Hotels accepting money transfers to boost profits
A growing number of hotels around the world, particularly in the UK and Ireland are now accepting international money transfers over traditional credit card payments.Popular hotel review websites are filled with cases of guests wanting to know if wire transfer deposits are a legitimate form of making payments for their hotel accommodations. In fact, the growing popularity of wire transfers for hotel reservations is a win-win for hotels and customers alike.
To understand the merits of wire transfer services over traditional credit card deposits, it’s important to consider the charges levied on hotels and customers when using credit cards. The main credit card companies include Visa, MasterCard, American Express, Diners Club International, and Discover Card. Hotels, like other merchants, have many options available when it comes to banking methods.
Credit cards are universally popular, and so they are globally accepted. However, credit card fees invariably cost a mint. In the hotel industry, high turnaround rates are commonplace. American Express for example charges its own rates, and therefore it doesn’t matter which credit card processor you’re using – the rates you pay whenever you swipe an AMEX card are always the rates charged by this credit card provider. Many smaller businesses simply don’t accept American Express because it is simply too expensive.
As such, a myriad of transactions is going to be processed, and each of them is subject to fees and other charges. Hotels may be doing themselves a disservice at some level by restricting their range of banking methods to credit cards alone. A more beneficial approach might be including wire transfer services since these are not subject to credit card fees.
While the fees will vary between credit card processors, there are also interchange fees that must be taken into consideration. This comprises a flat fee + a percent of the overall purchase price. There may also be additional fees such as merchant services companies which act as middlemen between your credit card provider and the merchant. They also take a chunk of change from the transaction. On a typical £100 charge, the charge may be £2.50 – £3.00, depending on the credit card provider in question.
In the days of old, merchants like hotels had no option but to accept the charges associated with credit card fees. In the US today for example, most states now impose a surcharge up to 4% on the purchase price which gets passed on to customers. Customers may not appreciate a high surcharge when making purchases on the credit cards, particularly when they are on vacation.
What’s the workaround? Wire transfers.
How are Hotels Using Wire Transfers for Visitors?
Money transfer services such as WorldFirst, TorFX, and TransferWise are increasingly being used by travellersto Ireland andthe United Kingdom. Money transfers with non-bank companies are also a cost-effective way of exchanging one currency for another without paying the exorbitant exchange rates and wide spreads. Depending on the amount of money that you wish to send for international travel and tourism purposes, you can certainly benefit from much cheaper rates and better FX conversions.
Companies like TransferWise allow you to make a minimum transfer of £1 via an app, or online. It is best for transfers between £100 and £5,000. Experts have consulted with the forex departments of banks for international money transfers and the facts alone advise against using High Street banks. As a case in point, the Bank of Ireland charges a flat fee of €6.35 + a 7% spread on FX rates. The spread is the difference between the rate at which banks sell FX, and the rate at which they buy FX. These differ markedly from the interbank rates.Information on Ireland’s money transfers tends to suggest that an increasing number of customers are choosing international money transfer companies over traditional banks and credit card options. Given that there are no wire fees, and much tighter spreads, there is significant benefit when global money transfers are conducted.
When you use credit cards for international travel and tourism, there are often excessive fees levied on top of the high rates charged by credit card companies. For example, the foreign transactions fees for credit cards are 3% for Chase, Citibank, and US Bank – a significant cost factor. For a €2,000 vacation, you can expect to pay an additional €60 in foreign transaction fees alone – money that could be better spent on value-added services on your vacation.
Buying FX in Your Home Currency
When you purchase euros for your vacation in Ireland, or sterling for your vacation in the United Kingdom, you can buy forex with your home currency and you will typically lose very little in the exchange rate conversion with international FX transfers. With credit cards, the transactions are converted at the credit card company’s rates which are often excessive.
Ireland is a hot destination for tourism, thanks to a weakening euro. For example, since August 2017, £1 has appreciated from €1.08 to €1.12, meaning that UK travellers get slightly more value for their money when they vacation in Ireland. For US travellers a steady strengthening of the dollar has taken place since the beginning of the year when $1 bought €0.83, and now buys €0.86.
By choosing online money transfers over bank transfers and credit cards, you can benefit from these favourable exchange rates for travel and tourism in Ireland. The online money transfer companies listed above have zero fees on international transfers of more than €1000. The added benefit of using international money transfer companies is that there are no hidden fees – you know all the costs upfront. It’s the cheaper way to travel abroad and it’s as easy as clicking a button!