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When the Knights Templar set-up what is often regarded as the first international banking system, the church didn’t allow them to charge interest. When a pilgrim lodged money in a Templar bank in London, and collected it in Jerusalem, they received every penny of their original lodgment.  

Of course, the Templars got around this through a variety of loopholes, but it wasn’t for another couple of centuries that modern banking methods had interest and fees as standard practice.

This system built was built upon and expanded, middleman upon middleman, as the world became more globalized and interconnected. By the time we got to the latter part of the 20th century, the global payments system was a tangled spiderweb where money would be routed from the payer to the payee through several banks and third-party handlers – all taking a cut as it passed through their hands.

Foreign exchange rates added a layer of complication, causing headaches for finance departments trying to predict if the amount they sent across an international border would arrive at the destination as expected.

This has all changed.

With modern fintech infrastructure, businesses can cut out layers of those middlemen, using new payment rails to reduce FX fees and banking costs when making international payments.

How to reduce banking fees and costs when making international payments

It’s important when looking at this area not just to look at the ‘what’ but also the ‘how’. Once you understand how it all works, the solutions (and their benefits) become obvious.

1. Accessing new payment rails

Traditional correspondent banking is built on that network created over centuries. It’s complex and uses multiple handlers along a payment chain. If you send a payment from the US into Australia, for example, that payment may go through several banks, each taking their fee for moving the money through the chain.

A survey focused on international payments showed that 48% of respondents were unhappy with the fees charged, while 80% of businesses would consider changing providers to reduce costs.

Saxo Payments

And it’s not just those fees that cost businesses; it’s the time delays, lack of transparency, and reconciliation issues that goes along with this type of payment process.

With today’s fintech payment solutions, businesses can access payment rails with much less steps along the path. Instead of going through multiple banks and third parties, they go directly from one country to another.

How is this possible?  

Basically, a new international payments infrastructure has been created over the last decade or so. These fintech’s have gone out to each individual country and secured regulatory licenses to operate there, allowing their clients to access these payment rails themselves and generate all kinds of benefits.

Because they have put in the groundwork in creating this simpler and more straightforward infrastructure, they can charge those clients much lower fees than traditional banking methods.

Additionally, because they control this network their clients can have complete transparency over their payments, seeing it move (often instantaneously) through the chain at every step. It also helps reduce administration time because there are never any follow-up payments to make up shortfalls due to unexpected bank charges, and it reduces support questions from suppliers enquiring where their payment is.

2. Using automation for mass payments and reconciliation

Accounts payable and receivables is a complex business at the best of times. Every step in the chain is a potential for more complexity, making it difficult to reconcile payments and resolve errors when they happen.

This leads to significant resources being put into administrative work, requiring the need for more staff and, maybe more importantly, staff not working on more productive activities.

Our platform allows the user to upload one file and request up to 10,000 payments at once in multiple currencies”

David Hughes, Chief Commercial officer, Transfermate

Beyond potential errors, even large enterprises will often be using multiple platforms to record invoices and reconcile payments, leading to more administration time connecting the dots, and leaving financial leaders in the dark on a daily basis. This also makes mass, batch payments much harder to manage and execute.  

Modern fintech platforms solves many of these issues.

By using API integration and other embedded technologies, fintech’s offer businesses platforms that can significantly reduce administration time, eliminate errors, allows for same-day payments in many cases (with receipt confirmations), gives the user the ability to make mass payments in multiple currencies, and give them visibility over the process in real time.

This hasn’t been the result of a single breakthrough. It’s been achieved through innovative technical engineering combined with that payment’s infrastructure built up over years of diligent work.

How to reduce FX fees and costs when making international payments

Outside of Traditional Bank
Traditional banking payment rails can lead to unexpected FX commissions being charged

Many of the same reasons that modern payment rails reduce banking fees also apply to the reduction of FX fees, with a few nuances and additional benefits.

1. Leveraging the modern payments infrastructure to reduce FX fees

Those same steps along the chain that generate banking fees are also vulnerable to detrimental exchange rates and handler commissions. The outcome is also the same – additional costs to the bottom-line and the payment sent may not be the payment received.  

SMEs are often charged up to 4% (and higher) using the more traditional payment providers

Money mover

By using the modern payments infrastructure, and its shorter payment rails, businesses can take advantage of lower fees. But how do these platforms offer lower fees? Put simply, because the money goes through less steps on the chain due to the infrastructure they’ve built, the fintech providers are not paying the normal correspondent banking rates and therefore can pass on those lower fees to their clients. When that relationship gets to a certain scale, it can even mean that clients are offered a percentage of the FX commission back to them, generating a revenue stream from their international payment activities.

2. Improve international currency management through fintech software

Visibility over how much cash a company has, where it sits, and what currencies it is divided into, can be a more difficult task than it would seem at the surface level. This is particularly true in large, multi-national enterprises.

The result of this can be the inefficient allocation of resources and being in danger of getting caught by currency fluctuations.  

With modern solutions, company’s can gain much more visibility over their international currency holdings. They can manage payments in one account, view all their holdings on one platform, lock in currency rates for future payments, and allow customers to pay in their local currency.

This leap forward allows treasury, procurement and finance departments work together more efficiently and transparently, allowing an agile allocation of resources depending on the business needs.

The more things change, the more they stay the same

When we look back at those first international payment networks, controlled by knights and popes, it’s difficult to reconcile them with the systems we have today.

It’s hard to imagine a time without high handling fees and commissions on currency exchanges, but in a lot of ways we’re moving closer to that original system than ever before. The pilgrim that took their promissory note thousands of miles over border after border, only to be given the same amount they put in at the start of their journey when they reach their destination, is analogous to the journey our international payments go through today.

Through building a new banking and payments infrastructure, and combining it with innovative technologies, modern fintech’s offer businesses a new way of payments very similar to the old one – albeit a lot quicker than carrying it all the way yourself.


To learn how TransferMate can reduce your banking and FX fees when making international payments, get in touch with the team.

TransferMate, the world’s leading provider of payments infrastructure as a service, and WEX, a global financial technology service provider, today launched new capabilities that simplify how businesses of all sizes execute complex international payments. Through the partnership, TransferMate has integrated its leading payments technology directly into the WEX system. WEX clients will be able to execute seamless international transfers with ease, and experience new levels of simplicity, security and speed through TransferMate’s extensive global payments network.

With the custom integration, WEX – known globally as a leader in corporate payments – will be able to expand its offering to give clients domestic, regional and international transfer capabilities via TransferMate. The partnership shows a commitment by both organizations to improve the payment options for global companies, enabling international transfers at lower costs, higher speeds and with greater reconcilement benefits.

Sinead Fitzmaurice, CEO of TransferMate, a subsidiary of Clune Technology Group, said: “We are excited to join forces with WEX to provide the most efficient payment process possible for global businesses. At TransferMate, we are committed to making international payments easier than ever before and a key way to accomplish that is through strategic partnerships with likeminded, cutting-edge companies in the industry, like WEX.”

The TransferMate and WEX partnership streamlines payment management and reconciliation for accounts teams, allowing for full transparency and one login to make fast and secure payments. With the new capabilities of the WEX payments platform, businesses can take control of their business spend, with tracking, insights, security and automated reconciliation. 

Jay Dearborn, President of Corporate Payments at WEX, said: “Through the WEX and TransferMate partnership, businesses will be able to make domestic, inter regional and cross-border payments by paying locally in their own currency, with funds settled locally in the beneficiary’s currency. As WEX continues to unify global AP to AR payments processes, we are thrilled to provide new flexibility and payment rail choice to our customers–helping them save both time and money as a result of simplifying the traditional transfer process.”

About TransferMate Global Payments

TransferMate — a subsidiary of Clune Technology Group founded by Terry Clune — is the world’s leading provider of payments infrastructure as a service, enabling companies to send and receive cross-border payments faster and easier. TransferMate, under the leadership of Clune and CEO Sinead Fitzmaurice, has built one of the largest portfolios of payments licences worldwide, including in 51 US states and territories, to support trading in 162 countries.

Leading banks, fintechs and software providers partner with TransferMate to offer an enhanced user experience for their business customers. The company has created bespoke integrations for banks like ING and AIB, who are also investors in the company, and Wells Fargo and software providers such as Coupa, SAP Concur, Tradeshift, Workday, etc. The TransferMate API solution allows partners to digitalise the payments flow within their software, enabling all businesses to achieving significant time and financial savings. For more information, visit www.transfermate.com.

About WEX

Powered by the belief that complex payment systems can be made simple, WEX (NYSE: WEX) is a leading financial technology service provider across a wide spectrum of sectors, including fleet, corporate payments, travel and health. WEX has offices in more than 10 countries and employs more than 5,200 associates around the world. WEX fleet cards offer approximately 16 million vehicles exceptional payment security and control; purchase volume in travel and corporate solutions was $20.9 billion in 2020 and was processed in over 20 currencies; our health division provides consumer-directed healthcare technology and services, and reached an estimated 34.3 million U.S. consumers as of March 31, 2021. For more information, visit www.wexinc.com.

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