International cheques have high bank deductions and exchange rate fees
The high cost is another downside of international bank cheque payment transactions. The deposit fees depend on the country of origin and destination, and the clearing method – by collection or negotiation. By negotiation, your beneficiaries’ bank will credit their account before they receive the funds, and by collection, the bank will only credit the beneficiary’s account after the money has been received from the issuing bank. Cheques cleared by negotiation are faster and cheaper than by collection, but if the cheque is returned unpaid, an extra fee will be charged, making the payment more costly.
For example, in Switzerland, if your beneficiary has a Credit Suisse account and deposits an international cheque, it’ll cost 20 Swiss Franc (EUR 18) in deposit fee and an extra 2.5% fee on the first CHF 1,000 (EUR 910) and 1% of the extra amount beyond that. If your beneficiaries receive a cheque for EUR 900, they’ll pay EUR 41 in fees, plus the foreign exchange rate commission. The foreign exchange rate can be rather unfavourable for your customers as foreign banks crediting the cheque typically make a profit on the margin by offering a much worse exchange rate than in the open market. Considering all these charges, the final payment to your customers will be substantially reduced.