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Currency transfers explained
Currency transfer is the process of exchanging currencies for transfer purposes. Currencies are usually exchanged at an agreed rate of exchange for the currencies involved.
You are studying overseas in Europe and your student fees for the term amount to €8,500.
You would like to pay for this amount using money in your bank account at home in the United States.
You conduct research and find the live interbank rate (also known as the mid-market rate) reflects an exchange rate of 1 EUR = 1.18241 USD.
This means EUR 8,500 will cost approximately $10,050.47.
Due to the excessive transfer fees charged by your bank, you decide to use the MoneyTransfers comparison tool to find the international money transfer provider offering you the most for your money.
Once you find the provider offering the most favorable exchange rate, you arrange an international money transfer that grants the recipient an amount closest to the live interbank rate.
You successfully send $10,050 from America, where it is received in Europe in the form of €8,500.
Currency transfer vs. money transfer: key difference
Both of these terms allude to the same process: sending money from one place to another.
However, a currency transfer refers to changing, or converting, the currency of the money involved. For example: Sending money from USD to Euros in Spain, as seen in the above example.
Conversely, a money transfer is a broader term given to a variety of different transactions.
The following are all examples of a money transfer:
Receiving funds from overseas, deposited into a multi-currency account
This is a type of international money transfer.
Splitting a bill between friends using a P2P apps
This is another form of a domestic money transfer.
"Money transfers" is an umbrella term that encompasses a diverse range of payments.
Top money transfer guides
Currency transfer costs
You can always do some research and find out the cheapest way to send money abroad but the cost of transferring currency between countries greatly varies.
The two main costs include:
Exchange rates
The most common way for companies to make money through their exchange rates is by adding a percentage-based markup (this varies between 0.1% - 6%) which can drastically affect the amount of money your recipient receives.
Transfer fees
Sometimes both the sending and receiving banks (or financial institutions) will charge a transfer fee.
It is important to understand the fee structure of any international money transfer before committing to a payment.
Like exchange rates, transfer fees vary, with some companies charging a flat fee, while others withhold a percentage of your transfer amount.
Transparency is key when it comes to international payments and we recommend using providers who are upfront about the costs.
The mid-market rate fluctuates constantly throughout the day, but some international money transfer providers such as RegencyFX allow customers to lock in a favorable exchange rate.
If you are given the option to do so, take advantage of this offer.
Certain providers only offer a rate for a limited period and if the money transfer is not completed within this time, the original exchange rate will expire.
Most common currency transfers
Below is a list of the top 6 most common currency transfer pairings:
Ready to send currencies abroad?
We recommend you compare currency brokers and money transfer companies before you send currencies abroad.
This way, you will find the cheapest and most suitable provider for your needs.
