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 better exchange rates, lower fees, and shorter transfer delivery times, so it’s a good idea to shop around for the cheapest way to send money abroad. Check out our guide on international wire transfers for more details on wire transfers.
If you’ve ever transferred money internationally before, you’ll know the frustration at having to navigate expensive fees and unfair exchange rates just to send your own money to someone else – this can be apparent even when looking for the cheapest way to send money through a mobile app or PayPal account.
In this guide, we’ll cover your cheapest options when sending money abroad, different ways to send money and why comparing providers should be the first thing on your to-do list, and our top recommendations for the cheapest international money transfer from particular countries.
The cheapest way to send money internationally is almost always going to be using a money transfer provider who specialises specifically in helping users send their money abroad in other currencies. Using a specialist money transfer provider is beneficial as it allows you to transfer funds within hours, as opposed to potential 2-3 business days.
Out of money transfer services, however, there’s no single best or cheapest way to send money internationally and that’s because the cost of your transfer will depend on a number of mitigating factors. This includes the amount you are sending abroad, where you are sending it to, your payment method, and more. This is why if you want to transfer money abroad is absolutely essential to find the right and the cheapest money transfer service for your needs – and it’s why we created our comparison tool to provide a transparent, in-depth look into all the money transfer providers available to you, the costs associated with each one and how each fee varies by provider or country.
These alternatives can also be convenient ways to send money abroad – but as a rule, money transfer services do tend to be the most cost-effective option.
There are a few major costs to watch out for when making an international transfer which, depending on the provider you use, can keep fees to a minimum or leave you unfairly out of pocket. These include:
This is the first thing you should look at when planning to send money across borders. The transfer cost is the fee your provider will charge for your transfer.
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. Transfer costs can differ across money transfer providers, especially as some are better able to facilitate the cheapest money transfer between two particular countries than others.
Compare the cheapest ways to transfer money abroad and choose one of the our popular transfer providers.
Our tools helps make decisions on which providers are is transparent about exchange rate markup added onto your transfer upfront, additional fees so you know exactly how much your recipient is going to receive before you initiate your transfer and which financial institutions providers are regulated by.
A reliable money transfer provider will always provide you with an upfront view of the exact fees you should expect to pay for your transfer – if it doesn’t, that’s a big red flag!
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. These tend to change on a daily basis, so it’s worth bearing that in mind if you are looking ahead of time. 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 EUR 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 way to send money 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 the top 10 money transfer providers to help you find the cheapest money transfer provider 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 the fees each provider charges and their respective exchange rate margins – enabling you to make the most cost-effective choice for transferring your money. Note, the mid-market rate does tend to change on a daily basis, so if you are looking to compare different providers we’d advise doing this on the same day if possible.
Most money transfer services operate digitally, meaning they have lower overheads than your traditional brick-and-mortar banks. This means they can afford to charge lower fees for international money transfers.
The majority of online transfer providers have P2P money pools in the countries in which they operate, which means costs and transfer fees can be reduced significantly.
P2P services essentially enable peer-to-peer selling and buying of different currencies – instead of transferring your money across borders into a new currency, the fund are instead ‘swapped’ with money other people are sending in the opposite direction. If you are sending smaller sums of money, this form of transfer is an extremely inexpensive way of sending money abroad and one of the key reasons money transfer services can be so much cheaper than banks.
P2P transfer services and lower overheads mean money transfer providers can offer international transfer at far lower rates than traditional banks, so it’s always worth comparing providers to see how much you could save before initiating your transfer!
Money transfer providers focus specifically on how they can send their users money abroad faster, cheaper, and more reliably than any other service (and there are a lot of services to choose from these days…).
That specialism means money transfer providers can have lower costs than banks, who don’t specialise in international transfers. Plus, the competition between providers only helps to drive costs lower.
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 transfer 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, resulting in much longer delays than you may have first counted on. 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. You may also need to supply details for the recipient, so be sure you have these to hand too.
A guaranteed rate is an exchange rate that has been guaranteed by a provider to stay the same for a set amount of time (for example, 24 hours) To be sure on the amount your recipient will get, you need to work with guaranteed exchange rates to ensure that the money you are transferring isn’t affected by changes in international currency markets that may 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.
|🥇||Online money transfer providers||Some providers are free||Compare Rates|
|🥈||Apps to send money||Free (it needs to add funds previously)||Compare Apps|
|🥉||Bank transfers||Foreign bank transfer fees, exchange rates||Compare Banks|
|#4||Debit card||Transfer fees, exchange rates, taxes||Compare Rates|
|#5||Credit card||Cash advance fees, interest, conversion fee||Compare Rates|
|#6||International wire transfers||Exchange rate mark-ups, fixed transfer fees||Compare rates|
|#7||International money orders||The sender will pay for the desired value||Compare Rates|
The cheapest way to send 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, the countries where transfers are less frequent do tend to attract higher transfer fees.
Unless you are making a transfer in an emergency situation, to find the cheapest international money transfer, it’s always good to plan in advance and put in some work comparing different providers. Remember, the fastest way to transfer money overseas will often not be the cheapest. 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.
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 added up can be for an expensive transfer – which is often the case if you choose to use the convenience of bank transfers instead of the cheap money transfer provider.
In order to avoid high fees such as these, you can opt to use online money transfer companies instead such as Wise, WorldRemit, WorldFirst, Xoom, Currencies Direct, 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 that 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.
Each of these options works out cheaper than if using banks 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 cheapest money transfer service for you and avoid the fees charged by big banks.
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 A$12 to receive the payment. Depending on the arrangements, other overseas bank fees (such as sending money to a foreign bank account) 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.
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 find 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.
As always, you can use a bank to make your transfers to the United Kingdom. However, it will again become clear that this may be costlier than other options available.
For example, if 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.
Banks are comparatively expensive when making international transfers, and while online money transfer providers are often the cheapest 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.
From these examples, you can see that the price varies from country to country, and will be the case for other countries, no matter if you’re looking for the cheapest way to send money to Canada or for the cheapest way to send money to Kenya.
There are some actions you can take to minimize the costs of money transfer. These include:
When looking for the cheapest way to send money internationally, 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 cheapest money transfer providers to choose from each having a different fee schedule and exchange rates.
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.
Elliott is a former investment banker with a 20 year career in the city of London.
During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.
During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.
Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com