0

First part of my question is: How do US online booking agencies send money to thousands of hotels worldwide on a monthly basis when outgoing international wire transfers cost about $40 per transfer? How do Priceline, Travelocity, Booking.com do it?

Second part of my question is: If the wire transfer fee is waived for large amount of transfers, then how do new businesses who are just starting out and have small and infrequent transfers transfer money to international business customers?

closed as off-topic by JoeTaxpayer Jan 20 '16 at 22:36

  • This question does not appear to be about Personal Finance within the scope defined in the help center.
If this question can be reworded to fit the rules in the help center, please edit the question.

  • "outgoing international wire transfers cost about $40 per transfer" they don't cost that much for these businesses, not even close to that much. Since these companies do a lot of business with banks they get much better costs on everything than consumers can through negotiation. This is generally applied as a business rate rather than on a per business basis. – MD-Tech Jan 20 '16 at 13:38
  • even if they would cost that much, if they do 10000 customer transactions per month, 40 $ would be nothing - divide it by 10000, and you get 0.4 cent per transaction. – Aganju Jan 20 '16 at 21:39
  • I'm voting to close this question as off-topic because this is not about personal finance. – JoeTaxpayer Jan 20 '16 at 22:36
1

For the first part of your question, I think the answer is a combination of three things: (1) Bigger companies have leverage to negotiate better deals due to volume. (2) Some of these companies are also taking bookings from outside the US for people traveling to the US (either directly or through affiliates). This means that they also have income in other currencies, so they may not actually be making as many wire transfers as you think. They simply keep a bank account in Europe, for example, in Euros to receive and send money in the Eurozone as needed. They balance the exchange on their books internally in this case, without actually sending funds through the international banking system. Similarly in other parts of the world. (3) These companies are not going to make a wire transfer for every transaction, in any case. They are going to transfer big sums of money to an account abroad to balance things on a longer-term basis (weekly, month, etc.) Then they will make individual payments to service providers out of the overseas account in between these larger, international transfers.

For the second part of your question, I think there's probably no way for a new business to get the advantages of scale unless you've got significant capital backing your endeavor that would make it plausible that you'll be transferring in scale. I don't see any reason in principle that the new company could not establish bank accounts abroad and try to execute the plan outlined in #2 above except that it would require some set-up costs to do the proper paperwork in each country, probably to travel, and to initially fund the various accounts.

Not the answer you're looking for? Browse other questions tagged or ask your own question.