International Money Transfer Comparison

An international money transfer involves transferring money from one country to another. The amount of money the receiver receives will depend on the exchange rate at the time of sending the funds.

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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.

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.

Whether you are using the banking network, money transfer companies, mobile apps, or international money orders, money transfers come at a cost. Compared to domestic transfers, international transfers incur more fees because of the intricacies involved such as currency conversion.

Secondly, the type of money transfer service you choose, and the destination will also determine how much you pay. Here are the costs to expect when moving money.

Transfer fees

Sending money whether locally or internationally involves certain costs such as administration costs, network partner fees, payment fees, and other charges. Service providers build these costs into their transfer fees. For instance, Venmo charges 3% to send money locally using a credit card. Barclays charges a £25 fee per transfer when sending money within Europe by telephone banking or through the branch.

Wise’s fees depend on the currency pair and amount being sent. Sending £1,000 to France in Euros will cost you £3.95 in fees while sending the same amount to the United States in US dollars will cost you £4.44. Other money transfer companies have their fees structured in such a way as to include a fixed component and a variable component.

For money orders, the charges vary based on the amount sent and the destination. International money orders from the United States cost $10.25 per order. On the other hand, local money orders between $0.01 – $500.00 in value cost $1.25 while orders ranging from $500.01 to $1,000.00 cost $1.75.

Exchange rate margins

International transfers involve currency conversions, and so making sure this conversion is processed at a favourable rate is key to getting the best deal. Banks and most money transfer companies often charge a margin above the mid-market rate to cater for the conversion charges. This means that the rate you get is worse off than the prevailing interbank rate in the currency market; the markup they add is the exchange rate fee and is often referred to as the hidden cost.

For instance, NatWest charges a margin of 3.98% above mid-market when transferring money from the UK to the US. For large transfers, exchange rate fees can quickly add up. Money transfer companies like Wise process all transfers at the mid-market rates, and other money transfer companies will commonly charge exchange rate margins in the region of 1%.

Other fees

Apart from the two main types of fees above, you also need to be careful about other nominal fees your transfer may attract. Customers who pay for their transfers using credit cards may attract a cash advance fee or about 5%. Beneficiaries may be charged an inward SWIFT fee, landing fees, bank processing and intermediary fees deducted from the amount received. The extra charges applied will vary from transfer to transfer, so make sure to research the method you’re using before sending your money.

Some of the top benefits of online money transfers include:

• Highly regulated: Online money transfer companies are highly regulated in the jurisdictions they operate in. Organisations such as the Financial Conduct Authority (UK), the Financial Crimes Enforcement Network (US), and Australian Transaction Reports and Analysis Centre (Australia), ensure that money service businesses follow the stipulated guidelines

• Safe to transact: Money transfer services are required to have valid SSL certificates to ensure customers information is always protected. Those that accept card payments are required to implement the Payment Card Industry Data Security Standards (PCI/DSS) to guarantee safe card transactions.

• Competitive exchange rates: Online money transfer companies offer better exchange rates compared to high street banks. This means you are left with more money in your pocket to spend. On average, these services charge a margin of around 1% above the mid-market rate, but the exact level will depend on the transfer you’re making.

• Lower transfer fees: Because of lower overheads, online money transfer services offer lower transfer fees than other players in the market. Banks may charge up to $40 per transfer while money transfer companies charge only a fraction of that for the same transfer.

• Speed of transfer: Transfers can take anywhere from minutes to 3 days to be delivered. Cash pickups and mobile wallet deposits are delivered almost instantly. Bank transfers may delay a little bit depending on the intermediaries involved and the destination.

Some of the top drawbacks of online money transfers include:

• Disbursement coverage: Online transfer services such as Azimo cover a total of 189 countries while others like Aussie Forex cover only 10 countries. Customers need to check the countries supported by a provider before making transfers.

• Availability: Online money transfer platforms rely on the availability of the internet. While internet penetration has greatly improved, users from countries such as Belarus, Myanmar, Cuba, Iran, and North Korea, and remote areas may have difficulties accessing the online and mobile platforms because of internet restrictions and inadequate coverage.

• Exposure to cyber risk: Even with the intensified security measures in place, cyber threats are still on the rise with online-based information systems being the prime targets. Users need to be extra careful when transacting to ensure their exposure is limited.

Despite the growing concern about hacking and information system compromise, online money transfer services are generally safe. They have invested in technologies that enhance the safety of their platforms and those of their customers.

Some of the technologies include end-to-end SSL encryption, adoption of Payment Card Industry Data Security Standards for user safety, and third-party proprietary security layers such as Norton Seal, Visa Secure, and Mastercard SecureCode.

Also, the high-level industry regulations requiring in part that customer funds be held in segregated accounts, give customers confidence when transacting.

Yes, some money transfer providers have minimum and maximum limits you can send. Others only have a minimum with no expressly pronounced maximum. For example, VFX Financial has a minimum transfer of £500 with no stated maximum while WorldRemit allows a maximum of up to $5,000 when sending to Nigeria.

At times, limits are based on the transfer payout options. Direct-to-bank deposits tend to support higher amounts compared to cash pickup or mobile wallet deposits.

There are several factors that affect an international money transfer and they are all determined by the exchange rate. The exchange rate is defined as the conversion rates between the two countries. The supply and demand for currencies will cause daily fluctuations which means that you can not determine how much money the recipient will receive until you are about to make the transaction. For this reason, it’s important to understand the economic conditions that determine exchange rates.

• Currencies: Depending on what currency you’re using and exchanging it into, the amount you could get will also change depending on each currency’s value going up and down.

• Send Amount: The amount you send to another person in a different country could affect how much you pay. Simply because of some providers giving you a better exchange rate or lower fees when you send a certain amount.

• Banks/Operators/Countries: There are usually fees in place by banks and firms, which tends to vary depending on the country and operator.

• Interest Rates: When interest rates are high, lenders are given higher rates which attracts more foreign capital, and this boosts exchange rates. Interest rates, inflation and Forex rates are all interrelated and have an accumulated effect on foreign currency.

• Inflation: Inflation can have an effect on foreign currency exchange rates. Currencies depreciate when inflation rates are high and when they are low, the currency’s value increases. When inflation is low, the prices of goods and services rises at a slower rate

• Speculation: If it has been predicted that a country’s currency will increase, investors will seek to make a quick profit by placing a demand on that currency. As a result, the exchange rate for the currency will increase.

• A Country’s Balance of Payments/Currency Account: A country’s current account reflects earnings and balance of trade on foreign investment. It is made up of the total number of a country’s transactions including its debt, imports, exports etc. When a country spends more on imports than it earns profits from exports, the currency account goes into deficit which causes depreciation. Balance of payments leads to fluctuations in exchange rates.

• Terms of Trade: Terms of trade is the ratio between import and export prices, and it is related to the balance of payments and current accounts and will improve if its export prices rise at a higher rate than its import prices. This leads to higher revenue which increases the country’s currency value causing a higher demand for the currency, and as a result, exchange rates appreciate.

• Political Performance and Stability: A country’s economic performance and political state affect the strength of its currency. When there is less risk of political turmoil in a country, it attracts more foreign investment. When there is more foreign capital in a country, the value of the domestic currency increases.

• Government Debt: Government debt can influence the Forex currency exchange rate. Foreign investors protect themselves against governments defaulting on debt by selling their bonds on the open market. The value of the exchange rate will fall as a consequence.

• Recession: Interest rates fall when a country is going through a recession. A recession reduces the chances of acquiring foreign capital, as a result, the currency of that country weakens which lowers the exchange rate.

No. MoneyTransfers.com is a comparison website aiming to match you with the best money transfer providers for your needs when transferring money online.

The honest answer; you can. But traditional banks aren’t set up very well to handle international payments and money transfers. This is why many other service providers exist, who are specialists in transferring money abroad. Money transfer companies are designed to provide cheaper ways to send money abroad, whereas, banks take much longer, cost a lot more and are generally more complex to use. This is why we always recommend using a specific money transfer provider to send your money abroad.

There are many ways to do this, but the best option really depends on your specific needs. Are you looking to transfer quickly? Or do you care mainly about how much of your hard earned cash actually ends up being sent over to its destination. We compare money transfer providers for your specific needs, to make sure you can send money abroad as efficiently as possible, all whilst saving you money.

The process will largely depend on the provider you use, however, the process typically involves the following steps:

• You will need to sign up with the chosen provider (use our comparison tools to find the best service for your needs)

• Then you will need to deposit the amount you want to send and the fees associated with it.

• The provider will transfer your funds in the right currency directly to the recipient without any intermediaries.

• You can deposit your money with a bank card online or you can make a transaction inside the store.

This process usually takes 1-2 days for the recipient to receive their money, but some providers can send money instantly.

Finding the best exchange rate is crucial to maximising the money received on the other end. Usually, you will receive better exchange rates with money transfer provider compared to a traditional bank. Here’s are a few tips to find the best exchange rate online:

• Start looking early: Various providers will offer different exchange rates on different days, start looking as early as you can to identify the best provider for your currency pair.

• Pay attention to the current exchange rate: Staying up to date with the current exchange rate will give you the advantage to buy and sell on time. Currencies fluctuate daily due to supply and demand, so checking it frequently is advised to get the best rate possible. Alternatively, you can sign up with our price alerts to know when your currency reaches the desired price.

• Avoid using your bank: Banks are trustworthy, reliable and convenient, but they do not provide value for money. They charge high fees and usually have higher costs compared to the money transfer provider. Some money transfer companies will even provide a mid-market rate.

Yes. We’re a team of money transfer experts working tirelessly comparing providers to find you the right provider for your transfer needs. Find out more about us here