The intermediary bank fees involved in international wire transfers can really rack up, especially if you aren't expecting them. This post explores those fees—what they are, why they happen, and how to avoid them.
What are intermediary bank fees?
In international transfers, the two financial institutions involved—the one sending the money and the one receiving it—don't always have a direct connection to each other. Intermediary banks bridge the gap in the international banking network, helping international money transfers find a route between the two banks.
Intermediary banks play other important roles too, including currency exchange across different countries and making sure the regulations for international money transfers are being followed. Intermediary banks charge intermediary fees for these services.
Companies sending international wire transfers often don’t know about intermediary banks or fees in advance and may not be aware of these common charges.
The true cost of international wire transfers
Intermediary bank fees join the long list of fees charged by financial institutions for USD international money transfers. The fees and costs when you transfer money overseas can include any of the following.
Bank wire fees
Also known as originator bank charges, these are the fees charged by your domestic bank to transfer funds overseas. The amount varies, but for payments in local currencies, outgoing international wire transfer fees charged by the top 10 US banks average about $38, according to the FDIC.
Lifting charges
Lifting charges, or lifting fees, may be charged by intermediary banks or by the recipient's bank for handling the international payments. These fees are charged to the recipient in cross-border transactions.
When you send money overseas, you don't pay lifting fees directly—your vendors do. But vendors that regularly work with international customers may pass that charge on to you, whether as a separate line item on the invoice or simply by adjusting their rates to accommodate these charges.
Currency conversion fees
International financial transactions have to be converted along the way from the originating currency to the recipient's currency. Currency exchange fees are charged by intermediary banks or receiving banks to convert the original currency to local currency.
Exchange rates
When international currencies are converted from one to another, intermediary banks use an exchange rate that's based on the trading rate at that time. One US dollar might be worth 0.79 in UK pounds, for example.
Whether or not you're paying currency conversion fees, you should also pay attention to the exchange rate. Banks can make money on international transfers by applying an exchange rate that leaves your vendor with less money in their pocket.
If this happens often, your vendor is likely to raise their rates to compensate for the loss.
International transfer fees
The receiving bank may charge your vendor an incoming international transfer fee as well.
Tracking fees
Seeing the status of an international payment is often difficult. Some banks may be able to track your payment across those intermediary bank connections—but it will cost you an additional fee.
How to avoid intermediary bank fees
What’s the secret to saving money on international payments? Skip the intermediary bank fees by paying in your vendor’s local currency with BILL International Payments—when you do, BILL covers any intermediary bank fees so they aren’t deducted from the payment.
BILL supports 137 countries and 106 currencies, helping you streamline international transfers. When you pay in local currencies, you pay your vendors more cost-effectively.
Below are examples of international wire payments with BILL vs typical banks, comparing the process for sending in USD with the process for sending in your vendor’s local currency.
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Bypass expensive bank fees
While banks may charge upwards of $38 for outgoing international wire transfer fees, BILL charges $0 for wire transfer fees when you pay in local currencies.
BILL wires in local currencies also include all intermediary bank charges, so your vendor receives the full payment amount.
If your vendor prefers to receive the payment in USD, please refer to our pricing page for details. (Like any other USD wire, intermediary banks may charge your vendor additional fees. BILL wires don't cover intermediary bank fees when you send payments in USD.)
Comparable exchange rates
BILL also gives you comparable exchange rates for local currency payments—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 provides detailed payment information, delivery times, and remittance information for vendors. You can track your international payments at no additional charge.
Save time by paying in local currencies
When you pay an international vendor in USD, the funds need to be converted, and that usually occurs at the foreign vendor’s bank. With another financial institution converting the funds, the payment can take longer to arrive in your vendor’s bank account.
However, if your vendor’s bank account is in local currency, you can use BILL to pay them in that same local currency, saving the need for the vendor’s bank to convert the payment (at rates the vendor may not have control over), so your vendors will likely receive funds faster.
Get started with BILL International Business Payments
Are you ready to reduce fees and streamline your international transactions? Sign up for a risk-free trial to get started, or view our International Payments page to learn more about making cross-border payments with BILL.