Retail cross-border transfers regularly cost well above the G20's one per cent target for average retail cost. The figure surprises people because no single invoice shows it. The cost is not one price; it is a stack of charges taken by different parties at different moments, and most of them are invisible to the person paying.

The stack, step by step

  • The FX margin. The rate the client receives is rarely the mid-market rate. The difference is the first and often largest component.
  • The sending fee. The visible charge, and usually the smallest part of the total.
  • Lifting fees. Deducted by intermediary banks as the payment passes through. These appear on no invoice at all.
  • Scheme and clearing tariffs. Levied by the rails that settle the payment locally.
  • The credit fee. Sometimes charged by the receiving institution for paying in.

Each is defensible in isolation. Together they produce a headline number well above the target.

Why no one owns the total

The deeper reason is fragmentation of responsibility. The client sees two or three of these lines; the intermediaries see only their own. Because no participant observes the whole bill, no participant is accountable for reducing it. Transparency rules improve disclosure, but disclosure alone does not change the arithmetic.

What actually reduces it

Three structural levers matter more than better pricing at any single hop:

  • Netting. Offset between participants cancels internally, so only the residual leaves the network. Less money moves, so fewer charges apply.
  • Local payout. Paying the beneficiary in their own currency avoids a second conversion and an extra intermediary.
  • One legitimacy check. Screening, sanctions and mandate validation performed once replaces duplicated effort that ultimately shows up in cost.

None of this promises a specific headline rate, and no single change removes the stack. The point is that the stack is a design outcome, not a law of nature.

In short

  • The all-in cost is a stack, not a single price.
  • The FX margin usually dominates; lifting fees are invisible.
  • Fragmented charges mean no party owns the total.
  • Netting, local payout and one compliance check attack the structure.
  • Better disclosure alone does not change the arithmetic.

For how those levers are organised into layers, see /protocol/.