Ask a finance team what an international payment costs and you will usually get the transfer fee. It is the number on the statement, so it is the number people know.
On a payment of any size it is rarely the largest component, and on some routes it is not even close.
The five components
1. The stated transfer fee. Visible, fixed, easy to compare. Also the smallest term on most payments above a few thousand.
2. The FX spread. The difference between the rate you are given and the interbank rate at that moment. It is expressed as a rate rather than a fee, which is exactly why it goes unexamined — a 1.5% spread on a €50,000 payment is €750, against a transfer fee of perhaps €25.
This is the single largest recoverable cost for most businesses, and the one least often measured.
3. Intermediary deductions. On correspondent routes, institutions in the chain may deduct charges from the principal in transit. The payee receives less than the invoiced amount, and the payer's records show the full amount sent. See the charge option discussion in SEPA or SWIFT — this is governed by whether the instruction is sent SHA, OUR or BEN.
4. Receiving and lifting fees. Some institutions charge to receive an incoming international payment, and some charge a "lifting fee" as a percentage for crediting a foreign-currency amount. Both land on the payee, who did not choose the route.
5. Reconciliation and failure overhead. The least visible and, at volume, not the smallest. Time spent matching unreferenced receipts, chasing short payments, re-sending returned transfers, and holding buffer balances in multiple currencies because timing is unpredictable. It does not appear on any statement, which is precisely why it grows.
Measuring the spread
You cannot negotiate what you have not measured. The method is simple:
- At the moment a conversion is quoted, record the interbank mid-market rate for that pair.
- Record the rate you were actually given.
- The difference, as a percentage of the mid, is your spread.
- Multiply by annual volume in that pair.
Do it for your three largest currency pairs and you will have a number that is usually larger than the entire annual transfer-fee spend. That number is the basis for any conversation about pricing — with a provider, or internally about whether to change one.
Where the savings usually are
Pick the right rail. A euro payment inside SEPA has no intermediary deductions and a defined charge model. Routing it over a correspondent network out of habit adds days and cost for nothing.
Hold the currency you invoice in. Every conversion is a spread. A business invoicing in EUR, GBP and USD that converts everything to a single base currency on receipt, then converts back to pay suppliers, is paying the spread twice on the same money. Holding balances in the currencies you actually transact in removes the round trip.
Net internal flows. Group entities paying each other across borders can often offset positions rather than sending gross both ways.
Agree the charge option in the contract. If the contract says an amount is to be received, the instruction has to be sent OUR. Discovering this after a supplier reports a short payment costs both the shortfall and the relationship.
Batch low-value payments. Where a fixed fee applies per instruction, many small payments to the same counterparty cost more than one consolidated payment.
Fix the reference format. Most reconciliation overhead is unmatched receipts. Giving payers a reference format and validating on receipt removes it at source.
A worked example
A business making €2m a year of cross-border payments, mostly EUR and USD:
| Component | Assumption | Annual cost |
|---|---|---|
| Transfer fees | 400 payments × €25 | €10,000 |
| FX spread | €1.2m converted at 1.4% | €16,800 |
| Intermediary deductions | 120 SWIFT payments × ~€22 | €2,640 |
| Receiving/lifting fees | Charged on ~90 receipts | €1,800 |
| Total | €31,240 |
The fee everybody knows is 32% of the total. The cost nobody measures is 54%.
The numbers are illustrative — the point is the shape, and the shape holds across a wide range of businesses. If you only optimise the visible line, you are working on the smaller half.
How this works with 2PayApp
2PayApp business accounts can hold and settle EUR, GBP and USD, so businesses invoicing in more than one currency need not convert on receipt and convert back to pay. Access to payment rails including SEPA, SEPA Instant, Faster Payments, SWIFT and ACH means the rail can be selected per payment. Current fees are published on the pricing page.
2PAYAPP LIMITED is registered with FINTRAC as a Canadian Money Services Business. FINTRAC registration is a legal registration requirement; it is not a banking licence and does not constitute an endorsement by FINTRAC. 2PayApp is not a bank. Accounts, currencies, payment rails and transaction limits are subject to onboarding, compliance approval, provider availability and the customer's approved account configuration.
FAQ
What is a reasonable FX spread? It varies by pair, size and provider. The useful question is not what is typical but what yours currently is, since most businesses cannot answer that.
Who pays intermediary charges? Determined by the charge option on the instruction — SHA, OUR or BEN. Set it deliberately.
Do instant rails cost more? Not inherently. SEPA Instant operates under the same scheme charge model as a standard SEPA credit transfer.