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Payments across borders: how to make international payments

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedFeb 20233 min read

From traditional banking transfers to of-the-moment apps, there are numerous ways to send and receive international payments. Here’s what you need to know about international payment systems before sending money abroad.

Cost of sending international payments

There are two types of costs to consider when you’re weighing up different international payment methods. While some transfers might claim to be fee-free, there are often hidden costs involved – namely within the currency exchange rate you receive.

Transfer fees: these may apply to the sender, the recipient, or both parties. Transfer fees are often broken down into multiple small charges, so be sure to read the fine print as they can add up over time.
Currency exchange rate: this is also another type of cost to look at very closely. Some companies promise low fees, but then drive up the exchange rate so that you pay more on currency exchange. Keep in mind that currency rates change from one moment to the next, so you should have some idea of the latest figures before sending any payment.

To get the best rate, you’ll need to bookmark the most recent exchange rate and then use this as a point of reference. Keep in mind that rates will become more favourable when you transfer larger amounts of money. It might be beneficial to send one larger payment abroad rather than multiple small payments, for example. Consolidate invoices for international suppliers to reduce payment costs.

Security and international payments

In addition to cost, you should think about security issues. UK bank accounts offer protection schemes to ensure your money stays safe, but there is no such guarantee with all money transfer companies. If you make payments using a third-party foreign exchange company and it goes under before completing your transaction, you could lose your money.

Look for companies that are FCA authorised. An authorised company must keep client cash separate from its own funds, safeguarding it against bankruptcy or other issues. FCA registered companies don’t have this same safeguard in place.

International payment methods

There are several ways to make international business payments, so it’s worth comparing options carefully to find the best fit.

International bank transfer

The first port of call for any international payment system should be your bank. Many banks within the UK allow you to transfer money abroad without paying a fee. However, this usually is only the case if you meet certain conditions like:

Both you and your recipient have an account with the same banking group.
Your name must be associated with both accounts.

Be aware that banks won’t always offer the best currency rate, and both minimum and maximum transfer limits may apply.

Instant transfer services

If you or a loved one are stuck for cash and need to receive it quickly, instant transfer services like MoneyGram and Western Union might be the best bet. The other types of international payment methods we’ve mentioned often take a few days for clearance.

However, fees for a wire transfer service like Western Union are far higher than other methods. To send money this way, you can enter a branch at the bank or post office, or choose to pay online. After entering all the details, the recipient is able to receive the payment at the other end with their valid ID or code.

Online transfer services

Online platforms allow you to send international money transfers in sterling via online transfer. The money is converted into the end currency of choice and deposited directly into the recipient’s bank account.

To use this type of service, you’ll usually need an account with address verification. It’s also important to note that there are usually limits on the funds you can send, so it may not be suitable for larger international business payments or investments.

Specialty Forex brokers

What happens when you need to make a larger payment? Perhaps you’re purchasing foreign property or transferring funds into a foreign pension plan. In this case, you need a foreign exchange broker to find the best rate. Specialty brokers buy and sell large volumes of foreign currency, which means they can offer better rates. You’ll have a choice of contracts to choose from:

Forward contract: the rate is fixed, but the transfer is arranged for a future date.
Spot contract: the rate applies to the money the transfer takes place.

In either case be sure to get multiple quotes first as a benchmark, and check that the broker is FCA-authorised.

We can help

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