Companies that make international payments often face an essential question: how much does it really cost to send money to another country?
The answer is rarely simple.
Unlike local transfers, where the cost is usually clear and predictable, an international transfer involves multiple layers of fees, intermediaries, and exchange-rate fluctuations that make the final cost difficult to estimate.
In practice, the amount paid by a company can be significantly higher than the amount received by the beneficiary.
In this article, we will detail:
What costs are involved in an international transfer
How these costs are formed
Why they vary so much
How companies can reduce these costs with new infrastructure
What are the costs of an international transfer?
An international transfer for businesses generally does not have a single fee. Instead, the total cost is made up of different elements that add up over the course of the transaction.
Understanding each one is essential for maintaining financial control.
Exchange rate spread: the biggest hidden cost
The main cost of an international transfer is usually the exchange rate spread.
When a company sends money abroad, the amount needs to be converted from one currency to another. However, the rate used in the transaction is usually not the official market exchange rate.
Financial institutions apply a margin on top of that rate, the so-called spread.
In practice, this means that:
The company pays more for the foreign currency
The amount actually converted is lower than it could be
This cost is often not very transparent and can vary significantly between institutions.
Bank fees
In addition to the exchange rate, banks and financial institutions usually charge fees for processing the transfer.
These fees may include: sending fees, receiving fees, and administrative costs.
Although they may seem small on their own, these fees become significant in recurring transactions.
Intermediary banks (hidden costs)
One of the least understood aspects of international transfers is the role of correspondent banks.
Since many transactions pass through different institutions before reaching their destination, each intermediary may apply an additional fee.
These costs are not always disclosed in advance, which reduces the transaction's predictability.
IOF (Tax on Financial Transactions)
In Brazil, depending on the nature of the transfer, IOF may apply. This tax is charged on certain financial transactions and can increase the total cost of the transfer.
For companies that make international payments frequently, the cumulative impact can be significant.
Exchange rate fluctuations during the process
Another relevant factor is exchange rate fluctuation between the time the transaction is initiated and the final settlement of the operation.
In transfers that take days to complete, this fluctuation can affect the final amount received.
How much does an international transfer cost in practice?
To illustrate, imagine a Brazilian company sending a payment abroad.
The total cost of the transaction may include:
Exchange rate spread (1% to 4%, depending on the institution)
Fixed bank fees
Intermediary fees
IOF (depending on the transaction)
In practice, this can represent a total cost of 2% to 8% of the transferred amount, or even more in some cases.
This number varies quite a bit, but the main point is that the real cost is rarely made up of just one fee.
Why are the costs so high?
High costs in international transfers are not random; they reflect structural limitations of the traditional financial infrastructure.
Among the main factors are:
Dependence on multiple intermediaries
Each step of the transaction adds cost and complexity.
Low global standardization
Different countries have distinct rules, systems, and processes.
Legacy banking infrastructure
Much of the system still relies on old technologies.
Lack of transparency
Not all costs are presented clearly to the customer.
This combination of factors explains why companies frequently face high costs and little predictability.
How to reduce the cost of an international transfer
Given this scenario, many companies have sought alternatives to make their international operations more efficient.
Some strategies include:
Compare rates between institutions: Differences in spreads and fees can be significant.
Optimize transaction volume: Grouping payments can reduce operating costs.
Seek greater exchange-rate transparency: Understand exactly which rate is being applied.
Reduce intermediaries: The fewer steps, the lower the total cost.
However, these strategies still operate within the logic of the traditional system. In recent years, a new approach has begun to gain traction.
The role of stablecoins and virtual assets in reducing costs
One of the main innovations in the international payments market is the use of stablecoins and virtual assets as settlement infrastructure.
If you're not yet familiar with this concept, it's worth better understanding the what stablecoins are and how they work, since they have become a central piece in the modernization of cross-border payments.
Unlike the traditional model, this approach allows:
Reducing the number of intermediaries
Speeding up settlement
Increasing the predictability of the final value
Simplifying the cost structure
How it works in practice
Instead of relying on multiple banks, the operation can follow a more direct flow:
Conversion of local currency into digital asset
Digital transfer of value
Conversion to local currency at the destination
This model reduces the complexity of the transaction and can generate significant efficiency gains.
If you want to understand the final step of this process, also see how USDT to real conversion.
Is it worth rethinking how your company makes international payments?
For companies that make international payments frequently, the accumulated cost of these operations can have a significant impact on financial results. Understanding how these costs are formed is the first step.
The second is to assess whether the infrastructure used still makes sense for the volume and complexity of the operations. Today, new technologies already make it possible to carry out international payments more efficiently, at lower cost and with greater predictability.
Reduce the cost of your international transfers
If your company makes international transfers frequently, there is a clear opportunity to optimize costs and improve operational efficiency.
Azify offers a modern international payments infrastructure, combining technology, virtual assets, and API integration.
Talk to an Azify specialist and discover how to reduce costs in your international transfers.
