How Much Does it Cost to Send Money Abroad for Business?

As a business owner in the UK that sends money abroad for business, you’ve got plenty of options available. With so many ways to send money abroad, however, it can often be difficult determining what’s the most effective solution for your needs.

New and innovative fintech solutions are now available that compete directly with banks and other old-fashioned remittance service providers, but how do they compare? This guide will help you understand your options so that you can make informed decisions for you and your business.

What to Look For in a Remittance Service

If you’re sending money abroad from the UK for your business one a one-off, regular, or intermittent basis, you’ll want to look for a few key factors in a remittance service. Namely, you should be looking for:

  • Cost: you’ll almost always be subject to transaction fees as the sender, but often the recipient will have to pay as well. Currency exchange fees are also common. Look for a service that has no fees or small fees and a currency exchange rate as close to market value as possible.
  • Transaction duration: keeping your clients happy means that you’ll need to be able to pay them in a timely manner. Transactions that take a week or more can lead to frustration and lost business. Look for a service that can have the funds deposited in minutes or next day.
  • Security: banks in the UK are FCSC regulated, meaning that your funds are insured and that the institution is trustworthy. Avoid services that don’t have a reputation for trust.
  • Availability: always ensure that your recipient is able to access the funds. This means that you should be aware of whether their country is able to receive funds from your service and that their currency is accepted from Pound Sterling.

Ways to Send Money Abroad From the UK

Whether you’re paying international clients or sending money to your international accounts, there are many ways to send money abroad from the UK. Here are a few common options:

  • Bank Transfer: most high street banks worth their salt will allow you to send remittances internationally to other bank accounts. They’ll normally request the beneficiary’s name, address, IBAN, and SWIFT.
  • PayPal: a popular way to securely send money abroad, PayPal is widely available in most developed countries and is a great online way to send and receive funds in different currencies with as little as an email address for the recipient. Important note: PayPal has a reputation for settling disputes in the buyer’s favour. If you’re selling goods through PayPal as a business owner, this can affect your bottom line.
  • MoneyGram and Western Union: these remittance providers conveniently allow you to send funds to most countries and in most currencies either via cash pickup at multiple locations or directly to bank accounts.
  • Apps: fintech companies such as Monzo, Revolut, and Transferwise all allow quick and easy payments from your phone and without the need for waiting in line at a bank or at a physical location.

What to Expect

Of course, not all of your options are the same. You’re likely to find that banks and payment processors each have widely varying fees, limitations, and transfer speed. All of these are important considerations whilst weighing out the pros and cons of each.

  • Bank Transfer: although banks in the UK tend to be secure and are all approved by the FSCS, they’ll often charge a hefty premium for international payments. For example, RBS charges a flat £10 fee for payments to the EU and a £22 fee elsewhere. Moreover, banks may end up exchanging your currency at a rate nominally higher than the market rate.
  • PayPal: although widely accepted, this convenience comes at a cost. Firstly, PayPal is not available in many countries or is only able to send funds and not to receive them. Furthermore, PayPal charges fees for both sending funds as well as currency conversion fees that can quickly add up. For example, sending more than £10 to Brazil in BRL will cost you at least £3.99 plus a 4.0% conversion fee. This will add up quickly, so consider other alternatives.
  • MoneyGram and Western Union: these services are convenient and can now be used to send money to bank accounts rather than via cash pickup, but they often charge scaling transaction fees that depend on the amount being sent and offer currency exchange rates normally far below the market rate.
  • Apps: new mobile apps are opening up much greater possibilities in international payment solutions. The following section will expand upon some newer and more popular alternatives.

Mobile Payment Solutions

As a business owner, your time is valuable. This means that antiquated methods of banking will not suffice in today’s day and age. Mobile banking and online payments are now ubiquitous, but some options are better than others.

These new financial service providers benefit from having little to no overhead (no physical locations), allowing them to offer very competitive solutions for all sorts of financial products. International remittance is often completely free and can be sent in a matter of minutes from your mobile phone from these new, online-only payment solutions such as
Monzo. With no transaction fees and near-market currency exchange rates, it only makes sense to learn more about these products as they become more mainstream.

What’s Best for my Business?

There’s no one-size-fits-all solution for everyone. As a business owner, however, you should be looking for banks or mobile payment processors that offer low to no transaction fees, competitive currency exchange rates, fast transaction times, safety and security, and is available wherever your clients are. User-friendliness and customer service are also things to look for.

With an ever-increasing globalised economy, the time is ripe for newer and more competitive mobile app solutions to our everyday problems, including sending money internationally from the UK. Keep an eye on some of these new fintech companies and consider them for your business today.

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