If you are developing your business or simply making lots of international orders, you have probably already noticed that the transaction fees or unfavourable exchange rates are taking a huge toll on your budget. We are living in the age of globalization and the common access to the world wide web, makes it easy to connect with people all over the world.
We order goods, services, hire employees for remote work and most importantly we make a lot of transactions. According to the latest study conducted by Capgemini, we are expected to make 726 billion digital transactions by 2020. This research also touches an interesting trend, as the majority of transactions are small payments. In that case, it is important to choose the most reliable and cheapest money transfer providers, as what’s the point of paying $5 fee to send $5 abroad?
1. International transfer fees
Mainstream bank charges
For most of the domestic payments our banks seem to be the easiest choice, especially with the introduction of online banking or mobile apps which allow you to check your account balance or order a bank wire with your smartphone. However, when we take a look at the international transfer fees of most of the major banks, the fees are quite significant. On average one has to pay $20 to handle overseas transaction through bank. Moreover, some banks even charge you for receiving money from abroad!
Online remittance companies
A quick google search of phrase such as “send money internationally” reveals that there is a huge market of online remittance platforms. For a fraction of bank charges, they can handle the transaction for you. If you are not familiar with this kind of platforms, don’t worry too much, they are not anything new or suspicious. Well, some of them are more reliable than others, but they process millions of transactions from people all over the world.
Lloyds Bank, which is one of the top British banks, charges around $12 for an international money transfer. An international wire from Australia’s ANZ bank costs around $16. Now, let’s have a look at TransferWise, which is an online platform for exchanging and sending money internationally. If you want to send 100USD and your recipient wants to receive it in EUR, the whole transfer will cost you $1.71. Sending the same transfer through one of the most popular online payment processor – PayPal, costs around $4.99.
One can easily notice that the costs vary quite significantly from platform to platform, but they are still much lower than the $9-$20 fee region offered by banks. Another advantage is that the estimated delivery time for online transfers is usually below two days.
How to find the cheapest service?
While the sole process of ordering your international money transfer is quite easy, the hardest part is to choose the best service. First of all, you need to understand what features are important for you. Do you want the cheapest transfer? Are you in a hurry and need the same-day delivery? Each platform offers different benefits.
It’s best to use a transfer compare tool, that way you can easily find out how much will the same transfer cost in different companies. One of the good places to do this is www.wirly.com which gathers information about all remittance platforms. Moreover, they allow you to sort the companies based on the fastests transfers, best reviews or highest security. They also notice you if there are any hidden charges that you should be aware of.
Remember, that it’s essential to look through some reviews before choosing the service. That way you can learn if there are any problems that other customers have had with this particular money transfer company.
2. Good exchange rates
Watch out for “cheap” transfers
The second, but equally important aspect of your international money order are the currency conversion rates. There is this popular trick, where companies lure people by offering “cheap transfers” (low transaction fees), however they “hide” the actual costs in very unfavourable exchange rates. If $1 = 0.89EUR, they may exchange your dollar for 0.75EUR. This means, that your recipient will receive less money than you though he would get.
What are midmarket rates?
Mid-market rates are the exchange rates for which the banks and financial institutions exchange currencies among themselves. Then, they add their own markup to this rate and offer it to their customers. However, there are some companies which let you use this “inner-bank” rate.
Before making a transaction, check twice what are the rates. You can quickly google the current values or check at some financial platforms to avoid falling for the “cheap transfer” scam.
Different currencies, different fees
It may also be worth to check some transaction combinations, as it may be cheaper to send EUR than USD abroad. It all depends on your and your recipient’s countries. But some platforms offer cheaper transfers for particular currencies, as they have well-established networks for them. Maybe it will be cheaper to first exchange your money to some foreign currency and then order a payment online.
Cheapest way to send money internationally
It’s impossible to point the cheapest place on the internet to send money online, as each site offers different features. You can find very cheap transfers, but it can take two weeks for money to reach your recipient. Other places can finalize the transaction in few minutes, but they will charge additional costs for fast delivery. It’s essential to compare and research different transfer options.