The Real Cost of Sending Money Home (And How to Keep More of It)
Key takeaways: The global average cost of sending money internationally is 6.49%, according to the World Bank’s Remittance Prices Worldwide report for Q1 2025. On a $500 monthly transfer, that adds up to $300 or more per year in fees. Most of that cost comes from exchange rate markups and layered fees that aren’t obvious upfront. Bank wires are the most expensive option, averaging 14.55% plus flat fees of $35 to $50 per transaction. Dollar wallets cut the cost to a fraction by sending dollars directly, phone to phone, without routing through the traditional banking system. On the same $500 monthly transfer, a dollar wallet like Arca charges 0.5%, or $2.50, saving families $450 a year compared to a bank wire. The difference can mean a month of rent or a semester of school supplies back in the hands of the families who need it most.
How much does it really cost to send money internationally?
The global average cost of sending money internationally is 6.49%, according to the World Bank’s Remittance Prices Worldwide report for Q1 2025. On a $200 transfer, that’s $13 gone before it arrives. For families counting on every dollar, $13 can cover groceries for days.
Every month, millions of people send part of their paycheck to family in another country. And every month, a chunk of that money disappears in fees.
Some corridors are worse. Sending money to Sub-Saharan Africa costs 8.45% on average, according to the same World Bank report. The South Asia corridor is cheaper at around 4.3%, but volume is so high that even small percentages translate to billions of dollars. And if you’re using a bank wire? The World Bank puts the average at 14.55%, plus a flat fee of $35 to $50 per transaction that NerdWallet documented in 2025.
These aren’t new numbers. The G20 set a target of reducing cross-border payment costs to 3% years ago. The Financial Stability Board tracks progress annually. Most corridors haven’t come close. The global average has barely moved in the last five years.
Where do remittance fees actually go?
Remittance fees are spread across multiple layers: the upfront transfer fee, an exchange rate markup, delivery fees on the receiving end, and credit card surcharges. Most senders only see the first one.
There’s the transfer fee itself, which is what providers advertise. It might be $5 or $10, which sounds reasonable. But that’s not the full picture.
Then there’s the exchange rate markup. This is where providers make most of their money. They quote a rate slightly worse than the real mid-market rate and pocket the difference. On a $500 transfer, a 2% markup means $10 gone before the money even moves. You won’t see this as a line item. It’s buried in the exchange rate.
Some services add delivery fees on the receiving end. Cash pickup options often cost more than bank deposit. Mobile money delivery varies by country and provider. And if you’re sending from a credit card instead of a bank account, add another 1 to 3% surcharge on top.
The result: the number your family receives is always less than the number you typed in. Sometimes significantly less.
Wise, the company formerly known as TransferWise, built its reputation on transparent pricing. They show the mid-market exchange rate and charge a visible percentage. It’s better than the old way, but you’re still paying 0.5 to 2% per transfer, and you need a bank account or card to fund it.
For someone in the Philippines, where only 50% of adults have a financial account (World Bank, Global Findex 2025), needing a bank account to send or receive money is already a barrier. The same is true across much of Southeast Asia, Sub-Saharan Africa, and Latin America, where remittances make up a significant share of household income.
How do dollar wallets reduce transfer costs?
Dollar wallets send dollars directly between phones without routing through correspondent banks, clearinghouses, or intermediary accounts. Transfers settle in seconds and cost a fraction of what traditional services charge.
This is a fundamentally different system from bank transfers. Instead of your money passing through correspondent banks, clearinghouses, and intermediary accounts over several days, a dollar transfer between two wallet users settles in seconds. There’s no chain of intermediaries taking a cut along the way. The fees are a fraction of what traditional services charge.
This isn’t just a different price. It’s a different system entirely. Traditional cross-border transfers involve at least three to five intermediaries: the sending bank, a correspondent bank, sometimes a second correspondent bank, a clearinghouse, and the receiving bank. Each one adds time and cost. Dollar wallets bypass all of them.
Over $179 trillion in cross-border payments flow through traditional rails every year, according to McKinsey. But that infrastructure was built for large institutions moving large sums. For a worker sending $200 home every two weeks, it’s like renting a cargo ship to deliver a package.
The technology to move money cheaply already exists. What’s been missing is a product simple enough for anyone with a phone to use, without needing a bank account, a credit check, or technical knowledge.
How much can you save with a dollar wallet vs. a bank wire?
Here’s what the numbers look like on a typical $500 monthly transfer:
| Method | Cost per $500 transfer | Annual cost ($500/month) | Delivery time | Bank account required? |
|---|---|---|---|---|
| Bank wire | $35-50 flat + markup | ~$480/year | 1-5 business days | Yes |
| Online service (e.g., Wise) | 0.5-2% + markup | ~$200-300/year | 1-3 business days | Yes |
| Dollar wallet | ~0.5% flat | ~$30/year | Seconds | No |
Arca is a dollar wallet that charges 0.5% with no hidden markups and sponsors all network fees.
The difference between the traditional wire and a dollar wallet is $450 a year. For many families, that’s a month of rent or a semester of school supplies.
Even compared to mid-range online services like Remitly or Wise, the savings add up. At 3% on $500 per month, you’re spending $180 a year. At 0.5%, you’re spending $30. That’s $150 back in your pocket every year, just by switching how you send.
For families that send money twice a month or more, the savings multiply. A family sending $1,000 per month through a bank wire loses roughly $960 a year to fees. Through a dollar wallet, that drops to $60. The math is hard to argue with.
What should you look for in a dollar wallet?
The five things that matter most in a dollar wallet are: no hidden exchange rate markups, no network fees passed to users, no bank account required, user-controlled funds, and instant settlement. Here’s why each one matters:
No hidden exchange rate markups. If you’re sending dollars and the recipient gets dollars, there’s no currency conversion and no spread to hide fees in. This is the simplest way to avoid the biggest hidden cost in traditional transfers.
No network fees passed to users. Some wallets charge you for the cost of processing the transaction on the network. Others cover that cost themselves. Arca, for example, sponsors all network fees for its users, so the transfer fee is the only cost.
Works without a bank account. The whole point of a dollar wallet is that anyone with a phone can use it. If the app requires you to link a bank account to fund it, it’s solving the wrong problem. Look for wallets that let you add dollars from multiple sources, including mobile money.
Your money stays yours. Some apps hold your dollars for you, which means you’re trusting the company to give them back. A wallet where you control your own account means you’re not depending on any company to give you access. If you want to leave, you take everything with you.
Speed matters. Traditional transfers take 1 to 5 business days. A dollar transfer should settle in seconds, not days. When your family needs money now, “3 to 5 business days” isn’t good enough.
How much money is lost to remittance fees globally?
Global remittance flows exceeded $656 billion in 2024, according to the World Bank’s Migration and Development Brief. At the current average cost of 6.49%, roughly $42 billion was extracted in fees (calculated at 6.49% of $656 billion) from people who can least afford it. To put that in perspective, $42 billion is more than the entire GDP of some of the countries where remittances are a lifeline.
That’s not a technical problem. The technology to move money cheaply and instantly already exists. It’s a distribution problem. The people who need low-cost transfers the most are often the ones with the least access to the tools that provide them. They live in countries with limited banking infrastructure. They work jobs that pay in cash. They send money to family members who don’t have bank accounts either.
Dollar wallets are changing that equation. They work on any smartphone. They don’t require a bank account, a credit check, or days of waiting. They settle in seconds. And they cost a fraction of what the old system charges.
The money that used to disappear in fees? It arrives now.
If you’re sending money home and want to keep more of it, join the Arca waitlist and be the first to try a better way.
Sources
- World Bank, Remittance Prices Worldwide, Q1 2025
- World Bank, Global Findex 2025
- McKinsey & Company, “Following Payments Paths,” 2024
- NerdWallet, “Wire Transfers: What Banks Charge,” 2025
- Financial Stability Board, G20 Progress Report, 2024