In a nutshell, receiving money is best done into a local account, in the currency being sent. To avoid being at the mercy of the person sending the money, opt for a multi-currency or local account.
Here’s how to combat that.
The biggest impacts on receiving money are:
Bank fees for incoming international transfers
Any conversion of foreign currency a bank needs to make.
The key solutions to this:
Receive payments in the same currency the sender is using, before converting yourself. You can do this through a multi-currency account.
Ensure the sender uses the right option. Using a money transfer company, not a bank account, will reduce costs for the recipient.
What’s the cost of receiving money into a bank account?
When foreign currency enters an account it will need to be converted. Banks have two types of markups: outgoing and incoming.
So, for standard bank transfers this could happen in one of the following:
Outgoing: Conversion at the point of sending
The sender will tell their bank to convert the currency before the transfer. This would be considered the outgoing markup. This usually has fees associated with it. In essence, the sender is paying for the bulk of the cost of the transfer.
Incoming: Conversion at the point of receipt
The sender will tell their bank to send their currency to your account, but with no conversion. The currency is converted by your bank into your currency. This is for incoming markup.
The markup for incoming and outgoing transfers can differ. This is because of a difference between fees and rates.
Let’s take a quick sidestep, we’ve covered the overall cost of receiving money in the right way.
This cost is made up of fees and exchange rates.
Exchange rates will determine the amount of money you can buy in one currency with another. This list is a percentage above the mid-market rate.
Fees are charged on top, these can be a percentage of an amount, but also set. It will depend on who you use.
The range of cost
The range you can expect when receiving money to a bank account, made up for fees and exchange rates, is:
Country (Into) | Best receiving cost | Worst receiving cost |
|---|---|---|
USA | $0 | $15 |
UK | £0 | £7 |
UAE | 0 AED | 105 AED |
Canada | 16 CAD | 30 AED |
Australia | 12 AUD | 30 AUD |
See a full range of bank fees for sending and receiving money.
Does it really need to be this expensive?
Use a money transfer company to send, or a multi-currency account to receive money. This is a surefire way to reduce cost.
Working with the person sending is a great shout, nobody wants to pay more than they have to.
Simply put, no. The cost will depend on who carries it.
If a sender converts they will pay for the transfer. If a recipient has to convert, they will pay.
Also, banks are notoriously difficult to find rates for. So for transparency we recommend a comparison for the exact amount that needs to be received. This will give you a price against banks.
Solutions on receiving
Use a multi-currency account: You’re in more control
Using a multi-currency account if you’ve got an incoming payment removes the need to ask the sender to send the money in a specific way.
This also gives you the option to hold onto the money and convert at a later date. This could actually result in receiving more money in the end currency overall, but could also result in less.
Every transfer is different. If you’re receiving money and want to have control in case you do end up paying conversion fees: use Wise.
Their multi-currency account supports a wide range of locations. With this, you can receive and hold up to 40 different currencies. This means you can convert a received payment as you need to.
These conversions are at the mid-market rate, and with fees of 0.33%.
Ensure the sender sends correctly: You’re in less control but it solves the problem
If you can’t or do not want to receive into a multi-currency account, then work with the sender where possible.
The sender really needs to use a money transfer company to send money abroad. This will mean fees and rates are much lower for them, and the money enters your account in the right currency.
Nobody gets stuck with high fees and rates.
The big issue here is that you’re at the will of what the sender chooses to do. So if they send in the wrong way, you may pay the cost for the transfer.
