Common Reasons for Sending Money to Japan
There are lots of reasons why Japanese in the diaspora send money home. They vary case by case but through analysis of the remittance information and frequency, the following are some of the common reasons.
Some Japanese in the diaspora do not live with their families. As such, they send money home to support them in their basic needs or supplement the income they are getting in Japan.
Some of the Japanese who work and earn abroad, prefer to have their earnings paid into their home accounts. Money transfer services like OFX can make this process simple.
Diaspora Japanese who have taken up home loans, often remit monthly payments through money transfer services. In fact, there are transfer features such as recurring payments than can help with such periodic and predictable payments.
Overseas Japanese who are sourcing for finished products or services from home often send money through online transfer providers to settle debt obligations.
Whether it is investing in the stock market, real state or in tech innovations, Japanese have a strong attachment to their domestic market. The good news is that, with currency exchange planning, you can lock in rates for the duration of your transfer.
Why Send Money with a Money Transfer Service?
Money transfer services have dominated most remittance corridors to Japan. This is because they are faster, cheaper and convenient to people sending both small and large amounts. The following are the key reasons why you should send you next transfer through money transfer service providers.
Ease of Setting Up
Opening an account and verifying your documents is a simple and quick process that takes approximately 10-15 minutes for some providers. If your provider allows, paying for your transfer with a debit or credit card makes sending faster than through a bank transfer.
Ordinarily, money transfer providers such as Xoom and OFX make their profit from exchange rates and transfer fees. However, when you compare online money transfer providers with banks, you’ll get margins of 2-3% above the mid-market rate for money transfer operators and 5% or more for banks. The lower the exchange rate, the lesser the amount you can send. TransferWise charges a 0% exchange rate margin. All transfers are made at the interbank rate.
Irrespective of where you are sending from, money transfer providers will give you the ability to convert your currency to the Yen. Wise allows you to send money in more than 50 currencies. OFX has a much larger currency base of 55+ standard and exotic currencies.
Safety and Regulation
Providers are regulated by bodies such as the Financial Conduct Authority (FCA), the Financial Crimes Enforcement Network (FinCEN), and the Australian Securities and Investments Commission (ASIC) among others. These bodies ensure that the providers comply with a strict code of ethics in their operations, guaranteeing you the safety of your funds.
Speed of Transfer
Compared to banks, money transfer providers such as Wise, OFX and Xoom deliver funds faster. Funds transferred directly to the bank typically arrive in 1 or 2 days. Western Union and MoneyGram transfer to pickup locations may even arrive the same day.
Providers have different fee structures and pricing models. There are those that charge fixed fees, others variable fees based on the amount, still others charge a combination of the two. Normally, as the amount increases, the transfer fees drop.
Things to Consider When Sending Money to Japan
When sending money to Japan, there are a few things you must bear in mind to ensure smooth transfers. Top on the list are:
Zero Rate Policy -The bank of Japan deliberately lowered and has maintained low-interest rates for a couple of decades to encourage borrowing, spending, and investment. A lot of capital flight has taken place over the Zero Rate period because the zero rate means minimal yields in Japan-based investments.
Remittance Cap -In a bid to curb money laundering, Japan Post Co. and Japan Post Bank Co. are putting in place reforms to limit the amount of money that can be sent to Japan from overseas through their bank transfer service to ¥5 million per day. To add to this, the number of post offices offering international money transfer services will be reduced from 3,210 to 1,194.
Taxation on Large Remittances -Taxation in Japan covers gifts both monetary and non-monetary. That being said, there is an exemption on the amount you can receive as a gift in a year. However, exceeding that amount may expose you to taxation. Also, factors such as the country you live in can have a profound effect on your tax status in Japan. The best approach is for the recipient to seek professional advice from a tax expert well versed with international money transfers and tax implications.
Therefore, sending money to Japan from any country requires that you understand the various avenues available and what you need to transfer funds. Always prioritise safety, cost and speed of delivery.
Looking to Send Money Somewhere Else?
Sending money anywhere else in the world is as easy as sending money to Japan. If you're looking to send money to another country, here is the list of the most popular destinations.