How international money transfer works
People sending money overseas often wonder about the actual value of their transactions. If you remit money regularly, you don’t have to stay in the dark regarding how the financial system earns through the remittance process.
These transactions can cost more than what service providers claim, as they earn revenues through marked-up exchange rates and intermediary bank fees. Companies can also charge extra, depending on your chosen receiving method or funding source, which may be a credit card or cash.
Whether you’re sending money for household spending or business payments, understanding how international money transfer works can help you compare providers more accurately and understand the total transaction cost, so you can get more value for your money.
What is a money transfer service, and how does remittance work?
What is a money transfer? A money transfer refers to sending funds physically or electronically from one account to another, typically to someone in another country. People searching "what is money transfer services" are typically looking for a company or platform that can help them send money abroad, although these providers also have domestic delivery.
What is a money remittance? Remittances are a type of money transfer. They are non-commercial, personal transfers sent by an individual—typically an expat or foreigner—to families, relatives, or friends in their home country. The term currently refers to money sent by someone working overseas to their family back home. Recipients then use it to pay bills, phone credits, or suppliers and staff if the family has a business.
Several remittance providers don’t move the exact funds in your account across borders, though. Instead, they use funds they already hold in your destination country. This process, called pre-funding, lowers banking costs and allows faster delivery methods.
While banking rails involve intermediary banks, payout networks can offer various ways for claiming transfers. They include mobile wallet transfers, cash pickup, bank deposits, or even home delivery.
Companies such as BOSS Money have local banking and retail payout partners overseas, enabling recipients to receive funds without a traditional bank account.
International money transfer types
You move funds overseas in various ways. The best approach depends on your desired speed, the amount to transfer, and your recipient's access to banking or digital services.
Bank transfer
Bank transfers are advisable for large transactions, such as property buying, business investments, or payroll, due to their security and high transfer limits. At the same time, this option is the most familiar and accessible to recipients who don't use digital banking apps or online money transfer services.
Money transfer apps
Fintech apps enable users to send, receive, and manage funds using mobile devices. This approach is most convenient for recipients who rely on alternatives to traditional banking. Mobile wallets and local cash pickup points offer near-instant delivery, while some companies like BOSS Money, can literally bring money to the recipient’s doorstep.
Wire transfer
A wire transfer is an electronic payment method enabling banks and financial agencies to send and receive money directly. When a sender's bank and the recipient's bank don't have a direct relationship, third-party or intermediary banks may help route cross-border transactions. Each bank involved may charge an individual handling fee. This method is commonly used for high-value transfers where senders prioritize documentation for traceability.
Cryptocurrency transfer
The blockchain technology that powers cryptocurrency transfers operates 24/7 and doesn’t pass through third-party banks. The process speeds up cross-border settlements, although the speed of transaction validation and network congestion levels vary among blockchains and platforms.
On the downside, cryptocurrencies undergo unpredictable price swings. With exchange rates changing rapidly, the final value received remains unpredictable. Legal and institutional protections aren't fully established or continue to evolve compared to traditional banking because legal frameworks vary per country.
International money transfer systems
Different payment systems work in the background to make global money transfers possible. They include networks that support bank transfers and others that enable access to funds via various providers' physical pickup centers, local banks, or mobile wallets.
SWIFT
Most banks and financial institutions rely on the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to coordinate secure cross-border transfers. It is widely used for high-value payments: B2B, real estate, and international wire transfers.
Financial entities typically use the SWIFT network when the sending and receiving banks cannot connect through regional networks. This process can take longer because several institutions are involved to bring the money to the recipient's location.
SEPA
The electronic Single Euro Payments Area (SEPA) network is designed for euro transfers across over 40 member nations1. Its unified regulations for transfers among participating states and territories allow many payments to clear in seconds or within one day.
ACH
The Automated Clearing House (ACH) Network is commonly used for money transfers within the US that’s related to routine payments like payroll and bill payments. This option typically costs less than international wire transfers routed through SWIFT, making it popular for non-urgent remittances. For international ACH transfers, banks work with the clearing mechanism of the recipient’s country.
Local payout networks
These networks partner with global money transfer operators or banks, which prefund payout establishments in the destination country to ensure recipients receive funds in their local currency. By bypassing the traditional, high-fee SWIFT network, funds arrive faster and at a lower cost.
Some remittance providers use domestic payment rails, such as Faster Payments in the UK or PIX in Brazil, to speed up bank deposits. Those with extensive networks can provide cash pickup and mobile wallet transfers. Companies like BOSS Money offer home delivery for recipients who may not regularly use traditional banking.
Card rails
Visa and Mastercard can facilitate remittance processing through eligible credit and debit cards. Card networks typically cost more than traditional bank transfers or fintech options due to forex markups and network cross-border fees.
Mobile wallet integrations
Mobile phones offer the convenience of sending and receiving money overseas through app-based digital wallets. Major platforms like Western Union or Remitly collaborate with local operators in destination countries, such as Alipay in China or M-Pesa in Africa. This system also doesn't pass through the SWIFT banking network, resulting in lower service fees and shorter waiting times.
What are international money transfers used for?
People send international money transfers to support various needs of loved ones back home. Some send-outs are large, one-time payments, while others cover recurring expenses.
daily living costs, rent, healthcare or medical bills, financial shocks
debt repayment and travel expenses of family members joining the remittance-sender abroad
tuition fees, school supplies
SME suppliers, workers’ salaries
land purchase for home, farming business, small business expansion
Donations for aid relief and other causes
The sender’s purpose affects their money transfer method. Slow but high-security options suit big-ticket transfers. For emergencies and day-to-day household spending, people prefer faster delivery through mobile wallets or cash pickup.
How do money transfer companies make money?
As business enterprises, money transfer operators need ways to gain revenue from each transaction. They advertise some of their fees, while others are incorporated in their premium service or in the exchange rate.
Transfer fees
These fees are the charges that money senders see most often. They include:
- a fixed amount or "flat rate" charged per transfer, regardless of the amount
- percentage-based fees that scale based on the amount sent
- wire fees for processing money via wire networks like SWIFT
- pickup fees or surcharges applied when the recipient goes to a physical agent location
- funding fees or additional charges triggered by how you paid for the transfer (example: credit or debit card)
Some providers require a flat fee for smaller transactions, while others take a percentage of the total amount for larger international transfers. But the lowest "visible" fee doesn't guarantee the best overall value if the company applies a weaker exchange rate.
Exchange rate markup
The exchange rate margin is one of the main ways providers make money. Money transfer operators often benchmark their pricing against the mid-market exchange rate, which is published by search engines such as Google using data from financial institutions, and to be discussed more later.
Then, they "sell" it to customers at a weaker rate. The company earns revenue from that difference (the gap between rates, also referred to as FX spread revenue) as profit.
Example: May 29, 2026
You can get more value by choosing a provider with a stronger exchange rate, even if they charge a slightly higher transfer fee.
Subscription and premium models
Some providers charge a monthly or yearly subscription for perks like fee-free transfers, higher sending limits, multi-currency virtual accounts, and premium physical debit cards.
What is the mid-market exchange rate?
The mid-market exchange rate serves as the benchmark for exchanging a currency pair before providers add their own margins or fees. It's the price at which banks and financial institutions trade currencies with each other, which is why it’s also called the interbank rate. Consumers can check the mid-market rate before sending money to determine which service provider to use for their remittance.
How do currency exchanges make money?
Currency exchange companies use different ways to earn their income and profit. Some rely heavily on transfer fees, while others focus on exchange rate margins or offering premium services. Studying all these cost components when comparing providers is necessary when you want to know which one offers the best "deal" because pricing structures vary within the industry.
Why do some companies advertise "$0 fees”?
Some companies claim their service has "zero fees" to attract new users or transfers in a highly crowded market. First-time clients typically compare providers solely on these charges, unaware that operators make a profit through other means. Some can charge you extra for higher transaction limits, faster processing, using "pro" tools, or credit card use.
What matters more: fees or exchange rate markup?
Money transfer providers use different pricing models to balance operational costs and revenue generation. They compete on transfer fees, exchange rates, speed, or payout flexibility. Reviewing the final amount the recipient receives in their local currency is the best way to evaluate the overall value.
Example: USD300 (from US to Pakistan)
| Provider | Transfer fee | Exchange rate | Amount received |
|---|---|---|---|
| Xoom | $03 | 1 USD = PKR 272.48953 | PKR 81,746.853 |
| Wise | USD3.344 | 1 USD = PKR 278.4754 | PKR 82,612.394 |
| Western Union | $0 on first transfer5 | 1 USD = PKR 276.76945 | PKR 83,030.825 |
| BOSS Money | $0 on first three transfers | 1 USD = PKR 278.344 | PKR 83,504 |
*Rates and fees are based on official sources as of May 29, 2026.
For a $300 remittance sent to Pakistan, the table above shows that the delivery amounts can end up lower from providers with $0 transfer fees because they use a weaker exchange rate. Recipients can receive more from providers with a small upfront fee when their exchange rate is closer to the mid-market rate.
How to compare international money transfer services
After learning how online money transfer services operate, check these five factors to get the most return on your transfer:
Total received amount
Most remittance websites display the amount your recipient will receive (“They get” or “Receiving”) as part of their built-in calculator. Verify these amounts when comparing providers. BOSS Money shows a table featuring the expected delivery amount if you use the platform, and how much recipients will get if they opt for other companies.
Speed
Providers typically require higher fees for express or immediate transfers (minutes or hours). Slower transfers (one to five business days) generally cost less.
Delivery methods
Most companies now offer flexible delivery options. The best one will allow your recipient to disburse the funds through channels most accessible to them.
Exchange transparency
Check the exchange rate of your currency pair on Google or other currency converters before going to a provider's website. Then pick the company that comes closest to the Google or external website’s rate.
"Hidden" fees
Upfront calculators typically don't display charges from the sending or receiving banks. Companies typically use their "Pricing" and "FAQ" pages to list which fees they control and which are handled by third-party institutions. Money service platforms also ask whether the sender will pay all fees or the recipient will pay the receiving bank's fees.
Why do exchange rates vary between money transfer providers?
Because providers typically take a cut from this rate to make a profit, they decide on the rate they will apply for every transaction. If the mid-market rate is USD1 = INR 95, one company may decide to offer INR 93 to a dollar while another INR 94 to a dollar.
How long do international money transfers take?
Delivery speeds depend on the recipient's location (which typically determines the payment system used), your chosen provider, and the payout system. Bank transfers usually take several business days, while some mobile wallet and cash pickup transfers allow money to reach recipients within a day.
Are online money transfer services cheaper than banks?
Yes, mainly because they don't maintain physical branches and rely on their own global network, not the traditional SWIFT network, where each bank involved charges a fee.
What is the difference between remittance and money transfer?
Money transfer is a broad term that refers to moving funds between accounts or entities. Meanwhile, remittances are a type of non-commercial money transfer between persons.
Final thoughts: choosing the right international money transfer service
Transfer fees may have been the most obvious factor to consider when selecting the service provider for your remittances. But with so many platforms offering zero fees, it has become necessary to prioritize the scrutiny of the final amount to be received and exchange rates. Platforms like BOSS Money understand that speed and multiple payout options matter as much as fees or exchange rates for families anticipating overseas remittances via cash pickup or even home delivery.
Clarifying these elements will help you make a more informed decision for your next online international money transfer.
Sources: all third party information obtained from applicable website as of May 29, 2026
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https://www.europeanpaymentscouncil.eu/sites/default/files/kb/file/2025-12/EPC409-09%20EPC%20List%20of%20SEPA%20Scheme%20Countries%20v8.0.pdf
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https://www.westernunion.com/us/en/currency-converter/usd-to-mxn-rate.html
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https://www.xoom.com/pakistan/send-money
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https://wise.com/gb/compare/wise-usd-to-pkr
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https://www.westernunion.com/us/en/currency-converter/usd-to-pkr-rate.html
This article is provided for general information purposes only and is not intended to address every aspect of the matters discussed herein. The information in this article is not intended as specific personal advice. The information in this article does not constitute legal, tax, regulatory or other professional advice from IDT Payment Services, Inc. and its affiliates (collectively, “IDT”), and should not be taken or used as such by any individual. IDT makes no representation, warranty or guaranty, whether express or implied, that the content in this article is current, accurate, or complete. You should obtain professional or other substantive advice before taking, or refraining from, any action on the basis of the information in this article.
