As small businesses active in import and export know very well, global business requires global payments. Most banks, including Bank of America have recognized this necessity and offer international wire transfers to their business clients.
But, like everything else in life, this service comes with a price tag. Since customers usually accept that international wire transfers require more work from their bank than a simple domestic transfer, they can tolerate a reasonable service charge.
But is what banks charge reasonable?
To answer that, we need to take a brief look into the nature of international wire transfers.
International wire transfers are based on the same premise as telegrams. In fact, the first wire transfer service was created in 1872 by Western Union bank with the use of its telegraph network.
Since then, and with the conception of the Internet, International wire transfers have expanded infinitely, reaching nearly all corners of the globe. Nearly 10,000 SWIFT member institutions send around 24 million messages on the network. With that many messages being sent, it’s nearly impossible to trace money and it’s much easier to lose it.
Banks, including Bank of America send money overseas through the SWIFT system. SWIFT is a formalized messaging system that is essentially an international communication network of banks. When you order an international wire transfer, your bank alerts the network and your payment travels through the system. Depending on how far your money has to go, or if a bank doesn’t have a corresponding account, the money bounces from bank to bank (known as intermediaries) until it finds a link with its intended destination. *takes breath*
That is, it if ever gets there.
First of all, this system is slow and uncertain. Since nobody knows the exact route your funds will take, the transfer can’t be tracked, and its arrival is unpredictable.
Another issue could arise if the client doesn’t have access to all of the information. One wrong number and your money can be sent to the wrong side of the world.
In short: nobody knows where your money is.
Hidden fees are another major issue. Even though your bank may tell you its own fees upfront, you won’t be notified of the receiving bank’s fees, nor of any other fees the intermediary banks in the SWIFT network may levy upon your transfer.
Not to mention the conversion rates. Banks make a lot of money charging bad foreign exchange rates, and they’re rarely upfront about it.
If you want to learn more about how to get the best foreign exchange rate its important to understand terms like mid-market rate and spread. The mid-market rate is the midpoint between the buy and sell prices of two currencies. The spread is the fee that the exchange institution charges. Each institution chooses their own spread when selling a foreign exchange. They are usually not disclosed and are built into any rate that you are given.
Unfortunately, Bank of America is one of the bad guys in this situation charging an exuberant spread for foreign exchanges.
All in all, you lose time and money when sending an international wire transfer through your bank. This is especially true if you’re using Bank of America, since their fees are some of the highest.
If you have an account with Bank of America, you may think that it’s easiest to choose their services when you need to send an international wire transfer.
But are you prepared to pay their high fees?
Bank of America charges $15 for an incoming wire transfer, and a whopping $45 for any outgoing USD transfers.
Does handling international transfers require so much work that it justifies these fees? No, not at all. Sending money overseas doesn’t create a significant addition to the normal workload of a bank.
And if you compare it to other services offered by other banks, why is Bank of America charging so much?
Simply, because it can.
Bank of America and any other banks that charge international wire fees do so because their clients don’t know of any other options. On top of that, the research involved with finding the best deal for your international wire transfer is an exhausting process.
It’s true that for a long time, banks were the only way to get a wire transfer across to overseas business partners. But these things change.
Even today, banks do just fine for large corporations. After all, what is $45 for a multinational company that makes billions each year?
Small businesses, on the other hand, feel that burden heavily. Unfair charges combined with uncertain timing take their toll on any small business with no time or money to spare. And anyway, why pay for services with no added value?
The cost and lack of security of wire transfers is a huge deterrent for small businesses as they look for the cheapest options to send and receive money.
Costs also take a considerable change when you factor in the differences between domestic and international wire transfers. To send a domestic or international wire transfer, you’ll need:
For domestic wire transfers, fees can range between $15 and $20 for the receiver and $25 and $35 for the sender.
For international wire transfers, fees can range from $15 and $25 for the receiver and $35 to $50 for the sender.
International wire transfers can only be completed with banks or financial institutions in the SWIFT network.
Luckily, with advances in financial technology (FinTech), small businesses now have many alternatives for sending money abroad.
Veem allows you to send and request international transfers with just a click. You can track all your transactions through your personal dashboard, and know exactly when your next transfer will arrive.
Unlike wire transfers, Veem utilizes blockchain and unique multi-rail technology to help reduce cost and worry. A huge win for small business owners.You’ll never have to have that awkward “where is my money” conversation.
Veem charges no wire fees, and offers competitive foreign exchange rates. With our online portal, users can also check out what their foreign exchange rate would be before sending.
Veem also verifies both the sender and receiver, enhancing the security of the wire transfer and reducing potentials for fraud. With the online portal, users can also ensure all data is input correctly, every number, decimal and dash. One party can also input both the sender and receiver information.
With Veem, you can save time and money that you can invest back into your business. Stop paying unfair charges for unreliable services.
Instead, sign up for a free Veem account to click, save, and grow.
All fees accurate at the time of this posting.
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