner
When managing payments for business, banks aren’t always the most efficient or transparent option. Dedicated foreign exchange (FX) and payment providers specialize in creating cost-effective, reliable solutions for international payments.
Working with a provider like Monex USA ensures:
- Better exchange rates with transparent pricing
- Detailed payment tracking for greater control
- Full transparency around fees and charges
- Faster delivery times for urgent transactions
