What are the different ways to transfer money abroad?
When transferring money either within the same country or across borders, there are several options available to you. Here’s a quick summary of some of the most popular.
Bank transfer
Banks are the most well known and historic presences in the money transfer space, having been around from as early as the 15th century. Through worldwide banking networks, users can transfer money within the same bank, or to other banks locally and internationally, with the knowledge that their money will reach its destination safely and securely. Here are the most common types of bank transfers:
ACH transfers: Here, transfers are pushed or pulled electronically from one bank account to another through the Automated Clearing House network. These transfers are either free or may cost up to $3 and can generally only be used for domestic transfers.
Wire transfers: Users can transfer funds from one bank to another either domestically or across borders using wire transfers. Wire transfers can cost upwards of $25 and in the case of international funds transfers, and deliveries can take up to 3 working days.
Money transfer companies
Companies such as Wise, Ria, WorldRemit and OFX have come up in recent years to help individuals and businesses to send money to designated beneficiaries. Some of the companies such as Zelle and Venmo have specialised in domestic transfers while others are exclusively targeting cross border transfers. You can use our top 10 list of money transfer companies - which is updated regularly - to find the best provider for your needs.
These transfer platforms can be accessed online, and many are also available in-branch and on mobile applications. Users can initiate and pay for their transfers using debit cards, credit cards, bank accounts or even cash deposits in the case of MoneyGram, Western Union, and Ria.
Depending on the transfer company, beneficiaries can receive their money through their respective bank accounts, at cash pickup locations, through their mobile wallets or as direct deposits in their cards. Service providers may charge either a service fee or an exchange rate margin or both – but these fees and margins tend to be considerably lower than when making a money transfer with a bank.
Mobile apps
Mobile money applications can be integrated as an extension of either of money transfer companies’ platforms or banks or can also be designed as standalone money transfer solutions. Applications such as M-Pesa in Kenya, bKash and Rocket in Bangladesh, and Paga in Nigeria are some of popular mobile money transfer solutions.
In addition to facilitating local mobile to bank and mobile to mobile transfers, these apps have also linked up with internal money transfer services to facilitate cross border transfers. For instance, Paga has a partnership with WorldRemit, M-Pesa with Western Union, and bKash with Wise.
Cash
Cash is still king in many contexts. However, its prominence is slowly fading with more people preferring electronic money transfers. Cash transfers can be sent through the mail, though this method is highly discouraged for safety reasons.
Service providers such as Xpress Money, Ria, Western Union, MoneyGram and UAE Exchange allow customers to deposit cash at their branches and partner locations for onward transfer to their recipients, offering a safer way to send money as a cash payment. Normally, transfers take minutes and recipients can collect the funds sent at designated cash pickup locations.
International money orders
Moving funds through international money orders is one of the oldest money transfer methods. Users can purchase money orders from post office locations, along with other select financial institutions. In the United States, the US Postal Service sells money orders of up to $700 per order.
Not every country accepts the cashing of international money orders. For instance, the US-originated international money orders are accepted in only 26 countries and territories around the world. Users can pay for money orders using cash, debit cards or traveller’s checks. The money orders are then mailed to the recipients who can cash them at any authorised post office location.
Customers can also send domestic money orders within the US up to a maximum value of $1,000.
Specialised Provider
With a specialised provider, an international money transfer works by having the sender provide their personal details to the agent either online or in person. They will verify the sender’s details and take details from the recipient such as full name, location, amount being sent. Depending on the provider, it can accept credit cards, debit cards and bank transfers as payment. The sender can also use cash when making the payment at an agent location. Some specialised providers offer instant transfer services, whilst some could take a few days.
There are typically two options when sending an international money transfer:
Forward contract
A forward contract is an agreement between two parties to exchange two currencies at a determined date in the future. These contracts protect buyers against fluctuations in currency prices. To cancel a contract, both parties must agree to the termination. In general, forward exchange rates for currency pairs are held for up to 12 months. However, some of the pairs of currencies are referred to as the “major pairs”, which can exchange rates for up to 10 years. These include:
Euros and the U.S dollar
The Japanese yen and the U.S dollar
The British pound sterling and the U.S. dollar
The Swiss franc and the U.S. Dollar
Several providers also offer contracts for as short as a few days. It is also important to mention that there is a £30,000 minimum for forward contracts.To learn more about the contracts, check out our in-depth forward contracts guide.
Spot contract
When making an international money transfer, the spot contract is the most common type of contract. They are ideal for businesses and individuals who need to make a quick overseas payment. You are given the exchange rate available at the time of the transfer and funds are delivered on the same day.
In the United Kingdom and Europe, the Financial Conduct Authority (FCA), regulates online providers. They can not operate without being licensed as Electronic Money Institutions. A licensed practitioner is subject to European rules that protect payment service users.