Bank Fees on International Wires in The US Among World’s Highest

One thing is for sure – wire transfers are among the first choices when moving money electronically from one bank account to another account elsewhere in the world. That is because they are typically fast and safe transactions. Nevertheless, they come with some downsides represented by the financial institutions’ fees. Surely, costs vary based on the amount of money sent, the country from where you send it, the country where your money goes, and, of course, the legal requirements on international wires applied in each state. Even so, you might be looking for cheaper solutions and lower fees.

That is why we will discuss in the following the very essence of international wire transfers, as well as the associated bank fees in several parts of the world, including Europe, the USA, Australia, and the UK. Since bank costs on international wires in America are categorized as some of the highest globally, this requires a deeper analysis of the phenomenon.

Money Transfer Comparison conducted thorough research on international bank wire fees

In quest of finding out the actual cost of an international wire transfer and answering some of the most prevalent questions as regards this subject, Money Transfer Comparison conducted comprehensive research on international bank wire fees, analyzing the status of many major countries around the globe. Their main points of interest were the UK, the US, Europe, and Australia, so let us start with the first on this list – England.

International bank wire costs in the UK

Banks all around the globe charge a mix of fixed payment fees and an exchange rate markup designating the discrepancy between the rate given to customers and the actual interbank rate. UK banks are no exception in this case, although the UK and implicitly London are considered the global center of finance, especially as regards Forex (FX). Moreover, England has been categorized as a global leader in neobank (Internet-only) development and FinTech. Surprisingly or not, London is the world capital where people trade currency massively, perhaps more than anywhere else. Nevertheless, the UK’s current status in terms of international bank transfer fees has not influenced England banks towards significantly lower money transfer costs. Indeed, commissions for international wire transfers are usually lower than the costs associated with other countries’ banks, but they are still considerably higher than no-bank options.

Furthermore, UK banks’ exchange rate markup applied to small businesses and personal clients continues to be high, meaning that these customers risk losing significant sums of money as a result of broad foreign exchange margins. For example, the exchange rate margin for a GBPUSD, GBPEUR, and one exotic currency transfer can reach up to 3,55%, depending on each bank’s costs of charging. For this reason, customers are encouraged to calculate their own exchange rate margin to see how much could be lost on a particular transfer.

International bank wire costs in the US

The US banking system’s capacity to carry out international wires relies on the needed state license to do so. Consequently, Money Transfer Comparison’s research mainly involves the most reputable banks in the US, typically making waves in the country. Some of the most popular banks are, thus, Bank of America, Chase (JPMorgan), Citibank, PNC Bank, US Bank, and Wells Bank. These generally allow for safe and convenient international wire transfers, but there are, however, some added costs, especially if no currency conversion happens and clients have to transfer US dollars to another country.

If you are about to make a USD transfer outside of America, learn that Wells Fargo charges the lowest costs for international wires ($30). However, the bank will tax $30 even if there is currency conversion and you wire money in a foreign currency. Wells Fargo is also renowned for its broadest FX margins. Opting for this bank, you, thus, risk losing about 3.5% on a US dollar transfer to GBP or EUR. Surprisingly, if you plan a transfer to MXN (the Mexican peso), a somehow more exotic currency than GBP or EUR, it will work to your advantage.

Chase Bank and Bank of America charge no fee at all if an international wire transfer is sent in a foreign currency. On the other hand, the US Bank charges the highest international wire fixed cost – no more or less than $50, and it does not matter which currency the transfer is sent in. So far, it seems that Bank of America is the most viable option for transferring money internationally – they apply the smallest FX spread and no fee when an international wire transfer is carried out in a foreign currency – but things are far from fine and dandy. Bank of America’s exchange rate spread is still considerably higher than what you can accomplish by relying on a dedicated foreign exchange firm.

However, a survey involving 1144 respondents conducted by Money Transfer Comparison shows that Americans happily accept the high fees their banks apply. 57% of them are aware of the irrationally high costs but concentrate on bank loan repayments instead of international payment costs.

International bank wire costs in Europe

The Single Euro Payment Area (SEPA) implementation has radically reduced the cost of EUR payments carried out between EU members, plus others like Switzerland and England. Today, SEPA transfers that are not so urgent are entirely free with most European banks. Banks are restricted to tax more for EUR payments through SEPA than they would tax for domestic transfers, in conformity with the ECB legislation. Whether the converted currency is in EUR or not, there are no such restrictions as regards transfers outside Europe. However, when sending money from Europe to a non-EU member like the UK, you should act prudently, as some banks could apply significant international money wire fees.

International bank wire costs in Australia

Australia’s largest banks, such as ANZ, NAB, Maquire, Westpac, and CommonBank, process the vast majority of international wires. According to Money Transfer Comparison’s analysis, Macquarie Bank is the only one out there preferring the specialist foreign exchange firm OFX to offer their retail Forex services. Unlike many banks discussed above, Australian banks are required to publish their actual exchange rates on their official web page, which diminishes customer uncertainty. Exchange markup rates vary depending on each bank, so we have a 3.25% rate for AUD USD transfers applied by ANZ and a 2.13% rate in the case of Macquarie Bank. What is more, some banks allow for improved or negotiable rates for privileged clients.

Who is in charge of wire transfers?

One of the most common questions regarding wire transfers is about the institutions responsible for these transfers. Well, the Federal Reserve handled almost 204.5 million domestic wire transfers whose value exceeds $990 trillion. On the other side is the private sector, in addition to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in Belgium and Clearing House Interbank Payments System (CHIPS) in America, responsible for wire transfers.

Conclusion

The US has some of the highest bank fees on international wires. As previously stated, US Bank has the highest fixed international wire transfer fees across the US, making it one of the bad guys in this vast international money transfer world. However, a significant number of US banks tax expensive payment fees, including Wells Fargo and Bank of America. Although the latter appears as the most viable option, customers still need to know some things before jumping to send money to a loved one in another country. For international wires, Bank of America’s costs can range from $35 and $50 for the sender and $15 and $25 for the receiver. As for domestic wires, fees are significantly lower, $15-$20 per receiver and $25-$35 per sender, more exactly.

Alternatives to wire transfers

The seemingly high costs involved in sending money internationally through bank services make many individuals and businesses reconsider their choices and orient themselves towards either a financial institution that allows them to negotiate their rates or more reliable alternatives such as the likes mentioned below:

1) Veem provides competitive foreign exchange rates and taxes no wire fees

2) PayPal is the go-to option for many individuals and companies, as it lets consumers send money overseas quickly and effortlessly. However, note that international wires imply a 5% fee.

3) Cashier’s check is the preferable variant, as it is more economical than a wire transfer, but nonetheless, it is not recommended for those wishing for rapid transfers.

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