The facts are in: cross-border payments power the modern world.
Nevertheless, a dark secret is starting to emerge.
While families, businesses, and national economies rely on global payment channels, they are all unwitting victims of a broken system.
Junk fees undermine international remittances—and they do it silently.
These sneaky charges are difficult to predict and quick to erode the value of each transaction. In sum, they create a lose-lose-lose situation across the payments ecosystem.
Senders spend more than expected, recipients receive less than intended, and providers risk damaging relationships they’ve worked hard to build. Over time, junk fees not only drain trust and add operational friction—they invite regulatory pressure.
At UniTeller, we’ve watched these issues play out in both consumer remittances and B2B payments. Today, we’re sharing what we’ve learned so you can protect yourself (and strengthen your business) in our fast-moving world.
In the sections below, we break down what qualifies as a junk fee, where they often show up in global remittances, how they impact every stakeholder, and finally, why transparency isn’t just the ethical choice, but a strategic one.
What Constitutes a Junk Fee?
We’ve all been there.
You book a hotel at a reasonable rate only to discover an unexpected “resort fee” at checkout.
That’s what junk fees are: predatory charges that weren’t clearly disclosed at the point of sale and offer little meaningful value.
These hidden costs are pervasive in the modern economy, and they have even burrowed into global payments.
It’s true that U.S. agencies like the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) have tightened rules around these practices.
For example, the FTC’s Junk Fees Rule requires clear disclosure of mandatory costs in industries such as ticketing and lodging.
Unfortunately, these rules have a less direct application to remittances.
After all, global payments operate across multiple jurisdictions and banking systems, making enforcement infinitely more complex. Even with emerging domestic regulations, international transfers fall outside the direct reach of CFPB and FTC rules.
The Hidden Costs in Remittances
Globally, the average cost to send $200 hovers around 6.5% of the total value.
That’s more than double the UN’s 3% target as stated in their Sustainable Development Goals (SDGs).
Keep in mind, these are only the upfront costs of a cross-border transaction. Beneath the surface are a host of sneaky fees that further drain resources and trust.
Exchange Rate Markup
Ever wonder why the exchange rate you see online differs from what your bank quotes?
That’s the exchange rate markup at work. It’s the lucrative gap between the mid-market rate (what big banks trade at) and the inferior deal passed to you.
Providers skim this spread as quiet profit.
The numbers sting: fintechs often cap markups below 2%, while legacy banks can hit 5% or higher.
For a $50,000 business transfer, a 3% markup quickly eats $1,500—cash that could fund a month’s payroll or inventory.
In high-volume corridors, this quickly balloons into millions lost each year, underscoring why transparency in FX is no longer optional.
Intermediary and Correspondent Bank Fees
Legacy systems often hide inefficiency behind their longstanding history.
Take the Society for Worldwide Interbank Financial Telecommunication (SWIFT), for example.
When you send money abroad through such traditional systems, the funds rarely go directly from your bank to the recipient’s.
Instead, the transfer passes through one or more “intermediary” or “correspondent” banks, racking up fees along the way.
When every player wants a piece of the pie, skimming becomes a feature, not a bug.
Like a highway tollbooth, each intermediary in the chain deducts its own service fee from the transfer amount, typically ranging from $15 to $50 per bank.
Since the sender often doesn’t know how many intermediaries are involved, it’s nearly impossible to predict the final cost.
The end result? Recipients get less money than anticipated, while senders are left wondering where their hard-earned money went.
Unforeseen Recipient Charges
Even after the money has navigated exchange rate markups and intermediary fees, costs may continue to snowball.
The recipient often faces additional charges at the final stage of the transaction, including:
- Receiving fees charged by the recipient’s bank simply for processing an incoming international payment.
- Cash pickup fees are charged if the recipient is collecting the funds in person.
- Fees for withdrawing funds from a digital wallet.
- Domestic processing fees are applied within the recipient’s country.
While federal law in the U.S. mandates remittance providers to disclose these fees upfront, they are not always required to provide the exact amount.
This leaves both sender and receiver in a state of financial uncertainty.
How Remittance Junk Fees Impact Stakeholders
The burden of junk fees isn’t limited to the person sending the money.
No, these hidden costs create a ripple effect that damages every stakeholder in the payment chain:
Money Transfer Operators (MTOs) and Paying Agents
Junk fees from upstream partners complicate pricing models.
Over time, it becomes difficult to offer competitive rates to customers when they themselves are hit with unpredictable charges.
This erodes their competitive edge against emerging fintechs and can lead to poor customer retention.
Banks
The high-cost structure of traditional channels like SWIFT creates compliance and reputational risks.
As regulators demand greater transparency, banks that rely on opaque fee structures face growing pressure and potential fines.
Simply put, the banks have reduced financial incentive to comply (or at least, to provide greater transparency).
Corporate Partners
Businesses that pay international vendors, suppliers, or employees often find their costs inflated.
Unpredictable fees make budgeting for international payroll or supply chain finance a nightmare, shrinking profit margins and increasing the cost of doing business.
From top to bottom, junk fees poison the entire payments ecosystem.
Nevertheless, while reality paints a disturbing picture, there are two reasons for cautious optimism.
First, regulatory pressure and consumer demand for fairness are making it clear that business models built on hidden fees are unsustainable.
More importantly, some payment processors are weaving transparency into the fabric of their culture—regardless of how it affects their bottom line.
These companies have the best opportunity to shift the conversation.
Transparency: A Strategic Advantage for Payment Providers
In an industry plagued by hidden costs, transparency is no longer just a buzzword.
It’s a strategic advantage.
Payment providers who embrace clarity and honesty will build stronger, more sustainable businesses.
The first step? Viewing relationships as partnerships rather than mere transactions. When all parties benefit from a remittance, the entire system becomes more robust.
For MTOs and banks, this means a shift toward marketing services based on the total cost, not just a deceptively low sticker price.
This transparency offers several meaningful benefits:
- Mitigated regulatory risk: Clear, upfront pricing makes it easier to comply with evolving regulations while avoiding hefty fines.
- Enhanced consumer loyalty: Customers who feel they are being treated fairly are more likely to stay loyal. Trust is a valuable commodity, and transparency is the best strategy to earn it.
- A competitive edge: In a crowded market, providers who offer clear, all-in pricing can stand out from competitors who rely on confusing fee structures.
- Complete oversight: Transparency requires full visibility over the payment chain. Internally, this promotes better risk management and operational efficiency.
When transparency comes first, reconciling profit with trust is not a zero sum game.
UniTeller’s Position Against Remittance Junk Fees
At UniTeller, we believe the future of payments hinges on transparency.
Junk fees have no place in a world where remittances close trillion-dollar funding gaps and drive developing economies.
We realize that we currently hold the minority position on this view.
Our rationale is simple: we believe that hidden fees and opaque practices harm everyone and undermine the integrity of the global financial system.
That’s why we are committed to providing clear, fair, and predictable payment solutions that empower businesses and individuals.
By eliminating the guesswork, we help our partners build stronger relationships with their customers by operating in the open.
It’s time to move away from a model that profits from confusion and toward one that thrives on clarity.
Ready to build a more transparent payment ecosystem together?
Learn more about UniTeller’s product suite.
