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International Business Payments in Canada: Transferring & Receiving Internationally

According to a 2019 Government of Canada data set, 13.5 per cent of all Canadian exports fall under the Wholesale Trade category – significantly more than Oil and Gas, for example (figure 10). Over 60 per cent of all Canadian Wholesale Trade is driven by small businesses with 99 or less employees (figure 11). Canadian exports in 2019 surpassed CAD $500bn, signifying those small businesses in the Wholesale Trade industry have exported at least CAD $45bn worth of goods in 2019, and these numbers have only grown since these metrics were last measured. While we still don’t have all the relevant data for 2021, we know that in the previous year the total value of exports totaled at CAD $637bn, a 22 per cent increase from 2020, and seven per cent more than in 2019, so it’s safe to assume that the SME export has surpassed the CAD $45bn mark set in 2019.

In other words, there are hundreds of thousands of Canadian small businesses, micro-businesses, sole proprietorships, and individual “side gigs” that are selling Canadian goods abroad, many of which operate online through platforms like Shopify or Amazon. For these types of businesses, international business payments are a big deal. Not only do these businesses receive large sum payments from abroad, they also, more often than not, have to make business payments to international suppliers as well. Hefty international money transfer fees often eat into profit margins unnecessarily.

International Money Transfer Fees for Canadian Businesses

There are a number of ways in which Canadian businesses lose money making international business payments and receiving foreign exchange payments in currencies other than the Canadian Dollar.

  • When small businesses pay suppliers or service providers through a Canadian bank account, they pay, on average $15-$40 per transfer, in addition to a two per cent markup currency markup (based on this data) per each international money transfer.
  • Small businesses receiving money in foreign currency to their Canadian bank account (unless it’s USD and you have a USD bank account) pay the same currency exchange markup of two per cent. Fees easily surpass a whopping four per cent when a business needs to accept exotic foreign currency payments.
  • Using Amazon’s own currency exchange program, the total cost of fees will amount to close to five per cent. PayPal’s own currency exchange is around that same five per cent range of fees for both inbound foreign exchange payments and for outbound money transfers abroad.
  • Paying through an online point of sale with a standard Canadian business credit card could easily cost 2.5 per cent in currency exchange fees.

Many small businesses using banks or other legacy international business payment solutions aren’t even aware they could be bleeding out two to five per cent on each of those international money transfers. They fall victim to the bank’s vague and convoluted language that does not specify the actual foreign exchange markups, only highlighting the flat international wire costs.

With such high costs to make and receive international business payments, SMEs could be looking at spending thousands in unnecessary international money transfer fees. Luckily there are alternative, reliable, solutions where international money transfer costs are lower.

Best International Money Transfer for Businesses in Canada?

The good news is that there are several dozen global service providers out there whose sole purpose is to offer cheaper international money transfers for businesses. The way they function is as wholesale currency brokerages. Each of these money transfer services trades between tens of millions to billions in foreign currency each year, enabling them to negotiate an excellent foreign currency exchange rate with their bank, and rolling over that savings on their customers.

Some of the best international business payment selections aren’t available in Canada (for example, Worldfirst, a prominent provider offering 0.15 per cent – 0.5 per cent  fees per transfer) –  but perhaps the most recognisable company in this space, which has been operating successfully since the 1970, Moneycorp, does on board Canadians (both businesses and individuals are accepted).

Moneycorp is definitely not your average “Fintech payments” company, and that is partially the reason I believe they are the best international money transfer service for businesses in Canada for 2022. They were Fintech before the term had been invented! Back in 1979 Moneycorp began offering business foreign exchange services for the bank’s most underserved customers – SMEs. It is a very friendly and welcoming company that takes pride in its quality of service alongside its tech. The offering is very diverse and you could use Moneycorp to simply transfer money internationally and receive money from abroad for cheap, but also for more sophisticated usages like bulk payments, treasury and hedging, or even obtaining a named foreign exchange business bank account in several countries and currencies. It has received glorious reviews from both individuals and business customers, while maintaining a strong reputation in the industry over the past four decades.

International Business Payments in Canada: More Options

Another company in the international payments space which mainly works with individuals, but does have a business foreign exchange offering is Wise. You might have heard about them as “TransferWise” which was the company’s official name prior to a rebranding. They are an absolute behemoth when it comes to international money transfers, offering both very cheap fees in addition to a high-end online platform and app.

It’s very easy to sign up with Wise in Canada and there are no minimum volumes to begin. The advantage and disadvantage of using Wise for international business payments is the fact the entire system is online. Unlike with Moneycorp, where you have a dedicated account manager replying to your emails, with Wise the only real support you will be getting is tech support. Wise is the do-it-yourself solution for businesses who already have everything worked out in regard to their international business payments, and just want to execute it online.