Imagine billing a client $1,000 for a project, expecting to receive $1,000 or something close enough. However, you end up with around $900, losing close to 10% to various bank charges and hidden fees. It is only natural to feel slighted, especially if this disrupts your financial plans.

Receiving $1,000 via any traditional bank or digital payment solution often comes at a cost, depending on whether it is a local or international transfer. This cost depends on the bank’s fee structure and the method of transfer. However, traditional banks often have hidden charges and high transaction costs that can eat into the payment. The real cost of a transaction is not only in the amount spent, but also the waiting time for settlement.

In this article, we discuss the real costs of receiving $1,000 through traditional banks versus Grey, exploring fees, exchange rates, speed, and other factors to help you make an informed decision.

Also read: Global accounts vs traditional banks: What remote workers should know

The real cost of receiving $1,000 with banks

Traditional banks have been managing international transactions for a long time. They are more familiar and trusted for large transactions. However, this isn’t always the full picture.

When someone sends you $1,000 via a traditional bank, the money often travels through the SWIFT network. This involves the sender's bank, possibly one or more correspondent banks, and finally your receiving bank. If the transfer requires currency conversion (e.g, from USD to GBP or another local currency), the receiving bank applies its exchange rate, which includes a markup over the mid-market rate.

Incoming international wire transfers are common for such amounts, and banks charge a flat fee for processing them. Additionally, if the sender chooses to pay in their own currency, you may incur conversion costs on your end.

So, what exactly are you paying for?

Here are some charges that might apply

• Incoming wire fee: Typically between $10 and $20 for international transfers.
• Intermediary bank fees: This is a charge imposed when the money goes through a bank before reaching your account. It varies from bank to bank, but is typically around $10- $30.
• Exchange rate markup: Traditional banks often add some markup to their mid-market rate when converting currencies. This could result in an additional loss of 3% to 5% due to currency conversion.
• Others: Fees for tracing or amending transfers if any issues arise. Estimate around $20 to $50 for this.

The total cost of receiving an international payment without a transaction will be between $25 and $45. If conversion fees and exchange rate markup apply, you will lose $65-85 from the $1,000, leaving you with $915-935.

Time is money. Delayed payment processing often results in economic losses and distress that may be difficult to estimate accurately. Traditional banks typically take up to five days to complete international transactions, which could be concerning during emergencies and for time-sensitive payments.

Also read: Grey vs traditional banks: which saves you more time

The real cost of receiving $1,000 with Grey

Grey is a digital payment solution designed to simplify global payments by offering multi-currency accounts, reducing the need for currency conversions and avoiding associated costs. Users have access to free USD, EUR, and GBP accounts from anywhere, with swift payment processing and mid-market exchange rates. Grey offers transparent, low-cost transactions. This means you always know the exact cost of a transaction before initiating it. The cost of a transaction often depends on the volume and the network used.

This is a breakdown of Grey’s cost:

• Deposit fees: For ACH (USD), SEPA (EUR), or FPS (GBP), the fee is 0.8% of the amount, with a minimum of $2/€2/£2 and a maximum of $10/€10/£10. Wire transfers for USD are a flat $20.
• Currency conversion: 1% fee, capped at $6 per transaction.
• No hidden fees: Unlike banks, Grey uses rates close to mid-market, with no intermediary charges.

For receiving $1,000 USD:

• Via ACH: 0.8% = $8 (within min-max).
• Via wire: $20 flat.
• If you’re converting to a local currency (e.g., NGN), add a 1% fee ($10, capped at $6), so the total fee is $8 + $6 = $14 for ACH and conversion.

Ultimately, you will receive approximately $986-$ 992, which is significantly more than with banks.

Additionally, transactions usually take a few minutes to some hours, unlike banks, which require days. Grey-to-Grey transactions are free, instant, and simplified using a GreyTag, which is not available with traditional banks.

Also read: How to switch from traditional banking to Grey for remote work payments

Affordable transactions with Grey

Receiving international payments should not mean losing a significant portion of your hard-earned money to fees and unfavourable exchange rates. The real cost of receiving $1,000 reveals how traditional banks have high fees and unfavourable conversion rates. To avoid losing a chunk of your income to bank charges, Grey offers multicurrency accounts with transparent and low fees, competitive exchange rates, and swift payment processing.

Sign up on Grey today for affordable cross-border payments.

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