Do you know how much more you’re paying for international payments just because you are an SME? According to an article in The Telegraph, UK SMEs are losing £215 million a year ($345 million AUD) because they use banks to make their international payments.

The amount you are charged per transaction depends on a number of factors. Simplifying things slightly, your costs per payment can be broken down as follows:

Margin + Transaction Fee = Cost of international payment

There are occasionally other costs - for example, if you pay through a bank that uses a correspondent banking network (such as SWIFT) to transfer funds, you may incur additional charges.

Most SMEs are aware of the transaction fees and know they can get better deals. But few realise they’re also losing money on margins.


Most payment providers (banks or otherwise) build a margin into the exchange rates they give customers. Each bank or company will use a different margin, which is why exchange rates vary between providers. This margin can be anywhere between 4-6% of your transaction amount in Australia and varies depending on how popular a currency pair is. The more unusual the pairing, the higher the margin, the more you pay.

Transaction Fee

The transaction fee can either be a percentage or a flat fee which varies depending on the transaction volume and the client. For example, payment providers will often lower or even wave transaction fees for clients with larger and/or more frequent transactions.

What you need to know

To reach SMEs on the hunt for the best deal, several payment companies advertise themselves as having ‘no transaction fee’. However that doesn’t necessarily mean you are going to be saving money: most make up for the lack of a transaction fee by increasing their margin. As a result, you can end up paying the same, if not more.

At Airwallex, we believe in transparency so we do not charge a spread. Instead, we use what’s known as the mid-market rate for all of our transactions.

What’s the mid-market rate?

Also known as the ‘interbank rate’, the mid-market rate is the midpoint between the buy and the sell price of two currencies. It’s the rate you’ll find on trusted foreign exchange sites like and Bloomberg. In other words, it’s the exchange rate without the margin.


We only charge customers a small, smart transaction fee of up to 1.5% so our customers can save up to four times times the amount they would with other payment providers.

Next time you need to make a payment don’t just compare transaction fees, have a look at the margins. Compare the total amount you're paying as well as the total amount that will be received to really hone in on the best deal.

Please note: The information provided here is intended to be general in nature and does not constitute financial advice. Before acting on any information, you should consider the appropriateness of the information provided with regards to your objectives, financial situation and needs, and seek independent financial advice.