Introduction

Suppose you’re running a business in Kenya and need to send money internationally. In that case, you’ve probably experienced the frustration of watching a significant chunk of your hard-earned revenue disappear in transfer fees. Whether you’re paying overseas suppliers, freelancers, or receiving payments from international clients, those fees can quickly eat into your profit margins.

The numbers are sobering. According to recent data, 68% of African SMEs identify payment-related issues as the primary obstacle to expanding their international trade activities. For Kenyan businesses specifically, fees for cross-border transactions using informal brokers can reach up to 12% per transaction, while even formal channels often charge an average of 6.4% for a $200 transfer.

But here’s what many business owners don’t realize: only 15% of SMEs in sub-Saharan Africa are currently involved in international trade, partly because of these prohibitive costs. Those who do venture into global markets often find themselves at a disadvantage, losing an average of 3-5% of transaction value simply due to a lack of transparency around fees and exchange rates.

The good news? There are smarter ways to move money across borders without breaking the bank. Let’s explore how Kenyan businesses can minimize transfer costs and keep more money where it belongs in your business.

Understanding the Real Cost of International Transfers

When sending business funds internationally, you’re typically hit with three types of fees:

• Transfer fees: The upfront charge for initiating the transaction, which can range from KES 500 to KES 5,000 depending on the amount and service provider.
• Exchange rate markups: This is often the hidden killer. Banks and traditional providers typically add a 3-5% markup on top of the actual exchange rate, which means you’re getting less foreign currency for your shillings. Globally, the average cost for sending $200 across borders stands at 6.4%, with roughly 2% attributed to foreign exchange conversion alone.
• Intermediary bank fees: When your transfer passes through correspondent banks, each one may take a cut, sometimes adding another KES 1,000 to KES 3,000 to your costs.

For a business sending KES 500,000 abroad, these combined fees could easily cost you KES 20,000 or more, which is 4% of your transfer amount. When you scale this up, global corporations collectively lose approximately $120 billion annually to cross-border transaction fees.

The Kenya-Specific Challenge

Kenyan businesses face unique hurdles. When sending money to underserved corridors like the Middle East or Asia, many financial institutions simply lack the infrastructure to facilitate efficient transfers. This forces businesses to either use expensive intermediaries or resort to informal channels that carry their own risks.

Additionally, when dealing with neighboring African countries, payments often route through the US payment rail system first, causing delays of up to one to two days even for regional transactions. This inefficiency ties up working capital that your business could otherwise deploy.

In Africa, the trade finance gap stands at $120 billion, with some experts estimating the broader systemic shortfall at $420 billion when accounting for outdated regulations and institutional barriers. Many African SMEs struggle with paper-based processes and siloed payment systems that further complicate international transactions.

Why Kenyan Businesses Send Money Abroad

Kenya’s trade and service industries are increasingly global. Businesses send funds internationally for many reasons, including:

• Importing goods: Electronics, fashion, machinery, and building materials from China, India, or Turkey.
• Paying freelancers or agencies: For web development, digital marketing, and content creation.
• Settling supplier invoices: Especially for businesses in manufacturing or retail.
• Paying for SaaS tools or subscriptions: Cloud software, ad platforms, or international hosting.
• Expanding to new markets: Investing in overseas partners or logistics.

These cross-border needs are growing, but the cost of traditional transfers remains a major barrier to efficiency and profitability.

Smart Strategies to Reduce Transfer Costs

1. Use Specialized Money Transfer Services

Traditional banks aren’t your only option. Specialized money transfer platforms like Wise (formerly TransferWise), WorldRemit, Yogupay, and Remitly often offer significantly lower fees and better exchange rates than banks. These platforms use real mid-market exchange rates and charge transparent, upfront fees.

Recent comparisons show that for sending money to Kenya, the cheapest providers can save you up to $27 compared to more expensive options for the same transfer amount. Wise typically charges fees of 0.5-1% compared to the 3-5% markup banks apply. With platforms like Wise, 64% of transfers arrive in under 20 seconds, and 95% in less than a day, far faster than traditional banking channels that can take 2-5 days.

2. Consider Multi-Currency Business Accounts

Services like Payoneer and Wise Business allow you to hold multiple currencies in one account. This is particularly useful if you regularly transact in US dollars, Euros, or British pounds. You can receive payments directly in foreign currency and only convert when the rates are favorable, avoiding constant conversion fees.

Multi-currency accounts also solve a common problem: when international clients pay you, they can use local payment methods in their country, reducing friction in the payment process while you receive funds at competitive rates.

3. Leverage M-Pesa and Mobile Money Integration

For smaller amounts and regional transfers within Africa, explore services that integrate with M-Pesa. Some platforms allow you to send money internationally starting from your M-Pesa wallet, often with lower fees than traditional banking channels.

Kenya’s M-Pesa, launched in 2007, has become a blueprint for mobile money success across East Africa. Countries like Kenya, Uganda, Tanzania, and Rwanda have established bilateral integrations enabling users to send money across borders directly from mobile wallets. While still evolving, these regional mobile money corridors can offer cost-effective alternatives for intra-African business transactions.

4. Negotiate Better Rates with Your Bank

If you’re making regular high-value transfers, don’t accept standard rates. Schedule a meeting with your bank’s business banking team and negotiate preferential rates based on your transfer volume. Many businesses don’t realize this is an option.

For businesses moving significant amounts monthly, establishing a relationship with a dedicated forex dealer at your bank can result in better exchange rates and reduced fees. Document your transfer history and use it as leverage in negotiations.

5. Time Your Transfers Strategically

Exchange rates fluctuate constantly. If you have flexibility in timing, monitor rates and transfer when they’re most favorable. Set up rate alerts through apps or platforms to notify you when your target rate is reached.

Given the currency volatility experienced in 2024, where currencies faced significant fluctuations, having a strategic approach to timing can save considerable amounts. Consider forward contracts through your provider, which lock in rates for future transfers and protect against unfavorable movements.

6. Batch Your Payments

Instead of making multiple small transfers, consider batching payments together. Many platforms offer volume discounts, and you’ll pay fewer fixed fees by consolidating transactions.

For example, if you’re paying multiple freelancers or suppliers, coordinate payment dates so you can process them in a single batch. This not only saves on per-transaction fees but also simplifies your accounting and reconciliation processes.

7. Explore Regional Payment Initiatives

The Pan-African Payment and Settlement System (PAPSS) is working to reduce costs and streamline transactions, enabling real-time payments in local currencies. While still being rolled out, PAPSS aims to eliminate the need for African payments to route through overseas correspondent banks.

The African Continental Free Trade Area (AfCFTA) is also working to harmonize trade regulations and lower transaction costs. The East African Community has validated a Cross-Border Payment System Masterplan with twenty targeted initiatives to address fragmented regulations, high transaction costs, and limited interoperability. Staying informed about these developments can help you identify new, more cost-effective payment corridors as they become available.

Practical Solutions for Common Business Scenarios

1. Paying International Suppliers

For regular supplier payments, establish a payment schedule and explore options like forward contracts, which lock in exchange rates for future transfers. This protects you from unfavorable rate movements and helps with budgeting.

Consider also discussing payment terms with your suppliers. Some may accept payment in Kenyan Shillings if you absorb the conversion fee, which you can then shop around for at better rates. Others might offer discounts for early payment, which could offset transfer costs.

2. Receiving International Payments

Make it easy and cost-effective for clients to pay you. Consider setting up accounts with platforms like PayPal Business or Payoneer that offer local receiving accounts in major markets. Your clients can pay locally while you receive funds in Kenya at competitive rates.

Some Kenyan businesses also invoice in multiple currencies, giving clients the flexibility to pay in their preferred currency while you convert at optimal times. This approach requires careful tracking but can result in significant savings.

3. Paying Remote Workers or Freelancers

If you employ international freelancers, use platforms designed for this purpose like Deel, Remote, or Payoneer. These services often provide better rates than traditional transfers and handle compliance issues automatically.

Many of these platforms also offer features like automated invoicing, contract management, and tax documentation, which add value beyond just the payment processing. The time saved on administration can justify any marginal cost differences.

4. Managing Currency Risk

Many SMEs don’t qualify for corporate banking solutions and are forced to use retail platforms that lack tools for FX risk hedging, cash flow forecasting, and bulk payment automation. However, some specialized platforms are now offering these business-focused features to SMEs.

Look for providers that offer:

• Rate alerts and notifications
• Historical rate analysis tools
• Forward contracts for locking in rates
• Multi-currency wallets to hold funds in various currencies
• API integration for automated payment processing

 Smarter Alternatives to Reduce Costs

Thankfully, technology is transforming how Kenyan businesses move money globally. Here are proven alternatives to traditional bank transfers that can save you both time and money:

a. Use Cross-Border Payment Platforms

Modern fintech platforms like Yogupay, Wise, and Payoneer allow businesses to transfer funds internationally at a fraction of the cost of banks.

Benefits include:

• Lower fees: Transparent and predictable costs.
• Better exchange rates: Close to the real mid-market rate.
• Faster transfers: Payments settle within hours or the same day.
• Easy tracking: Digital dashboards and real-time updates.

For example, Yogupay helps Kenyan importers send funds to Chinese suppliers efficiently, cutting transfer costs by up to 70% compared to traditional channels.

b. Explore Stablecoin or Crypto-Based Transfers

Stablecoins such as USDT (Tether) or USDC (USD Coin) are digital currencies pegged to the US dollar, offering fast, borderless, and low-cost transfers.

Advantages for African businesses:

• Instant settlement: Payments reach recipients within minutes.
• Low fees: No middlemen or correspondent banks.
• Stable value: Unlike volatile cryptocurrencies, stablecoins mirror the USD.
• Global reach: Ideal for suppliers in China, the UAE, or Turkey who already accept stablecoin payments.

For example, a Nairobi-based importer can send $10,000 in USDT to a Chinese supplier and save up to $200–$300 compared to bank transfers while completing the transaction instantly.

c. Open Multi-Currency Business Accounts

If your business frequently deals with multiple currencies, a multi-currency account helps you hold and pay in USD, EUR, or GBP without constant conversions.

Benefits:

• Avoid repeated FX costs.
• Simplify supplier payments in foreign currencies.
• Protect against exchange rate volatility.

Some fintechs, including Yogupay, offer USD wallet options tailored for African SMEs.

d. Consolidate or Schedule Payments

Instead of sending small amounts multiple times a week, batch your payments to save on per-transaction fees.
You can also schedule transfers when exchange rates are favorable or automate recurring payments to avoid penalties or missed deadlines.

Red Flags to Watch Out For

Be wary of services that advertise “zero fees” but don’t show their exchange rate clearly; the markup is likely hidden in the rate. Always compare the rate offered against the mid-market rate (check Google or XE.com for reference).

Avoid services that aren’t properly regulated. In Kenya, look for providers licensed by the Central Bank of Kenya or international regulators in their home countries. Check for proper registration and verify their credentials before transferring significant amounts.

Be cautious of rates that seem too good to be true, especially from informal brokers or peer-to-peer arrangements. While these may offer lower fees, they often lack regulatory oversight, dispute resolution mechanisms, or recourse if something goes wrong.

Only about 55.6% of cross-border payment services are fully transparent with cost and speed information, so always request a complete breakdown of all fees before committing to a transfer.

Making the Switch

Transitioning to a more cost-effective transfer method doesn’t have to be complicated. Start by tracking what you currently pay in fees for a month. Calculate the total cost, including exchange rate markups, not just the stated fees, to understand your true expenses.

Then test one or two alternative services with smaller amounts to compare costs and experience. Most modern platforms have straightforward onboarding processes that can be completed in a day or two, often requiring just your business registration documents and ID.

Start small: transfer a nominal amount through a new platform to verify the process works smoothly before migrating larger transactions. Keep your existing banking relationship as a backup while you build confidence with new providers.

Many platforms offer business accounts with enhanced features like:

• Batch payment processing
• API integration with your accounting software
• Multiple user access with different permission levels
• Detailed transaction reporting and analytics
• Dedicated customer support

Looking to the Future

The cross-border payments landscape is evolving rapidly. Some providers are leveraging AI to predict FX rates more accurately and process transactions in real-time with transparent costs. Blockchain technology and stablecoins are being integrated into payment systems to speed up transfers and reduce costs further.

Tokenization of trade documents like invoices and bills of lading could revolutionize trade finance for SMEs, enabling faster funding and reducing fraud. Kenya is leading some of these efforts in Africa, with initiatives to tokenize securities and expand capital market participation.

Stay informed about developments like the Pan-African Payment and Settlement System, which is gradually onboarding more countries. As these systems mature, they promise to make regional African trade as seamless as domestic transactions.

How Yogupay Helps Kenyan Businesses Save on Cross-Border Transfers

Yogupay is built to simplify cross-border payments for African businesses, especially those dealing with suppliers or partners in Asia.

Here’s what makes it stand out:

• Fast Transfers: Payments to China and other markets settle in minutes.
• Transparent Pricing: No hidden or intermediary bank fees.
• Competitive FX Rates: Close to mid-market, maximizing your value.
• Dual Payment Options: Send via fiat or stablecoins (USDT, USDC).
• Business Wallets: Hold and manage multiple currencies securely.
• Tailored for SMEs: Ideal for importers, freelancers, and global entrepreneurs.

Example: A Kenyan electronics trader uses Yogupay to pay a supplier in Guangzhou in USDT. Instead of waiting three days and paying $250 in fees via bank transfer, the funds arrive instantly with less than $20 in total cost.

That’s the kind of efficiency modern businesses need to stay competitive.

Conclusion

Reducing international transfer fees isn’t about finding loopholes; it’s about choosing the right tools for your business needs. By combining smart platforms, strategic timing, and volume negotiations, many Kenyan businesses have cut their transfer costs by 50% or more.

Every shilling you save on transfer fees is a shilling that can be reinvested in growing your business. In today’s competitive market, those savings can make a real difference to your bottom line. For many SMEs, the difference between 6% transfer costs and 1% transfer costs is the difference between profit and loss on international contracts.

The barriers to international trade for African SMEs are real, but they’re not insurmountable. With the right knowledge and tools, your Kenyan business can compete on the global stage without hemorrhaging money to unnecessary fees.

High fees shouldn’t be the price you pay for doing business internationally. By switching to smarter, fintech-driven payment solutions, Kenyan businesses can save money, move faster, and scale globally.

Whether you’re paying a supplier in China, a freelancer in India, or a partner in Dubai, choosing the right payment method makes all the difference.

The landscape of cross-border payments is constantly evolving. Stay informed about new options, compare rates regularly, and don’t hesitate to switch providers if better alternatives emerge. Your business’s financial efficiency depends on it.

Ready to start saving on international business payments?
Send funds abroad with Yogupay, the affordable, fast, and transparent way for Kenyan businesses to go global.

Visit www.yogupay.com to get started today.