Transfers are a core banking service.
Whether it’s paying back a friend, or buying goods from a vendor in China, today’s bank clients need to be able to send money efficiently, safely, and at low cost.
Especially in the world of Venmo and other online services, banks need stay competitive with the next generation.
Chase charges $50 to send money overseas. Even if you send money within the US, you’ll be charged $35.
If someone’s doing it better, customers will move on. Unfortunately, many US banks haven’t caught on to this development, even though these online services have been around for a while.
Specifically, JP Morgan is notorious for high wire transfer fees and bad foreign exchange rates.
Chase charges more than almost every other US bank to send international wires.
Chase charges $50 to send money overseas. Even if you send money within the US, you’ll be charged $35. That doesn’t even include the FX rates, fees charged by other banks that touch your transfer, and other gouges they aren’t telling you about.
So, why so much?
No one knows what a service fee is.
Every bank charges them, we all have to pay them, but nobody’s really sure why they’re used or what they’re for. Some banks say it’s a processing charge, others to ensure security.
But, whatever they are, banks apply them as much as possible, and even if they’re to pay for someone’s laundry, we’re shelling them out.
Ultimately, banks like Chase take advantage of established client trust
Especially for international wires, banks like Chase have an easy time justifying these fees to the average customer. The international transfer process is a black hole: nobody seems to know how or why it works. Chase can give a customer almost any reason for charging them fees.
Ultimately, banks like Chase take advantage of established client trust.
Though that might seem a bit off-the-wall, consider the fact that every bank charges a different service fee to offer the exact same service. Or, that fintech and other finance companies don’t charge service fees at all.
Chase charges a service fee simply because they want to make money wherever they can. Banks are for-profit corporations. If there’s a way to effectively improve the bottom line, you’d better believe they’re doing it.
But, there are more tangible and somewhat understandable fees that Chase and other banks charge for international wires.
Currency values are complicated.
They fluctuate depending on several factors, and are an integral part of sending money globally. Most countries have a nation-specific currency (besides the European Union and a couple of other examples).
Chase in particular has been known to charge up to 6% above mid-market rate, one of the biggest differentials among major US banks.
So, anywhere in the world that money is sent has to be exchanged into a local currency to be used. Though it depends on the situation, you generally can’t buy something in one country with another country’s money.
When an international wire is ordered through a bank, there are a couple of options for exchange:
Either way, banks generally charge a fee to make this exchange, which adds onto the total cost of your wire.
But, more important than that is the currency exchange rate mentioned earlier.
Though foreign exchange rates fluctuate, they should be universally applicable across all exchange platforms.
There is something about international bank wires that makes them much more difficult than they need to be. Maybe that’s why Chase and other banks want to get their money’s worth
This shouldn’t be a surprise at this point, but different banks will charge different foreign exchange rates. More often than not, more will be taken off the top of an international transfer than is expected out of the exchange.
Whether or not that money lands in the sender or the receiver’s bank, it sure isn’t added into the wire transfer.
Again, there’s no clear reason why this happens. But, there is something about international bank wires that makes them much more difficult than they need to be. Maybe that’s why Chase and other banks want to get their money’s worth.
SWIFT is a global network of banks and other financial institutions that allows international wires to be sent and received.
Established in the 1970s, this transfer method is still in use in almost all of the world’s major banks, though it has presented problems for customers since its inception.
In the SWIFT network, an international wire travels from the sender’s bank to multiple institutions on the way to its destination. Instead of traveling directly, your wire touches several institutions before it arrives.
Chase is just one of several major banks in the US that still use this outdated transfer method
With each touch, a transfer is susceptible to attack from hackers or not-so-trustworthy bank employees.
On top of that, your bank isn’t the only one charging service fees to handle your money. Each touch could result in more fees added onto your wire. By the time it gets where you need it to go, your payment could be hundreds of dollars less than what you originally sent.
Depending on what the money’s for, these fees could be devastating.
Chase is just one of several major banks in the US that still use this outdated transfer method, while new and innovative financial technologies become increasingly available.
It isn’t just your money that moves slowly through a bank. They’re notorious for approaching new methods and technologies with caution, even if it could improve their customers’ experience, and ultimately banking efficiency.
If they can’t charge for it, they probably won’t use it.
Chase isn’t the only one, but their high fees and outrageous foreign exchange rates are head and shoulders above the rest. Today’s banking customers need to look for better options.
For small businesses, there’s Veem.
Veem is the global payments provider built for small businesses. We utilize innovative technologies to ensure payments are sent as securely, quickly, and cost-effectively as possible.
With our competitive exchange rates and low-fees, you can be sure your money arrives on time and in full.
No more waiting, no more black holes. With our payment tracking, you’ll never lose another payment.
Try Veem today and enjoy the future of global business payments.
Ditch the wire. No more swift codes. No more wire fees.
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