Do smaller international money transfers incur lower fees?

Smaller transfers don’t mean lower fees. But you do have options when sending $100 or less.

You’ve seen ads for providers offering low or no fees on international money transfers. Those ads don’t tell you that you often need to send $5,000 or more to get such low fees.

What if you need to send only $100 in spending money to your grandchild in the UK or a $50 gift to a friend in Mexico? You might expect that such a transaction would attract a smaller fee than sending, say, $2,500.

Unfortunately, your local bank and time-tested providers like Western Union could charge you $35 or more to wire the money — a significant chunk out of such a small amount.

However, newer companies like TransferWise, Xoom and Ria are undercutting the competition to earn your business with better deals. Even if you’re looking to send only $100.

How much will an overseas money transfer cost?

Providers make money on your transfer in two ways: by marking up the exchange rate and by charging you a transfer fee.

The exchange rates offered by transfer providers fluctuate due to a wide range of factors that include interest rates, consumer confidence, inflation and political stability. Banks and other services are likely to add a little to the exchange rate, “padding the rate” to increase their profits. Specialized money transfer services offer rates that are closer to the mid-market rate.

What's the mid-market rate?

The mid-market rate is what your money’s actually worth on the global market compared to another currency. This rate is the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves.

Use this rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.

In terms of transfer fees, companies may charge:

  • A flat fee on all transfers, no matter the transfer amount.
  • A tiered-fee structure — for instance, $5 for transactions under $500 or $10 for transactions under $1,000.
  • A fee calculated as a percentage of the transfer amount.
  • No fee if you meet a fee-free threshold — say, $10,000 or more.

Each of these fees affect whether your smaller money transfer will attract lower fees.

Money transfer methods and costs infographic

Case Study: PayPal vs. online transfer service vs. a cash pickup company

Clayton lives in Sydney and wants to send two transfers to relatives in the Germany. One transfer of $150 will go to his brother, who is on a backpacking holiday and needs a little bit of cash to help him until he finds temporary work. The second transfer is $5,000 and will go to Clayton’s Aunt Patricia in Munich to pay off an old loan.

In an effort to find the most affordable transfer method, Clayton compares three options for each transaction: a cash pickup transfer company, an online money transfer company and PayPal. First, let’s take a look at the fees involved with the $150 transfer.

Cash pickup transfer companyPayPalOnline money transfer company
Transfer amount$150$150$150
Transfer fee$15$2$3

As you can see, PayPal charges the cheapest fee for this transaction. However, this fee applies if your transaction is funded from your bank account or PayPal balance — it increases substantially if you pay with credit card.

Now we can take a look at the fees that apply to the larger transfer.

Cash pickup transfer companyPayPalOnline money transfer company
Transfer amount$5,000$5,000$5,000
Transfer fee$150$50 from account$0

When sending this larger amount, the online money transfer company waives its transfer fee, making it easily the most affordable option. However, you’ll need to take the exchange rate into account when calculating the overall cost of a transaction.

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How do I compare international money transfers services?

If you’re looking to save money on international transfers and find an affordable, secure way to get your money where it needs to go, consider the following factors.

  • Look for a competitive exchange rate.

A small difference in exchange rates can make a big difference to the value a transaction offers. Compare the rate you’re offered to the mid-market rate — the rate banks and transfer services use when they trade among themselves — and look for the smallest margin between them.

  • Choose a transfer method that suits your and your recipient’s needs.

Consider how you can place a transfer — online, over the phone or at a branch — and how your recipient will be able to access the funds you send.

  • Consider when your recipient needs the funds.

If it needs to be there fast, companies like Western Union and MoneyGram allow for quick cash pickups, often in minutes. If you have more time, you’ll get better rates and fees with an independent provider

  • Look for a service that provides 24/7 customer service.

Most companies offer customer service by Internet chat, phone, in person or by email. Make sure help will be available if you need it


The best way to ensure that you save money on international transfers is to compare exchange rates, fees and transfer methods among providers. This will help you find the best value for your money and guarantee that more of it makes it into the pockets of your loved ones.

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