Over the past decade or so, the need for currency transfer services has expanded hugely. Although most Brits transfer their sterling into dollars or euros, but there’s an increasing number of reasons why businesses especially need to convert their currency to more exotic currencies. So, how should your business move its money abroad in a way that’s safe and avoids charges?
If you have a business bank account, then you can transfer money international with them. Usually, a rate is given to you in advance, which is pre agreed, meaning that you don’t have to worry about any delays or exchange rate fluctuations.
However, although your bank will move the money for you, it often comes at a substantial cost. There’s usually a one off charge per transaction of around £40 (although this varies from bank to bank), and the bank also makes money by adding a margin to the exchange rate. On a £100,000 transfer, this could cost you an additional £5,000.
The ease and convenience of this approach means that banks still dominate the transfer market, handling around 80 per cent of transactions. It’s safe and secure, but also very costly, which means it can be worth looking at other options, too.
If you’re only a small business and are looking to only transfer small sums, then PayPal is a good option. It allows you to transfer money in any currency and, if you’re paying for goods, it provides you with protections should they never arrive. You can even select your exchange rate before the transaction.
However, there are drawbacks to using PayPal, too. It’s only really useful for small sums of money, as the charges are incredibly high (at times even higher than bank transfers). This is because a transaction fee is charged on each payment alongside the exchange rates. This means that, although it’s perfect for one off transactions, you would not want to use it for regular repayments.
The advancement of technology now means that dedicated exchange companies such as CurrencyFair are now available, so that you can avoid these large transaction fees and poor exchange rates.
In essence, companies like these are dedicated to finding you the best possible exchange rate, all while keeping charges as low as physically possible. These can sometimes be as little as 5% of traditional bank fees.
To conclude, although banks and PayPal are both viable options for transferring your business’s money abroad, they are expensive options, so look to dedicated companies instead.