When sending money to business associates, shops, family, or friends abroad, there are lots of options you can choose from to facilitate your transfer. Traditionally, banks have been the go-to choice for transferring money between people thanks to their well-known brands and international networks, but banks now have competition from a host of online money transfer providers that are often able to offer cheaper ways of sending money abroad and offer better exchange rates.
These companies can transfer money online to recipients in different parts of the world within minutes, hours, or a couple of days (depending on factors including the payment method you choose). They are particularly useful when sending money in emergencies or to remote areas where people have no access to formal banking services – but they can be used in any scenario and are most often the best option when transferring money overseas.
To answer this, it’s helpful to imagine some specific scenarios and see how the amount of money you pay changes depending on the service you choose. There are several things that you need to consider when looking for the best way to send money abroad, such as:
For this, let’s assume you want to send money to Australia from the the United States. Depending on the bank or online money transfer provider you choose, you’ll find a range of fees being charged to transfer money overseas. Online providers tend to come in cheaper than banks. For example, WorldRemit will charge you a flat fee of $3.99 to send any amount to Australia from the United States, whereas XE charges zero fees, and TransferWise charges a variable percentage fee depending on the size of your transfer. For instance, sending $1000 to Australia using TransferWise will cost you $9.03 in fees while $1500 will cost you $13.
When looking at the fees charged by banks, it’s common to find the rates varying depending on the currency in which the transfer is processed. For instance, a transfer of $1000 from Chase Bank to the Commonwealth Bank of Australia will cost $5 if it is processed in Australian dollars, but $40 if sent in USD. On top of this, the Commonwealth Bank of Australia will charge the recipient 11 Australian dollars to collect the funds. These fees are in addition to correspondent and intermediary fees where applicable.
This component of transfer cost is often referred to as the hidden cost. It doesn’t show upfront, unlike the transfer fee, but can add up to be more expensive than upfront fees, particularly when transferring large amounts..To put this into perspective, consider a scenario where you are sending £2000 from the UK to the US.
Online providers such as TransferWise will process your transfer at the mid-market rate. This is the same rate as that is displayed on Google and Reuters. However, other companies like WorldRemit, InstaReM, and XE will offer you an exchange rate that is a small percentage higher than this rate. The difference between the two rates is called the exchange rate margin, and the amount charged may differ from one currency pair to another. For instance, WorldRemit charges a GBP/USD margin of 1.29% and InstaReM charges 0.16%. This means that for your £2000 transfer to the US, WorldRemit will charge £25.8 while InstaReM will cost £3.2 more than any stated fees.
However, both these rates compare very favourably when we look at how much it costs to make similar transfers using banks. Lloyds bank states on its website that its exchange rate margin is 3.55% for transfers of between 0 and £25,000, whereas Barclays UK charges a margin of 2.75%, and HSBC’s margin is about 3.6%.Again returning to the £2,000 transfer, on top of the fees charged by each banks you’ll be losing £70, £55, and £72 in exchange rate markups with Lloyds, Barclays, and HSBC respectively.
The first thing you need to ensure is that your chosen provider can support the transfer you want to make – both in terms of facilitating transactions between the countries you’re sending from and to, and supporting the relevant currencies.
Money transfer providers allow their customers to send funds only from specified countries and currencies to their recipients in designated markets. Normally, a provider would make public its sending and disbursing network coverage, but this is not always the case. However, you can find out from the provider’s customer support team, FAQs section or by trying out a transfer if your sending and receiving countries are supported on the platform.
Whether you are making a small or a large transfer, nothing beats good customer support. It is not unheard of to experience technical issues such as transfer delays, unexpected fees and transfer payment challenges, and so choosing a service where you can quickly get any questions answered is essential.
Some providers have online support teams available through live chat services, others can be reached through email and telephone 24/7 or during specific times. Ensure that you always have your transaction reference details for prompt assistance.
A majority of money transfer service providers have free, downloadable mobile applications that allow their customers to transact on the go. However, some only work through online platforms or have their apps restricted to certain markets.
Having access to money transfer services on mobile means convenience and speed when transferring funds. You will also find that some companies such as Ria, Western Union, and MoneyGram support both online and brick and mortar transfers. Depending on where you are sending your funds to, you may be able to begin your process online and complete it at a physical shop.
For you to send money through any online money transfer provider, you first have to open an account. The procedures for setting up an account, including the information required, vary from one provider to another. Some will ask you to provide proof of your identity and address before completing the process. Others will allow you to send a limited amount of funds and only lift the limits when proper verification has been done.
How you pay for your transfer is also an important factor to look at when choosing the best way to send money abroad. Most providers allow for bank transfers, ACH, and credit/debit card payments. There are also country specific payment methods including Google Pay, Apple Pay, and POLi that you can use depending on where you are making your transfer from.
Much like with payment options, providers also have various payout options including direct-to-bank deposits, mobile transfers, and cash pickups. When sending money to recipients without access to formal banking services or when transferring small amounts cash pickups and mobile deposits are most preferred, but be sure to ensure your chosen provider offers both the payment and collection methods you require.
The answer to this question will change depending on the countries involved, and the easiest way to find out the service that works best for you is to use our comparison tool. The ideal approach to find the best way to transfer money is always to choose the provider with the lowest overall transfer cost. However, this may not be straight forward to see at first glance, hence why we help you compare the different providers. We’ve also compiled a list of top 10 money transfer companies to help you make the best decision.
To give you an indication of how the nature of your transfer can alter which provider is best to use, the following brief country-specific analysis will give you an insight on who to choose when sending money to the following countries.
When sending money to the United States, you have a variety of options so you’ll be able to prioritise a number of factors such as speed of transfer, safety, and affordability. One of the most frequent transfer pairings is from the United Kingdom to the United States, so let’s have a look who gives the best value for transfers between these two countries.
To start with a high street bank, let’s take an example of a transfer of £1000 from the UK to the United States through Santander UK. You’ll pay a flat transfer fee of £25, and also a margin above mid-market exchange rate of about 3.9-4.10%. This means your £1000 transfer will cost you between £39 and £41. The receiving bank in the US may also charge your recipient about $15 – meaning the overall cost of the transfer will end up as over £50.
It’s easy to get a better deal by turning instead to online money transfer providers. For the same transfer as above, TransferWise will charge a £4.44 transfer fee and no exchange rate margin, WorldRemit would apply a fee of £2.99 and a further 1.05% exchange rate margin, and InstaReM will charge you £3.5 and a transfer margin of 0.16%. This adds up to overall charges of £4.44, £13.04, and £5.10 respectively.
From our analysis, it’s clear that sending through online money transfer platforms is the best way to save money when transferring from the UK to the US, and that for an amount of £1,000, TransferWise is the best option to transfer money. With other amounts it will be different though, so use our comparison tool to find out quickly which provider offers the best way to send money abroad as it will save you the most.
For Australia, let’s assume you are making a transfer of 1000 Australian dollars to the United States. Again starting with the rates a bank will charge, if you decide to use Westpac you’ll pay a transfer fee of A$10 If you use Westpac Live Online Banking, and A$32 for branch transfers. The margin Westpac adds on top of the mid-market rate is about 4.76%. For your A$1000, this margin translates to A$47.6, meaning the overall fees add up to between 57 and 80 Australian dollars – nearly 10% of the amount you’re transferring.
If you decide to use providers such as InstaReM, TransferWise, or WorldRemit for the same transfer, you’ll notice almost immediately the difference in exchange rates and transfers fees. Sending through TransferWise will cost you A$6.56 with no exchange rate margin charged. WorldRemit charges A$3.99 and a margin of just 0.52%. InstaReM charges A$3.50 in transfer fees. All this means that when using an online money transfer service to send money to the USA from Australia, the overall fees for a A$1000 transfer won’t go over A$10 which is clearly a better way to transfer money.
Finally, let’s look at the sort of fees and exchange rate margins you can expect when transferring money to the United Kingdom from abroad. As with the other examples above, it quickly becomes clear that the easiest way to find the best way to send money is by comparing different money transfer companies as you can save yourself a lot of money compared to standard bank transfers.
Take an example of a transfer of $1000 to the United Kingdom from the USA. If you were to choose a bank such as Bank of America, they will charge you a flat $35 if you are sending money in foreign currency and $45 if your transfer is in USD. On top of this, Bank of America applies an exchange rate margin of 3.4%, meaning the total fees and charges you pay on your $1000 transfer is around $70-80..
For the same transfer, WorldRemit will charge you a $2.99 fee and a margin of 2.78% on top of the mid-market rate. TransferWise is similarly cheaper, charging you a $9.04 fee and zero exchange rate margin – meaning they’re generally a better option if transferring a large amount of money. If you decide to use InstaReM, you’ll pay a fee of $5 and a margin of 0.48%. So the fees respectively you’ll pay on your $1000 transfer with WorldRemit, TransferWise, and InstaRem are $30.79, $9.04, and $9.80.
To find the best way to send money online and to know exactly how much your recipient will get when using the different providers and banks, you can use our comparison tool. Nothing beats the knowledge that the provider you are choosing for your next transfer is the fastest and the most affordable.
For the best experience when sending money to any country or even locally, you have to play by the rules set by each provider. Failure to abide fully by their requirements right may cause unnecessary delays or even transfer cancellations. Below are some of the best practices to follow when making your transfers.
When making large transfers (generally over $10,000), there are certain things you will have to watch out for. These include:
Bank and Provider Limits: Your bank may limit the value of the transfers you can make per day, per transaction, or per payment method such as online, phone, or at a branch. Whatever the case, you need to understand the limits very well to avoid bounced transfers. You should also check if there are any upper limits set by the provider.
Account Verification: Before you make a transfer, you will usually have to verify your account. Most providers prompt you to verify your account if it’s not already verified, but make sure you have done this in good time to avoid delays. Depending on provider policies, you may be asked for additional information on top of the proof of address and proof of identity documentation.
Fixed Exchange Rates: Large transfers, because of their size, can amplify even the smallest exchange rate differences into large savings or expenses. Getting the best rate and locking it for the duration of your transfer ensures you not only make savings but also know with certainty how much your recipient will get. This is extremely important when dealing with fixed payments such as rent, deposits, and mortgage repayments.
Paying for your transfer using a credit card ensures that funds reach the online service provider’s account faster for onward sending to the recipient. Despite this advantage, credit card payments are quite expensive compared to bank transfers and bank debits and involve a variety of things to watch out for, such as:
Credit Card Limits: This is the first aspect you need to check. Credit cards are assigned limits either as part of the issuer’s policy or upon your request as the customer. When finding large transfers, you need to check if your limits allow else you may be penalised for bounced payments.
Cardholder Details: Ensure the name that appears on the credit card matches that on the online money transfer account. Mismatches can result in card declines, delays and transfer cancellations. Providers won’t allow you to pay using a card that isn’t yours.
Use a Brand of Card that is Supported by your Provider: Some providers insist that credit cards should be either Mastercard, Visa or Maestro for them to be accepted. Others proceed to add more conditions requiring cards to be secured by Verified by Visa or SecureCode. It is important you check all this out before you begin your transfer.
If your provider allows for cash pickup as a payout option, you can use it for small transfers. For successful transfers you must meet the following requirements:
Recipient details: When making a transfer, ensure the recipient’s details are captured correctly. These usually include their name, national identity card number and address.
Transfer Code: The code for your transaction is normally sent to you and in some cases sent to the recipient. The recipient has to present the code to claim the funds, otherwise the transfer may be reversed if no proof is presented.
If paying for your transfer from a bank account, you’ll have to ensure that the details on your account match the information on your money transfer account. In case you are paying from a joint account, you must share proof that you are part of the account holders. This can be in the form of a bank statement that you scan and send to the provider.
Using services such as Venmo to transfer money locally requires that both you and recipient have local bank accounts and addresses. If you are in the United States, you may be asked to provide your Social Security Number (SSN), as extra proof of identity.
When sending money to different countries there are lots of things you need to consider if you are to get the best deal. Check whether the provider allows sending to your destination in the currency you would like your transfer to be processed in. If it is an emergency transfer, you should also look at the delivery times.
Through our research we have found that when transferring money overseas, the best way to send money online will almost always be an online money transfer service rather than an established bank. The variety of these services on offer helps keep their fees and exchange rate margins low, saving you money and ensuring the maximum amount of your transfer possible reaches your intended recipient.
But it’s not as simple as just using an online provider instead of a bank, depending on where you’re transferring money from/to, the currency pairing your transfer needs, and the amount you are sending, the total fees and charges will be different for each provider. It’s only by comparing your options that you can truly find the best way to transfer money overseas.
That’s where we come in. Our easy-to-use money transfer comparison tool can lay out your options clearly for you in seconds, so you can cut through the noise and quickly find your best money transfer option. Whether you’re sending £10 or £10,000, just type in the details of your planned transfer to compare your options and get a great deal.