One of the simplest ways to send money overseas is through a bank or building society, although you can also use high street transfer firms, such as Western Union. Others use foreign exchange (FX) brokers, or money transfer companies.
How much will it cost you to send money abroad? The company breaks your cost into three categories: foreign exchange rates, the cost you or your recipient will have to pay for the recipient to receive the money, and the cost of transferring the money.
Some companies charge more than others. Forex agencies tend to be cheaper than others when sending large amounts. Money transfer companies are more expensive for sending amounts under $60.
If you live in Britain, check that your money transfer firm or FX broker is the Financial Conduct Authority (FCA) authorized. Better still, check that they are under the ‘authority’ of the FCA. Fx brokers and money transfer schemes are not covered by compensation schemes, so you can lose your money if they fail. If they are simply ‘registered’ by the FCA, they do not need to safeguard your money if they collapse. On the other hand, if they are ‘authorized’ by the FCA, they are required to keep your money separate from company funds, so you may be able to sue.
Verify transaction rates and the amount of time it takes for your funds to reach its destination, as well as confirm that the company can handle the amount of money you want to be transferred. It’s a good idea to get a written copy of these details, either in an email or as a mail format, to keep a record of the paperwork in case something goes wrong. This is particularly so since some money transfer companies do not require identification, and while others, may not even need to open an account when sending relatively small amounts of money.
Some companies offer instant cash for your recipient or transfer directly to the bank account. Others ask the recipient to pay for incurred charges, while some give you the option to cover the enter transaction. You may want to confirm transaction details before you proceed.
Check the processing time. This varies with banks averaging almost a week for standard delivery, charging you extra for their express service which takes 1-2 days. Transfers from money transfer and FX channels can take, in the first case, 24 hours, and, in the second case, a matter of minutes. On the other hand, both FX companies and high street or money transfer companies are less safe than banks.
While Fx companies will not charge you for amounts of over $4,000, some companies may charge you an absurd amount for small amounts. For instance, you could end up paying $20 to transfer just $60. FX companies tend to change better exchange rates than money transfer companies and certainly cheaper rates than banks. The exchange rates of online money transfer firms can vary on a daily basis and according to currency, so make sure you compare costs on the day you plan to send the money.
The first option businesses usually think of to send money overseas is their bank. Banks are easy to arrange and convenient. You can even make transfers from your mobile phone, and they protect your funds. On the other hand, their services aren't cheap. Expect to pay high transfer rates, around $20 to $75, and to receive exchange rates that tend to be below the mid-market norm.
Online money transfer companies provide superior exchange rates and lower fees than banks, allowing your beneficiary to receive more money in the end. You save more, too.