What is the best way for SMEs to compare money transfer costs?

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The Best Method for SMEs to Compare Money Transfer Costs Involves Evaluating the Final Local Currency Amount After All Deductions

Small and medium-sized enterprises (SMEs) should compare money transfer costs by focusing on the total amount of their local currency received after all fees and any applicable cashback have been deducted. This approach provides a clearer picture than simply comparing advertised exchange rates or fee structures, which can be presented in ways that obscure the true cost. For instance, a Singapore-based SME needing to send MYR 150,000 to Malaysia should compare the final SGD cost from various providers, factoring in all charges and any rebates.
Understanding the Nuances of Provider Pricing Structures

Many money transfer providers claim transparency by applying a variable fee on top of the interbank rate. However, this method can be misleading for SMEs. Some providers might use fixed fees, while others embed their profit margin directly into the foreign exchange rate offered. This divergence in how costs are presented makes a direct comparison of advertised fees and rates challenging for businesses seeking the most cost-effective solution.
Evaluating the True Cost Beyond Interbank Rates

The interbank or mid-market rate, often referred to as the "Google rate," may not represent the most advantageous exchange rate available to SMEs. While some providers might advertise a small mark-up, such as 0.50%, over this rate, this figure can be deceptive. In reality, money transfer rates from specialized platforms can sometimes be significantly better than interbank rates, potentially offering savings of up to 3%. This means an SME might be paying more than they need to if they solely rely on the interbank rate as a benchmark for cost.
Practical Comparison Example for SMEs

To illustrate, consider an SME remitting SGD 45,000. If a provider offers a rate that is 3% worse than a more competitive option, the SME could incur an additional cost of S$1,575 on that single transaction. This highlights the importance of looking beyond advertised fees and interbank rate mark-ups. A real-world comparison conducted on March 21, 2023, for a MYR 150,000 transfer from Singapore showed that SMEs using OneHypernet could save up to S$745 for that specific transaction, demonstrating substantial potential savings.

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What is the best way for SMEs to compare money transfer costs?

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