Many aspects go into the cost of transferring money internationally. Here is a summary of the most common ways that cross-border money transfers are done.

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Sending money across borders is a complex process that traditionally involves various financial institutions, technologies, and regulatory frameworks. In an era of globalization and increased international transactions, understanding the mechanics of global money transfers is essential for any company that does business in foreign countries. With this in mind, let’s examine the most common ways to transfer money globally.

Mechanics of Cross-Border Transfers

• Banks: Historically, individuals and businesses relied on banking channels to facilitate cross-border money transfers. This process involves the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, a messaging system that enables secure communication between banks. However, bank transfers can often take up to 5 days to complete.
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• Money Transfer Operators (MTOs): Money Transfer Operators, including Western Union, MoneyGram, and others, play a significant role in cross-border remittances. These companies operate vast networks of agents and locations globally, allowing individuals to send and receive money in cash. MTOs often leverage partnerships with local banks and agents to facilitate the last mile of the transaction. MTO transfers usually take 1-4 business days.
  
  
• Digital Platforms and Fintech Innovations: The rise of digital platforms and fintech innovations has transformed the landscape of cross-border money transfers. Online platforms and mobile apps offer users convenient and cost-effective ways to send money globally. Peer-to-peer (P2P) platforms, such as PayPal, TransferWise (now Wise), and Revolut, leverage advanced technologies to facilitate swift and low-cost transfers. The time it takes for an international money transfer using fintechs or digital platforms typically ranges from 1 to 2 business days, making them a faster option compared to traditional banks. This is because fintechs and digital platforms often utilize their own infrastructure and technology (including mobile apps) to facilitate cross-border payments, eliminating the need for intermediaries and streamlining the transfer process.

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Costs of Transferring Money Internationally

There are two primary costs associated with global money transfers: Upfront Fees and Exchange Rate Markups. Now let’s look at how these play out across the various tools and institutions we use to transfer money across the globe.

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Traditional Bank Transfers:

• Fees: Banks may charge flat fees for international wire transfers, ranging from $15 to $50 or more per transfer.
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• Exchange Rates: Banks often apply a margin on the exchange rate, resulting in additional costs compared to the mid-market rate (the real exchange rate).

 Money Transfer Operators (MTOs):

• Fees: MTOs like Western Union, MoneyGram, and others, charge fees that vary based on the transfer amount, destination, and transfer speed. Fees can range from a fixed amount to a percentage of the transfer.
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• Exchange Rates: MTOs may offer less favorable exchange rates compared to mid-market rates, incorporating a margin into their rates.

Digital Platforms and Fintech Solutions:

• Fees: Online platforms like PayPal, Wise, and Revolut, often have transparent fee structures. Fees may be fixed or a percentage of the transfer amount, but are typically lower than traditional banks.
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• Exchange Rates: Fintech solutions may also offer better exchange rates closer to the mid-market rate, reducing costs associated with currency conversion.

The Pangea Advantage to Global Money Transfers:

Pangea works to achieve some of the most competitive FX pricing in the industry through several methods. 

1. Leveraged Purchasing Power: By leveraging all of our clients' volume, Pangea achieves smaller markups from its liquidity providers and passes those savings on to you. Pangea even offers special pricing for the P10, which includes all of the United States' top 10 trading partners.
   
   
2. Strategic Execution: Pangea's "Strategic Execution" leverages "liquidity windows" to ensure optimal trade timing, capitalizing on moments when banks offer better pricing due to thick liquidity. Utilizing Ai, Pagnea’s platform strategically holds and executes transactions, considering market movements, to hit the most liquid periods, often bidding against multiple banks for the best rate. This advanced approach results in clients saving over 50% on interbank fees on average.
   
   
3. Netting Payments: If you are a business that sends mass payments, Pangea will automatically net all your smaller payments together, convert them into one lump sum with "buying power," and then send out all the individual payments to your beneficiaries in their local currency.

Pangea was created to make access to FX services easier, quicker and more cost-effective. With Pangea Prime™, clients can send money without contacting a bank or other intermediary, and at pricing that beats conventional methods. Now you can make a transfer with one click, saving time and money.

Schedule a demo today and get the predictability and control you deserve in business.

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Pangea Prime: Predictable, simplified FX management.

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