Large cross-border payments are commonplace in global business, but using traditional banks can quickly add unexpected costs. Banks routinely embed hidden markups into currency exchange rates – often 2–4% above the mid‑market rate – on top of flat transfer fees. In practical terms, a 3% markup on a £1 million transfer means £30,000 lost to the bank. If an SME makes several large payments each year, these hidden costs can easily mount into the tens or hundreds of thousands.
For example, Wise found that US small and medium businesses lost an estimated $800 million to opaque foreign-exchange fees in 2023. In the UK and EU, the picture is even bleaker: research showed 92% of banks continued exploiting loopholes, hiding conversion fees inside bad rates – contributing to Brits losing around £5.6 billion to hidden FX charges in 2022.
Modern online payment platforms
Modern online payment platforms offer an alternative. Banks often appear to charge only a flat fee (£10–£50, say), but they recoup much more by skewing the exchange rate. A bank may quote a seemingly “free” transfer, yet apply a 3% spread. On a £100,000 transfer that alone costs £3,000. Additional fees such as correspondent bank or intermediary charges commonly add another £75–£150 or more per transfer. According to a Wise survey, a whopping 82% of small business leaders don’t believe (or aren’t sure) that their bank is honest about cross-border fees. In short, the true cost of large international payments can be much higher than advertised if you rely solely on banks.
Calculate the true cost of transfers
Businesses should work out the real price of each transaction by comparing the mid-market rate to the rate the bank or provider offers.
Finding the real rate
Using a specialist tool or simply checking Google Finance for the live rate helps reveal the hidden margin. For example, a 2–4% FX spread on even £500,000 is £10,000–£20,000 in unnecessary cost. Tools on comparison sites or brokers can show you exactly how much you’re losing to markups. Being aware of each fee – even a tiny percentage – is the first step to avoiding bank markups. You may discover, for instance, that switching to a provider with a known low margin (say 0.2–0.6% above interbank rate) can save you thousands per transfer.
Explore alternative platforms
Once you know the baseline cost, you can explore alternatives. Foreign-exchange brokers and money-transfer platforms often offer near-market rates and clear fees. CurrencyTransfer promises full price transparency – it displays the live interbank rate alongside your quoted rate. Using such platforms, companies can pick the best provider for each currency route.
Forward contracts
FX brokers typically allow forward contracts (locking in a rate now for a future date) and rate alerts, which help avoid unfavourable fluctuations. Small businesses are increasingly adopting these fintech solutions: a recent industry study noted that many non-traditional providers now capture a large share of transaction value, especially for transfers above $25,000. In fact, one analysis found that intermediary banks charge about 3.39% on average for cross-border payments, whereas specialist providers’ published spreads are far lower.
Compare banks and specialist providers
Instead of trusting your bank, do a quick comparison. Many banks refresh rates only a few times a day and hide fees. In contrast, dedicated platforms often operate around the clock with live pricing. For large transfers, a small reduction in the FX spread is significant. For example, cutting the bank’s 3% markup to just 0.5% on a £1 million payment saves over £25,000. Unlike banks, many fintech companies charge one upfront fee (sometimes even zero on the transfer) and make money solely on a tiny percentage of FX – sometimes 0.1–0.5% above interbank. Always look for providers who explicitly quote the mid‑market rate and who let you lock in a rate or automate your transfer at an optimal moment. Platforms like CurrencyTransfer also match businesses with FCA-regulated partners, adding a layer of security without the hidden costs.
Plan ahead with hedging and timing
Large payments don’t always have to go out immediately. If you can plan in advance, consider forward contracts or options. These tools let you fix today’s rate for a payment weeks or months ahead, shielding you from adverse swings. If the exchange rate is currently favourable, booking a forward contract can lock in that rate for your future payment. Many FX brokers and platforms offer such hedging products to businesses.
Rate alerts
Alternatively, set up rate alerts on both bank and broker platforms. If the market moves in your favour, you can send the payment at that optimal time. Even delaying a payment by a few days can make a difference when volumes are large. Just be mindful of deadlines and contractual obligations: mistiming a payment could incur late penalties.
Use multi-currency accounts and smart structuring
When handling recurring international bills, open foreign-currency accounts if possible. For example, if you pay suppliers in euros frequently, keep a EUR account and convert funds when rates are attractive. This avoids repeated buy-sell loops. Some banks and fintech accounts allow you to hold multiple currencies and transfer between them at competitive rates.
Netting payments
Another tactic is netting payments: if you have both incoming and outgoing transfers between your UK company and, say, a European subsidiary, work with your bank or provider to net those payments instead of two separate transfers. Finally, group smaller invoices into fewer large payments. Many providers offer volume discounts or tiered pricing; consolidating payments can sometimes unlock better rates or waivers on fees.
Negotiate and maintain transparency
Finally, for very large or regular transfers, don’t hesitate to negotiate with the provider. Banks and brokers alike may offer bespoke deals for high volumes. If you have a history of sending large amounts (e.g. monthly supplier payments), ask for a lower spread or fee. Even a slight cut of 0.1% can be worthwhile. Ensure any agreement is clearly documented, and always check the final transfer amount via your online statement or platform before and after the payment. Maintaining a relationship manager or dedicated FX broker can help: they can alert you to rate movements or suggest timing, ensuring your company never overpays. In all cases, insist on full transparency. The Cross-Border Payments Regulation means banks legally must disclose all charges upfront, so leverage that right where applicable.
Use a specialist platform today
Avoiding bank markups on big payments boils down to knowledge and alternatives. By calculating the true cost, using specialist platforms, planning ahead, and even arranging short-term funding, a business can cut these fees to near zero. Every percentage point saved on FX goes straight to your bottom line, so this is not just bookkeeping: it’s boosting profit. Do your homework, demand transparency, and use the right tools – that’s how savvy businesses send large international payments without bleeding profits through bank markups.
If you’re looking for an efficient solution to transfer currencies into various countries, take a look at our platform: CurrencyTransfer offers access to a network of payment providers, live quotes and 5-star customer service. Sign-up today.
Caleb Hinton
Caleb is a writer specialising in financial copy. He has a background in copywriting, banking, digital wallets, and SEO – and enjoys writing in his spare time too, as well as language learning, chess and investing.
