Considering the many different options you have for transferring funds internationally, you should think twice before using a bank to send your money. While there is no denying that a bank transfer is reliable, the transfer fees are usually ridiculously high. A lot of banks charge hidden fees that include commissions and skewed exchange rates. In most cases, both the recipient and sender are charged with these fees.
Keep in mind that when you’re sending money from one foreign currency to another, your bank will try to take as much as they can from you through weak exchange rates. Although a lot of people are aware of this, they continue to use banks to transfer funds internationally. You can try to reduce these fees by scheduling recurring transfers or paying attention to foreign exchange rates, but there are also other options to consider. Today, you can find many different services that will charge you only a fraction of standard bank fees. Here’s what you need to know about the best money transfer services available today.
Why Should You Use a Money Transfer Service?
Apart from being the cheaper option, using a money transfer service is incredibly simple. On top of that, a good service represents a quick and reliable way to send funds internationally. In order to set up an account, you will need to provide some basic information about yourself, such as your name, address, and bank details. You’ll also need to provide some proof of identification. When you’re ready to send money, simply include the information of the recipient of the funds and decide the currencies you want to exchange funds between.
But before you start using a money transfer service, you should know which ones will actually help you save money. While a lot of people use PayPal to transfer funds internationally, this is by far the most expensive option. In fact, a bank transfer will cost you less than using PayPal. In order to avoid paying high fees for an international money transfer, here are some of the cheapest services you can use:
International Remittance Services
If you want to send a sum of up to $2,000 to someone in a foreign country, your best bet would be to use an international remittance service like WorldRemit or Remitly. These services enable you to send money to bank accounts, mobile wallets, or as cash to local pick-up agent locations. It is easy to set up an account on WorldRemit and Remitly: all you need to do is provide some personal information and proof of identity. You can then use their websites or apps to transfer funds.
The great thing about international remittance services is that they provide you with a low-cost alternative to traditional transfer services. However, you should use them only if you want to send a small amount. Know that transferring large sums using services like Remitly and WorldRemit may be very expensive or, in some cases, even impossible, as there is a limit on how much you can send at a time.
Unlike banks, international remittance services are transparent about their fees. When you decide on an amount you want to send, the service will provide you with a transfer fee and exchange rate upfront. This way, you’ll have a chance to decide whether you want to continue with the transfer. In case you’re using WorldRemit, the transfer fee will be anywhere between $3.99 and $24.99, depending on factors like currency, amount, and delivery option. There is a chance you will get charged some hidden fees only in the event of you using a bank to make the transfer.
Using WorldRemit ensures that the transfers are completed almost instantly, unless you’re sending money bank to bank, in which case it will take several days. This service is an excellent option for people living abroad who want to send a percentage of their earnings to their local accounts. It’s also perfect for people who are low on cash while traveling and need a way to receive money quickly. In case you want to send US dollars from Australia, you can do this by using WorldRemit. But first, you would need to convert your Australian dollars to US dollars. In order to avoid wasting money, do some research on the best currency exchange rate AUD to USD available in your area.
Peer-to-Peer (P2P) Transfer Services
Peer-to-peer transfer services are slowly but surely taking clients away from banks all across the globe. The reason why many are drawn to using P2P transfer services is due to their transparent fees and competitive exchange rates. Because of this, it will be easy for you to calculate the cost of your transfer. Some of the most notable services of this kind include TransferWise and CurrencyFair. The great thing about P2P transfer services is that they are very easy to use. All you have to do is set up your account online and deposit funds into it. When you provide information about the recipient, you will be able to transfer money.
In layman’s terms, these are basically online marketplaces that facilitate the peer-to-peer selling and buying of different currencies, which is exactly why they allow cheap transfers. Instead of making one international transaction, services like TransferWise and CurrencyFair will use two local transfers. In other words, the money doesn’t get transferred across borders at all. Instead, it gets swapped with the funds people are transferring in the opposite direction. This means that you won’t have to worry about insane exchange rates no matter which country you’re currently backpacking in. While this is a very inexpensive way of sending money internationally, it isn’t quite effective when you want to transfer large sums. Nevertheless, it should be one of your primary choices if you plan on sending less than $10,000 at a time.
Non-P2P Money Transfer Services
If you want to send more than $10,000 at a time, you should use non-P2P transfer services like TorFX and OFX. However, know that this is only a good option for transferring large amounts. If you only want to send a few thousand dollars or less, you’re better off using peer-to-peer services. When you choose to use a service like OFX, you will be charged their standard fees and the exchange rate at the moment of the transfer. However, the great thing about OFX is that the exchange rate improves the more money you send.
Services like TorFX and OFX are completely safe and regulated. It is very easy to set up accounts on them. All that you need to do is register online and verify your identity, which you can do in less than five minutes. One of the best things about these two services is that they have outstanding customer service. They will help you every step of the way, not only when you need assistance with your account, but also when it comes to liaising with banks to make sure transactions go smoothly.
When it comes to the speed of transfer, P2P services like TransferWise are superior. This is mostly due to the fact that they allow the use of credit and debit cards for making payments. When you use services like OFX or TorFX, it will usually take a minimum of two business days for the transfer to be completed. Both of these companies have offices worldwide and represent some of the most regulated financial firms in the world. In other words, they are very legitimate and can be trusted. There is almost zero chance they will mishandle or lose your money.
Keep in mind that you have to transfer a minimum of $200 when using TorFX, and a minimum of $250 if you choose to go with OFX. But, once again, you should avoid using these services to send small amounts.
Bitcoin and Other Cryptocurrencies
Cryptocurrencies are generally disrupting the money transfer business since they offer people a chance to send funds very quickly. Although there are hundreds of different cryptocurrencies you can choose from, people usually use bitcoin for transfers. In order to complete a transfer, you will first need to deposit a fiat currency onto a cryptocurrency exchange. Your next step is to buy bitcoin; after which you can easily send it to whomever you want. The recipient can then sell the bitcoin for fiat currency and withdraw it to their bank account. Another option for withdrawal is to simply use a Bitcoin ATM.
One of the main drawbacks of cryptocurrencies is that not everyone uses them. On top of that, you will lose some money when you exchange funds between fiat currency and bitcoin. Nevertheless, it’s still a cheap way to send money internationally. Keep in mind that you should consider using this option especially if speed is important to you. On top of that, it’s a very reliable way to transfer funds across long distances, which may prove helpful when you are in a foreign country and strapped for cash.
It’s worth noting that this method of transferring money will become even more effective as more people start using it. In case you are looking for more freedom when sending funds, you should definitely consider cryptocurrency. Apart from low costs, efficiency, and financial freedom, using bitcoin means fewer fraud issues, increased safety, and fewer restrictions.
So, which money transfer service is the cheapest? It really depends on the amount you’re sending. But one thing is for sure: there are currently much better options available than a traditional bank transfer. In case you want to send up to $2,000, consider using an international remittance service. If you plan on sending between $2,000 and $10,000, it’s strongly recommended you use a peer-to-peer service like TransferWise. However, if you have to send larger sums, your best bet is to use services like OFX and TorFX. On the other hand, cryptocurrencies enable you to send money to anyone, anywhere in a matter of minutes.