All, I am looking for your experiences to find the best bank to work with regarding international payments.

I am a USA-based business and have recently noticed that PNC Bank likes to take a nice chunk from my international check payments (for merchants not offering wire transfers). Now I understand fees are one way a bank makes money and all check processing fees for international payments are stated clearly under our deposit agreement. At PNC the fees per check are
  • $25 collection fee
  • $6 International Deposited Item

... while this is the stated fee per check I have come to find it is actually a little higher when the partner bank's international fee is also added. Basically my fees are $37.77/check. But wait, that is not all they take!

The best money making scheme PNC performs, and from what my brief research shows most banks also do, is also charging a ridiculous currency exchange rate. This is what I mean...

I recently had $2,500 in Canadian Dollars to deposit (2 checks), but noticed my estimates on collection were way off. Making a long story short, I have revealed that PNC takes the per check fees + 5% of the total deposit. So in that $2500 CAD total deposit, I lost a total of $180 ($75 in stated per check fees + $105 in undervalued currency exchange rates). They used a currency exchange rate that was so undervalued it hasn't officially been that low since 2009! They used 1.17CAD/USD when the lowest rate during the month it took to process the checks was 1.12CAD/USD. Doesn't seem like much, but it all adds up.

Quite a few years back, I used to use a foreign currency exchange processor out of Beverly Hills, and their fees were only a flat $10 per check... plain and simple. Since that time, they have stopped doing foreign check collections so the only way I know is to use a bank... and mine is clearly charging a ton to do the processing.

I am looking for other banks where the fees on foreign check collection are not so great. Based on your own experiences, can anyone provide a more affordable route in which to process foreign currency checks? It can be another bank with better rates or any other advice.

I don't mind paying the stated collection fees, BUT taking 5% of my earnings on top of the fees seems way over the top. I basically lost 7% total.

To figure out what you are truly paying for when it comes to foreign check processing... Either call the bank and ask (prepare to be on the phone a while as bank CSRs don't know either and because it is all hidden), or figure it out yourself. The following steps will help you to figure it out yourself (unless you know all the fees first this is hard to do):

1. Find an Estimated Exchange Rate. Use XE.com to find the least valuable USD/foreign currency rate from the date from when you made the foreign check deposit till the date the check cleared and monies entered your account. In my case, it ranged from 1.09/USD to 1.12/USD so I used 1.12CAD/USD.
2. Estimated Return = ((Check Amount / Estimated Exchange Rate) - Per Check Processing Fees)
3. % Bank Takes = ((Estimated Return - Actual Returned) / Estimated Return)