When looking to send money abroad, there are a wide range of options open from which to choose. Banks have dominated the money transfer market for centuries, but in recent years there has been a flurry of new online money transfer providers keen to undercut the competition. These services often offer competitive exchange rates, lower fees, and shorter transfer delivery times than traditional bank transfers, so it’s a good idea to shop around for the best and the cheapest deal when sending money overseas.
Transfer cost is the first thing you should look at when planning to send money across borders. Almost every provider shows you upfront how much your transfer will cost you – either as a percentage of the amount you are sending or a flat fee. If you find the right provider, you could also find there’s no fee at all depending on where you’re sending money to and how you’re sending it.
The second bit of the transfer cost to consider is the exchange rate. Sites such as Google and Reuters display exchange rates known as mid-market rates to give you an indication of what the current conversion rates between currencies are. For any given currency pair, the mid-market rate is the midpoint between the buy and sell rates on the global foreign exchange markets. Money transfer companies tend to add a margin onto the mid-market rate in order to make money, and so the size of this margin between providers determines the competitiveness of the exchange rates they offer.
For instance, if the mid-market rate for Euros to GBP is €1 to £0.85, when you transfer €1000, you expect to get £850. However, your provider may give you £820 instead. This means the margin they charge is 3.5%. When choosing the cheapest and the best provider to make transfers abroad, you can maximise the amount your recipient will get by finding a provider that charges a low exchange margin. We’ve put together a list of top 10 money transfer providers to help you find the one that fits your needs.
These companies do not always make this an easy process, but that’s where we come in. In the common occurrence that the exchange rate margin being charged is not fully disclosed, our comparison tool will show you exactly the fees each provider charges and their respective exchange rate margins – enabling you to make the most cost-effective choice for transferring your money,
Sending money abroad differs in cost depending on the country you are sending to. If you are making a transfer to a country where online money transfers are common, you may end up paying lower fees. On the other hand, countries, where such transfers are less frequent, tend to attract higher transfer fees.
Unless you are making a transfer in an emergency situation, it is always good to plan in advance and put in some work comparing different providers. Just because a provider is the cheapest for one specific currency pair, does not mean this will be the case for all transfers. With proper research and cross-comparisons, you are likely to find some money transfer providers cheaper on some routes compared to others.
To get a feel of how cheap or expensive it is to send money to different countries, below is a brief look at the United States, the United Kingdom, and Australia.
Whether you are sending money to the US for business reasons, to pay for a holiday, or to support your family, your choice of provider will have an impact on the total cost of your transfer. One of your options, and before the internet came along pretty much your only option, is an international wire transfer to the recipient’s bank account. Such transfers can be done online, on phone or at a branch.
Assume you are sending money from HSBC UK to JPMorgan Chase Bank in the US. You will pay a £4 fee if you transfer online and £9 if you transfer at the branch or via phone. When the funds get to Chase Bank in the United States, your recipient will be charged a further $15 to receive the transfer. In addition, HSBC charges an exchange rate margin of 6.1%. When combined, these costs make your transfer expensive.
In order to avoid high fees such as these, you can opt to use online money transfer companies such as TransferWise, Azimo, WorldRemit, WorldFirst, Xoom, and TorFX. The advantage of online transfer providers over banks is that they offer attractive exchange rates and lower transfer fees, partly because money transfers are the core of their business, unlike banks which offer a variety of other services. The time these companies take to deliver a transfer is also often shorter – ranging from instant deliveries to 3 working days.
Take an example of a transfer of £1000 to the United States via TransferWise. You’ll incur a fee of £4.44 if you pay through online banking and the transfer will be processed at the mid-market rate. If you pay using a debit or credit card, you’ll be charged a fee of £7.42. There is no other added cost. Sending the same amount via WorldRemit will cost you £2.99 in fees and a further charge of 1.54% in exchange rate margin.
This means that each of these options works out cheaper than if using HSBC to make the transfer, as not only are the fees lower but the exchange rate margin charged is either much lower, or even nothing at all. You can use our comparison tables to find the right money transfer service for you and avoid the fees charged by big banks.
Australia receives about $2 billion dollars annually from other countries including over $400 million from the UK. Many Australians in the diaspora have their families, friends, and business interests back home to whom they send money regularly, so finding a cheap money transfer service is essential.
Again if we look at the options for transferring money to Australia from the US or the UK, banks work out as quite an expensive option. For instance, if you make a transfer from Barclays UK to Australia through telephone banking or at a branch, you’ll pay £25. If the transfer goes into a Westpac bank account, you’ll be charged another 12 Australian dollars to receive the payment. Depending on the arrangements, other overseas bank fees may be deducted as well.
Barclays UK charges an exchange rate margin of 2.75% – 3.9% depending on the size of the transfer, and other banks similarly charge high rates which push the cost of the transfers even higher above these initial fees. This should prompt you to look for cheaper alternatives to send your transfer, and there are lots of options in online money transfer providers with companies such as Orbit Remit, TransferWise, InstaReM, Ria, and WorldRemit frequently used to process transfers from various countries to Australia.
Assuming you are transferring $1000 from the US to Australia through InstaReM, you’ll be charged $5 as the transfer fee and an exchange rate margin of 0.67%. Making the same transfer on WorldRemit will cost you $3.99 in transfer fees and an exchange rate margin of 1.5%. TransferWise will charge you a $9.03 fee with zero exchange rate margin because their transfers are based on the mid-market rate.
So online providers work out cheaper in this case also, but as you can see the online money transfer providers have different fee schedules. For you to get the cheapest way to send money to Australia, you need to do a comparison based on the amount you want to send, your payment method and the country of origin – and our comparison tool can help you accomplish this in seconds.
Much of the money transferred into the United Kingdom comes from Australia and the United States. About 23% of all money transfers from Australia are made to the United Kingdom. As always, you can use a bank to make your transfers. However, it will again become clear that this may be costlier than other options available.
Let us look at a scenario where you are sending $1000 from the United States to the UK through an international wire transfer, using Citibank as the sending bank and NatWest as the receiving bank. Citibank will charge you $35 for the outbound international wire transfer. On receiving the transfer, NatWest will charge your recipient an additional £7.50. Added on top of this is Citibank’s exchange rate margin – about 2.9% on top of the mid-market rate.
Once again there are a host of alternatives in the forms of online money transfer providers such as SendFX, Hawk FX, XE Currency Exchange, TransferWise, and TorFx. The advantage with these providers is that they charge lower transfer fees and give you a much better exchange rate for your currency pair. This means the recipient gets more money than they would if you used a bank.
To illustrate this, let’s look at the amounts charged by TransferWise, WorldRemit, and InstaReM. It is important to note that there isn’t any preference for these providers only that they have money transfer widgets on their websites that make it easy to calculate the cost of transfers – our tool can easily help you compare these rates against the other available options.
Sending $1000 from the United States to the UK using InstaReM will cost you $5 in fees and an exchange rate margin of 0.29%. TransferWise charges $9.04 in fees with zero exchange rate margin. WorldRemit charges a fee of $2.99 and adds a margin of 2.65% on top of the mid-market exchange rate. Again, much cheaper than the banks and all slightly different from each other in terms of their fee structures.
Banks are comparatively expensive when making international transfers, and while online money transfer providers are the best option for sending money abroad – it’s important you compare the rates offered by each. The best approach is to use our tool to assess all the providers to find out exactly which service is right for your transfer.
Transfer fees and times differ depending on attributes such as the amount involved, payment method, payout option, transfer time and destination. These differences often give rise to specific transfer requirements and things to watch out for. Here’s a quick list of things you’ll need to be aware of:
Banks usually have limits on the amount you can send per day or per transfer. The limits may be different when sending via phone, online, through an app or in-branch. Transfers involving amounts such as $10,000 and above are generally classified as large transfers. Where the limits are set per transfer, you may have to make several transfers to equal the total amount you want to send. Some banks allow you to send much larger transfers when you visit their branches.
All transfer providers require that you verify your identity, and failure to do so when sending larger transfers may cause the transaction to be flagged. The resulting delays may inconvenience you especially if the transfer is urgent.
Depending on the provider, identity verification can take up to 2 days, and during the verification process, the provider will want to check for proof of identity and proof of address.
To be sure on the amount your recipient will get, you need to work with guaranteed exchange rates, to ensure that the moenby you are transferring isn’t affected by changes in international currency markets that happen while it is being processed. Providers like TransferWise allow you to lock in rates for up to 48 hours to protect against this eventuality.
When using your credit card to pay for your transfer, ensure the following requirements are met:
Cardholder Information: The name appearing on the card should match the name on your online money transfer account. You cannot use a card belonging to another person to pay for your transfer.
Credit Card Limit: Ensure that the card limit per day or per transaction allow you to pay for your transfers. Larger transfers require higher credit card limits, and some providers allow only certain branded cards such as Visa, Mastercard and Maestro.
If your provider has a cash pickup option, you could opt for it when making small transfers as long as there is a secure pickup point close to your recipient. The specific requirements include:
Full name of the recipient: The name you give should match that on the recipient’s identity card or passport. A mismatch can result in delays or transfer cancellation.
Physical address: Providers want to know where your recipient is located so that they can match them with the closest pickup point.
Transfer code: Normally, once you transact, your transfer will be assigned a unique code. You should then send this code to the recipient to help them claim the funds.
When paying for a transfer using your bank account, confirm that your account name matches your online account details. In case you are paying from a joint account you need to send proof of the joint account which includes a PDF bank statement showing the names of the other account holders.
Depending on the provider, sending money locally requires that both the sender and the recipient have local bank accounts. If the money you are sending is to be used at a merchant store, the merchant may be required to register on the platform as well. Local money transfer companies in countries such as the United States require that their customers provide Social Security Numbers if they are to be issued with branded credit cards.
When looking for the cheapest way to send money abroad, you can save yourself a lot of money in fees and exchange rate margins by using an online money transfer service rather than a bank – but you have to consider each provider separately to get the best and the cheapest rate. Based on your transfer route, you’ll have several providers to choose from each having a different fee schedule and exchange rates.
One provider may be cheaper when transferring money from the United States to Australia but costlier were transferring funds from Australia to the UK. While another might offer a great exchange rate when sending money from the UK to Europe, but be more expensive if the transfer is going to a country that doesn’t use the Euro.
Using our comparison tool will help you find the provider that guarantees you the lowest combination of fees and exchange rate margins to make sure you don’t get overcharged when sending your money abroad.