The Hidden Cost of Cross-Border Payments: FX Over Fees

When companies think about cross-border payments , the first thing that usually comes to mind is the transfer fee . A flat charge of $15 or €25 may sound fair . But here’s the reality: the fee is often just a distraction . The real cost is hidden in the foreign exchange (FX) spread, and it can quietly eat away at margins far more than the upfront charge ever could .

The “Invisible” FX Cost

Take a simple example: sending €500 ,000.

• Transfer fee: €25 ( 0.005%)
  
  
• FX spread:  1.8% (€ 9,000)
  
  That € 9,000 doesn’t appear on an invoice . It’s the gap between the benchmark market rate and the actual rate applied. And yet , it’s where the majority of the cost sits .

Why FX Costs Stay Hidden?

Fees are easy to understand , they’re listed clearly as a flat number or percentage . FX spreads , on the other hand , are buried in complexity . They’re shaped by factors like:

• Multiple currency hops . Payments may move UAH → USD → CNY , stacking spreads at every stage .
  
  
• Unclear benchmarks . Was the rate pulled from XE , Bloomberg  , Reuters , or something else entirely?
  
  
• Uncertain timing . Few systems disclose when the rate was set , or who decided it .
  
  Add to this the fact that most providers rely on rigid , single-corridor routing . If that corridor offers a poor FX rate , there’s no switching to a better one . Businesses are stuck absorbing the loss .

Tackling FX Costs with Smarter Technology

To solve this , Neema developed Dynamic Routing®, a technology designed to cut costs at the source .

• Real-time FX optimization . Before each payment is sent , multiple routes are scanned to select the lowest-cost option .
  
  
• Rate-shift rerouting . If a better FX rate becomes available mid-payment , the system can instantly switch routes to capture the savings .
  
  

  The Bottom Line

  Focusing only on transfer fees misses the bigger picture . The true cost of cross-border payments lies in FX spreads , an invisible margin drain that can turn a “cheap” payment into an expensive one .

  By adopting smarter infrastructure , businesses can reduce costs dramatically , keep clients happier , and free up more room for growth .

  👉 Get in touch here to eliminate hidden costs from your cross-border payouts!