Will International Money Transfer Costs Rise in the Near Future?

International money transfers, including remittances and business payments, are essentially the backbone of globalization. They are the foundational financial instruments fueling the interconnection and interdependence of diverging economies and cultures across trade, work, and migration.

They are also why modern global trade is largely possible and successful, and also how migrants can effortlessly support their families from thousands of miles away.

Therefore, it’s understandable why parties (senders, recipients, and service providers) involved are keen on keeping costs low.

Businesses want to be sure that transfer costs are not eating into their profits or inconveniencing their customers. Migrants don’t want transfer costs disproportionately reducing the amount that reaches their families, impacting their ability to sufficiently meet essential needs.

And bearing in mind that the international money transfers market is increasingly competitive, service providers hope that by keeping fees low, they can boost and retain their customer base.

In recent years, the cost of sending money abroad has moved in various directions across different channels and regions.

But with a global inflation rate that has remained higher than the pre-pandemic era, marked by a widespread increase in the cost of goods and services, there is a generally reasonable concern about whether fees are likely to increase soon. And this concern grows as the excise tax on remittance transfers comes into play.

This article examines various factors to determine the likelihood of an increment.

Current State of Transfer Costs

According to the World Bank Remittance Prices Worldwide (RPW) last quarterly report, the average cost of sending money abroad (using $200 as a benchmark) is 6.36% of the amount sent.

Essentially, this means that on average, when an individual initiates a $200 international money transfer, only $187.28 will get to the recipient. However, costs might increase or decrease depending on the international money transfer channel the sender chooses.

Banks, for instance, which have consistently remained the most expensive channel for sending money abroad, attract an average cost of 14.99% of the amount sent.

This is quite the contrast from digital-only fintech platforms with fees as low as 3.54% of the transaction amount.

In reality, this means that a recipient only gets about $170.02 on a $200 transfer initiated via a traditional bank. But via a fintech platform, the recipient gets $192.92.

Beyond the averages, US-based fintech platforms continuously offer competitive exchange rates and fees across various money transfer corridors, with a renowned international money transfer operator like BOSS Money even offering $0 fees on certain transfers.

The influence of the fintech operators in the market has been a major driver in driving costs down in the past ten years.

Although the global average still remains significantly higher than the 3% optimum transaction costs by 2030 (SDG indicator 10.c.1), there has been a noticeable drop in transfer fees, which hovered above 8% in 2014.

Factors That Could Drive Costs Up

Remittance costs are subject to numerous factors across various divides, including government policies and regulations and market infrastructure.

The U.S. excise tax on remittance transfers, for example, immediately places an additional 1% cost burden on transfers initiated using physical instruments, such as cash, cashier’s check, and money order.

If similar policies spring up across other countries, regions, or even instruments, there’d definitely be a spike in the global average cost of sending money abroad.

Socioeconomic and political activities amidst global tensions could also have both direct and indirect effects on remittance costs, especially manifesting along the lines of unfavorable exchange rates in emerging markets.

Factors That Could Keep Costs Low (or Reduce Them)

There are three key points to note in this direction:

• Digital-only, fintech money transfer operators are by far the cheapest channel for sending money abroad, with an average transfer cost of 3.54% against 14.99% from traditional banks.

• This 3.54% is already very close to the 3% 2030 SDG objective

• As noted earlier, some fintech platforms are already offering fees below 3%, with some going as low as $0 on certain transactions.

These points are clear indicators that the digitalization of both market structures and channels brought about by fintechs is a major way forward for reducing transfer costs.

Fintech service providers also bring about much-needed competition in money transfer corridors, enabling faster and cheaper services, pushing traditional players to improve their offers.

For these and many other reasons, the UN IFAD recognizes and documents digitalization as a key component for reducing remittance costs.

Essentially, any instrument that could further reduce remittance costs in the future will most likely be a digital instrument.

Beyond digitalization, implementing regional and national policies, such as G20 National Remittance Plans, could go a long way in driving costs down.

Regional Differences

Historically, sub-Saharan Africa has consistently remained the region with the highest average cost of sending money abroad, followed by Europe & Central Asia and East Asia & the Pacific.

As of Q3, 2025, the average cost of sending money via transfer corridors in these regions was:

• Sub-Saharan Africa — 8.46% transaction amount

• Europe & central Asia (excluding Russia) — 6.80%

• East Asia & the Pacific — 5.83%

On the other hand, Latin America & the Caribbean (5.64%), South Asia (5.30%), and the Middle East, North Africa, Afghanistan & Pakistan region (5.11%) account for the regions with the cheapest average costs of sending money abroad.

The variation in cost across regions is largely due to the degree of competition, infrastructure, and regulations enabling money transfers in the regions.

In Sub-Saharan Africa, for instance, high costs are generally a result of heavy reliance on cash-based transfers, regulatory silos, and limited interoperability and competition among competitors.

The Role of Technology

Fintech platforms are key indicators that technological innovation is a major driver of cost reduction in international money transfer markets.

In fact, fintech innovations, alongside economies of scale, are two key focus areas highlighted in the 2023 G20 Global Partnership for Financial Inclusion (GPFI) action plan for reducing remittance costs.

The scale of impact varies across the technological instruments and channels championing the change, including conventional fintech remittance service providers, blockchain payment solutions, and crypto remittance platforms.

Innovations across these instruments and channels are enabling:

• Greater interoperability: This allows more direct account-to-account transfers with limited influence from middleman institutions.

• Automated verification: By replacing manual document reviews with AI-driven verification, fintechs are equally reducing onboarding costs, allowing the provision of services at a lower cost.

• Digital ID wallets: The increasing use of portable digital IDs allows users to prove their identity once and use it across multiple platforms, drastically reducing administrative costs on individual money transfer providers.

• Alternative payment rails: Real-time payment networks, local payout networks, open banking rails, and blockchain-based networks help reduce settlement costs.

• Smart routing: This helps processors route around expensive intermediaries and choose the best channel with the least exchange rate markup.

These technological innovations are instrumental to reducing costs for international money transfer service providers. In turn, this translates to reduced transfer costs for migrant workers, freelancers, and remote workers, and businesses engaged in cross-border trade.

Conclusion

In the past two decades, the global average cost of international money transfers has largely maintained a downward trend, with occasional fluctuations along the line.

The gradual yet steady domination of fintech international money transfer operators in the global remittance market has been influential in driving costs down, irrespective of volatility across global economies.

As the shift towards cheaper, more efficient technologies for transfers continues, we can expect an increased integration of crypto- and blockchain-based payment solutions into more payment corridors, just as the United Nations High Commissioner for Refugees (UNHCR) did in 2022, using USDC.