Understanding how to find the best international money transfer services is essential for everyone who doesn’t want to waste their money. By choosing to make the transfer through a specialized international payment company instead of a bank you get to cut the cost of the transaction by a significant amount. These companies also offer additional services that can benefit luxury goods importers greatly.
Why the Cost of an International Money Transfer Matters When Importing Luxury Items
One might think that the matter of expensive cross-border payment services and luxury items import as a whole shouldn’t be important now. After all, it’s true that the global economy is in a deep recession due to the COVID-19 pandemic. However, the opposite is true. The rate of international shipping of luxury items has increased greatly during the pandemic. There are numerous art pieces and collectibles that are sold and transferred daily. Therefore, the cost of these services has become an issue of great concern.
The coronavirus pandemic had a major negative impact on the international shipping industry. There is a shortage of containers, problems with lockdowns, and extreme shipping delays. These and other factors resulted in the cost of some international shipment services going up by 80%.
This means that any savvy collector or business owner should now look for ways to cut the overall cost of luxury items trade. Finding a more affordable alternative to expensive international money transfer services from banks is one of the more effective solutions you can use.
Popular International Payment Options
Making a cross-border payment is easy today because you can do it through the majority of banks. Online banking made this process very simple as you should be able to make a transfer using your smartphone app.
However, a bank wire transfer will cost at least 3% of the transfer volume. The exact amount will depend on the currency pair. Exotic currencies will be more expensive and the transaction can cost up to 7%. Frequently traded currency pairs, like GBP/USD or USD/EUR, will be more affordable. But a bank transfer can take up to a week.
Paying for international shipping of your luxury items with a debit or credit card might be impossible. That’s because this international payment method won’t process six-figure transactions. Five-figure transactions are acceptable for the majority of cards. However, the transfer fee can be over 2.5%.
Services like PayPal are very convenient when you need to make a cross-border payment fast. However, this transaction will cost about 4% of the transfer volume or more. Also, you are unlikely to get any discounts and benefits for high-volume transactions.
International money transfer companies specialize in affordable foreign currency exchange and can make your six-figure payment cost 1-3%. The exact cost will depend on many factors and differences in offers between multiple companies can be huge. That’s because the industry is new and not well-regulated. Therefore, every company has its own unique rules and its prices are dictated by different factors.
How to Use International Money Transfer Services to Pay for Luxury Goods
The alternative international payment industry is poorly regulated at the moment. Therefore, you need to be thorough in your research when choosing a cross-border payment processing company. A good place to start is to check out the MoneyTransferComparison’s Top 10 for international transfers. This way you’ll know who the leaders of the market are. These are the most trustworthy companies as they have a good reputation and many of the top names are industry veterans.
However, you shouldn’t forget that the alternative international money transfer industry is rather new. Therefore, being a veteran in the business isn’t the only sign of credibility you should be looking for. In fact, some of the leading companies, like TransferWise, are barely a decade old. However, they’ve already built a solid reputation for reliability.
The most important factors to consider when choosing a cross-border payment processing company are:
Services the company offers
Making an international money transfer cheaper isn’t the only benefit this type of company should provide. Therefore, if you a looking for the best option, you should start by studying the service package on offer.
At the very least, a good international payment platform should offer:
- Currency hedging.
Foreign currency exchange always carries some risk because FX rates are in constant flux. Hedging tools help you minimize these risks, which can save your luxury purchase from becoming a sinkhole. This is most important during the global recession because foreign currency exchange rates are very volatile now.
- Currency guidance.
Timing of your cross-border payment is essential if you want to get the best deal. However, if you aren’t an expert forex trader, it will be almost impossible for you to pick the best moment. Leading international money transfer companies, especially those dealing with large transfers, offer professional guidance to help you make the best decisions.
These services are most important for those who need to make a large international payment. However, you should also consider other useful perks, like discounts from partner businesses or a card for more convenient payments.
FX rates and fees
International money transfer companies that specialize in high-volume transactions should offer FX rates close to mid-market. As they trade currencies wholesale and keep their overhead costs low, they are able to offer low or zero fees.
Therefore, the cost of a cross-border payment through leading companies should be no more than 1-3%. For example, in some cases, for example with WorldFirst, you might get a transfer cost of less than 1%.
Bear in mind that the majority of companies don’t have a fixed FX margin. However, many of them reduce the margin and fee for large transfers. So making five or six-figure payments will be cheaper than sending a small transfer.
Being an industry veteran like Moneycorp is definitely a pro for any international money transfer company. However, this isn’t the only sign of credibility.
Markings of a reliable international payment service provider include having multiple positive reviews on consumer platforms (TrustPilot and Google Reviews) and being audited. Trustworthy companies must be accredited with the FCA or other financial authorities in the countries where they operate.