Finding The Best Money Transfer Provider
There might come a point in time where you may have to pay for someone living overseas, work abroad or transfer money to a family member living in another country. At the topmost of anyone’s mind using a money transfer service would be, how do I do that and what kinds of fees are involved?
Most people will probably go to a bank and end up paying a high percentage of fees on the amount transferred. But the money transfer industry has since evolved, thanks to the advent of technology as well as fintech entrepreneurs, we now have a variety of ways to make those transfers. If you are new to money transfer services or ain’t quite satisfied with your current service provider, read on to find out what alternatives you have.
Types Of Money Transfer Services
Bank Money Transfer
For those who are new to money transfer, going to the bank might be one of their first thoughts when sending money abroad. Bank transfers are an easy option for many people, but they are almost always never the most cost-effective or convenient method. Banks usually use less competitive exchange rates or higher transfer fees than dedicated foreign exchange brokers since the latter can offer better deals due to a high volume of money transfers.
One essential feature of bank transfers is that the remitter (the person transferring the money) and the beneficiary (the person/entity receiving the money) both have bank accounts to initiate and receive the transfer, respectively. This can be rather inconvenient for some people since not all of us will have an account with the same bank.
The remitter will also need to provide complete details of the beneficiary and the beneficiary’s bank account details including the bank name, branch address, currency of transfer, branch’s special IBAN or SWIFT code etc. If you are simply paying someone else for a service done, it can add much hassle.
On the other hand, bank-to-bank transfers are known to be highly secure compared to other alternative methods.
Money operators are specialised services for people to send money quickly to almost anywhere in the world. Some familiar names include MoneyGram or Western Union. These international wire transfers are particularly useful when a recipient doesn’t have access to a bank account, is in a remote area, or needs cash urgently.
Money operators can be convenient because you can usually transfer money online, via the phone or in-store within a short period of time. The receiver does not always need a bank account as well. However, the downside is that fees are quite expensive and can cost up to 5 percent or more of the transfer amount.
Online Transfer Providers
Paypal is a prominent example of an online money transfer provider. It requires that both you and your recipient to have an account with the same provider and you can easily transfer money instantly online, and take the funds directly from your bank account.
Fees vary between providers but if you are looking for a fast, easy transfer, it might be one of the best options to choose from. Compared to traditional bank transfer and remittance, the fee charges are still considered rather competitive.
For instance, TransferWise, one such online transfer provider, allows customers to transfer money internationally at the mid-market rate shown on Google and is up to 8 times cheaper than banks.
FX brokers traditionally offer an online platform for traders to trade currencies but are increasingly opening up transfer and exchange services. Some of these services include online money transfers, better exchange rates and even the ability to make the transfer only upon your desired exchange rate.
This is a good option for those who may need to transfer a large sum of money, such as for regular mortgage financing or school fees since you are likely to get one of the best exchange rate option compared to the other money transfer methods. You will, however, have to deposit money into the account you have with the FX broker before you can make that transfer.
Tips To Consider Before Making Money Transfers
For those new to making money transfer, it may seem like an overwhelming process. There are probably four main factors you want to think about and use as a means of comparison when choosing the best method for you:
- Fees involved – how much fees are you paying? This should include the administrative fees as well as the exchange rate loss you may suffer due to the method you choose. You can use the mid-market rate which you can find on Google to compare the rates from your transfer agent.
- Convenience – with technology being so advanced, you should be able to send money via online or mobile methods which can help you save time. Think about the receiving end as well, do they need an account with the same provider? Will they be able to receive the money online as well?
- Speed – most providers have some options for you to choose how fast you want the money to be transferred. You can generally expect faster remittance to be more costly.
- Security – any kind of money transfer provider you use should be regulated by some type of financial authority to ensure that your funds are safe.
When you need to decide the best way to transfer money abroad, a little research and planning can help you save much money. This is especially true if you are going to use the service on a recurring basis. Each money transfer option has its pros and cons, so weigh them according to your priorities – whether it is speed, low fees or convenience. Remember to check out our money transfer comparison page to help you pick the right provider for your needs!