Sending money abroad can cost more than the transfer fee you see on the screen. The actual cost can also be hidden in the exchange rate you’re given, while the time it takes for the money to arrive can depend on the countries, currencies and institutions involved.
According to the World Bank’s Remittance Prices Worldwide database, the global average cost of sending remittances is 6.36% of the amount sent. The World Bank’s measure includes both the fee charged to the sender and the exchange-rate margin, which is the difference between the reference exchange rate and the rate applied to the transfer.
That’s why looking only at the advertised transfer fee doesn’t always tell you what you’re actually paying.
Why Sending Money Abroad Can Be Expensive
There are usually two costs worth paying attention to when you make an international transfer.
The first is the transfer fee. This is the charge a provider applies for processing the transaction. It may be a fixed amount, a percentage of the transfer, or a combination of both.
The second is the exchange-rate markup. This is easier to overlook because it may not appear as a separate fee. Instead, it is reflected in the exchange rate you’re offered when your money is converted.
For example, imagine the market exchange rate is 1.60 units of a local currency to $1, but the rate you’re offered is 1.56. That difference affects how much you receive when converting your money, even if the provider charges no separate conversion fee.
On a $500 transfer, that difference would mean paying the equivalent of an additional $12.50 through the exchange rate.
The point isn’t that every provider will use that particular markup. It’s that the exchange rate can have a meaningful effect on the total cost, particularly when you’re transferring a larger amount.
Why “No Fee” Doesn’t Always Mean Free
A transfer advertised as “zero fee” can sound like the obvious cheapest option, but you still need to look at the exchange rate.
A provider charging a small upfront fee could potentially give you a better exchange rate than another provider charging nothing. If the difference in the exchange rate is large enough, the second provider could ultimately leave you with less money.
The easiest way to compare two services is therefore not simply to ask which one has the lowest fee. Instead, enter the same amount, using the same currencies and destination, and compare how much the recipient will actually receive. That gives you a much clearer picture of the total cost.
What Makes International Transfers Slow?
Cost isn’t the only issue with sending money internationally. Speed can vary significantly as well.
A transfer may involve more than one financial institution or payment network before it reaches the recipient. The process can also be affected by the currencies involved, the payment method, processing cut-off times, weekends and public holidays.
Compliance checks can also affect how quickly a transfer is completed. This means that a transfer described as “instant” shouldn’t automatically be assumed to arrive instantly in every country or through every payment method. Delivery times can vary depending on the specific transfer.
The World Bank’s Remittance Prices Worldwide data tracks transfer speed alongside cost, reflecting the fact that both are important when comparing remittance services.
Why Exchange Rates Matter So Much
The exchange rate becomes particularly important when you’re converting a large amount of money.
Consider someone converting the equivalent of $5,000 into another currency. A 1% difference in the effective exchange rate represents $50. That can be significantly more than the stated transfer fee.
This is why the phrase “cheap transfer” can be misleading if it only refers to the upfront charge. A low fee doesn’t necessarily mean a low overall cost.
The better approach is to look at the complete transaction: how much you pay, the exchange rate you’re given, any additional charges and how much eventually arrives.
How to Compare the Real Cost of Sending Money Abroad
When comparing providers, start with the amount you’re actually planning to send.
Then look at the exchange rate each provider offers. If you have access to a reliable market reference rate, compare it with the rate being used for your transaction. This can help you understand whether there is a significant exchange-rate margin.
After that, check the stated transfer fee and any other charges that apply. Most importantly, look at the final amount the recipient receives.
This is particularly useful because providers can structure their pricing differently. One may charge a larger upfront fee but offer a stronger exchange rate, while another may advertise a zero-fee transfer but make more of its revenue through the exchange rate.
The World Bank’s Remittance Prices Worldwide database is useful for this kind of comparison because it tracks prices across hundreds of country corridors rather than treating international transfers as if they all cost the same. The database currently covers 367 corridors from 48 sending countries to 105 receiving countries.
What About Multi-Currency Accounts?
If you regularly move money between currencies, converting money every time you need to make a payment can become inconvenient and expensive.
A multi-currency account allows you to hold balances in different currencies, giving you more flexibility over when you convert your money.
For someone who earns or receives money in one currency but spends in another, for example, being able to hold a balance in the currency they receive can mean they don’t have to convert immediately every time money comes in.
That doesn’t automatically make every multi-currency account cheaper than every alternative. The fees, exchange rates and features still matter. The benefit is having more control over how and when you move between currencies.
Where Farlo Fits
This is part of the problem FarloPay is being built to address.
FarloPay is a multi-currency wallet being built to make it easier for people in emerging markets to hold and move money across currencies.
Once live, it will allow users to manage multiple currency balances and use those balances for activities including funding, trading and investing accounts, & sending and receiving money.
Rather than treating every international transaction as a separate conversion, a multi-currency approach gives users more control over the currencies they hold and when they choose to convert them.
FarloPay is coming soon. Farlo Trade and Farlo Learn are live today.
Frequently Asked Questions
The cost can come from both the stated transfer fee and the exchange-rate margin applied when one currency is converted into another. The World Bank includes both when measuring the total cost of remittances.
The time can depend on the transfer route, currencies, financial institutions involved, processing times, weekends, public holidays and compliance checks. Delivery speed can therefore vary between providers and destinations.
Don’t look at the transfer fee alone. Compare the exchange rate, any stated charges and, most importantly, the final amount the recipient receives.
Not necessarily. A provider can charge no explicit transfer fee while applying a margin to the exchange rate. The World Bank includes exchange-rate margins in its measurement of remittance costs.
It can reduce the need to repeatedly convert between currencies, but the actual savings depend on the account’s fees, exchange rates and how you use it. The main benefit is having greater control over the currencies you hold and when you convert them.
No. FarloPay is coming soon. Farlo Trade and Farlo Learn are live today.
