International payments are the heartbeat of global trade and commerce. As the boundaries of international trade blur, so does the way we make payments. However, the major challenge lies with the cost of transferring money internationally between banks.  

According to the Bank of England, the value of cross-border payments can increase to $250 trillion by 2027, leading to a $100 trillion rise in a span of 10 years. If these are the values to go by, then leveraging cheap and cost-effective international payments becomes important. While there’s no straightforward way of doing so, let’s look into the complexities and costs associated with the process and ways with which we can save money.  

Challenges Surrounding International Payments 

Before we delve into the strategies or methods of saving money while paying internationally, let’s consider the leading cross-border payment challenges: 

Fees & Charges (Some May Be Hidden) 

The foremost challenge is the high cost and charges associated with cross-border payments, some of which might be hidden till the end. Here we have revealed the charges accruing in international payments: 

• The Obvious Charge, Aka Fees- This flat fee is charged as a specific percentage of the transfer. There may be companies claiming no flat fee. Such companies provide higher exchange rates, leading to an overall costly transfer.  

• The Hidden Charge, Aka Exchange Rate- This charge is classified as hidden because every company may not publish their currency conversion rates. Thus, comparing it to other providers may be difficult. Also, the currency conversion margins might not be favourable in some cases. 

• Intermediary Fees- If you’re going through an international transaction with multiple banks in the middle, the intermediary costs might make it costly. 

The multiple charges levied might be confusing to compare. So, you can ask yourself “How much of an international currency will I get in exchange for your pound sterling.” 

Slow Processing Time & Speed 

Businesses operating internationally may face blockages due to the slow processing speed of the payment. Depending on the origin country and the fund’s destination, the cross-border payment may take anywhere from 3-5 business days. Such delays are a primary cause of cash flow problems and financial planning issues. 

Regulatory & Compliance Needs And Cross-Border Restrictions 

International payment processing may get stuck due to the complex regulatory compliance landscape. Each country you deal with may have separate restrictions or protection laws, including GDPR (General Data Protection Regulation), KYC (Know Your Customer), and AML (Anti-Money Laundering).  

Although these requirements are essential from a security viewpoint, they may increase the administrative burden and time in transferring money internationally. 

Security Threats 

Security concerns and threats are always at the top when we consider international payments. Since the money has to cross multiple intermediaries, there may be fraud and other challenges. Identity theft, phishing attacks, and card not present (CNP) are just some examples of these threats. 

Strategies For Cost-Effective International Money Transfers 

While there’s no cheapest way to send money abroad from UK, some strategies can be used that can reduce costs and boost efficiency. These are: 

Leverage FinTech Solutions 

As compared to traditional banking, FinTech companies are lower cost and efficient alternatives to international money transfers. These include: 

• FxMaster- FxMaster offers the best exchange rates with no hidden costs and faster and more secure transactions. We are the leaders of simplified cross-border payments, maximising your savings as much as possible.  

• Wise- Earlier known as TransferWise, it is popular for offering mid-market exchange rates and transparent fees. Also, it’s secure and fast. 

• Revolut- It has low-cost international transfers and multi-currency accounts as its star traits. 

• Payoneer– Freelancers, small businesses, and e-commerce businesses can use it to receive and send money globally without hassle. 

These platforms, especially FxMaster have stringent security standards, quicker processing times, lower fees, and higher transparency.  

Go For Multi-Currency Accounts 

If you have a consistent need for cross-border payments in various countries, holding one multi-currency account can be quite helpful. You can hold, manage, and transfer several currencies (Rupee, Pound, Euro, Dollar, Yen, etc.) through a single account.  

Such accounts have the following features: 

• You can hold balances of multiple currencies, avoid conversion fees, and manage exchange risks. 

• Instant currency conversion is possible at the real exchange rate whenever required. 

• There are real-time updates, detailed insights, a user-friendly platform, and integrated account management. 

FxMaster is one of the leading platforms where you can run a multi-currency account with no worries. 

Opt For Foreign Exchange Hedging Tools 

Businesses that face exchange rate fluctuations a lot should consider foreign exchange hedging tools, which include the following: 

• With forward contracts, lock in the current exchange rates for future transactions. This provides predictability. It is a 50-50 chance of losing, saving, or keeping your money intact.  

• There’s no obligation but a right to exchange the currency at a rate agreed on earlier with currency options. 

• You can exchange principal and interest payments in different currencies with exchange swaps.  

Such international money transfer services and tools mitigate risks and help manage the budget effectively for cross-border payments.  

Compare Various Service Providers And Their Exchange Rates 

It’s a no-brainer that you shouldn’t settle for the first exchange rate you receive. You must undertake an in-depth comparison across different service providers and see how their exchange rates, transaction fees, and more compare. Even if the difference is not much, you can save a lot, especially in high-value transactions.  

Batch Payments For Businesses 

Businesses that have to make frequent international payments to vendors or employees should consider batch payments to save time and money. The discounted fees and automation capabilities can benefit in several ways.  

Negotiate With Your Bank For Better Rates 

Negotiation is a powerful weapon for international money transfers. If you have high-value/ volume transactions,  negotiate with your bank or patent provider for lower fees and better exchange rates. Corporate clients and loyal customers are sometimes given preferential rates by the bank. 

Look For Special Offers & Promotions 

While comparing platforms for international transfers, you can choose one with attractive offers, discounts, special promotions, and even cashback. These help attract new customers or retain existing clients. Such offers can make the platform one of the cheap ways to make international payments from the UK.  

Best Ways To Make International Payments 

Given below are some of the best ways to transfer money internationally: 

Payment Initiation Service Providers (PISP) 

Some banks or payment service providers provide this option which is as cheap as a manual bank transfer. It involves giving instructions directly to the provider to make a bank transfer from the bank account without leaving the app or logging in to online banking.  

Debit/ Credit Card 

It is easy and fast to pay for your transfer with a debit or credit card. Visa, Maestro, and Mastercard may be accepted forms of debit or credit cards. Compared to credit cards, debit cards are cheaper to process for international payments. 

Bank Transfers 

Possibly the cheapest way to transfer money internationally, bank transfers usually give the best value for money. It may be slower than other options in comparison. 

SWIFT  

This may be a good way to transfer money globally but it is usually expensive because the bank charges fees. If there are more intermediary banks, the correspondent banks may deduct handling fees.  

Considerations When Finding Cheap Money To Transfer Abroad 

Here are all the things to consider when looking for cheap ways to make international payments online: 

Transfer Fees 

Check for the transfer fees charged by the provider. Many businesses state reduced fees or may even offer fee-free transfers. However, some concealed fees may arise in poor exchange rates.  

Exchange Rates 

The exchange rate you see in real-time on Google and other places might be different than what the providers offer. So, you’ll have to compare and see which one is the cheapest. 

Transfer/ Delivery Time 

You may find affordable international money transfer options but they may take time in delivery. Thus, choosing one provider with the perfect balance is important.  

Summing Up 

Transferring money internationally between banks need not be expensive or complicated. Access to digital solutions, smart payment strategies, and awareness of the most recent innovations can help businesses and individuals reduce costs, make activities much more efficient, and manage risks quite effectively. 

Whether you are a personal remittance sender or a business running an international supply chain, the right tools and best practices enable international payments to be as seamless and low in cost as possible. The adoption of these solutions will save you money and position you to thrive within an interconnected, globalised economy.