When people mention "the exchange rate" between any two currencies, they are referring to the mid-market exchange rate.
The rate at which banks trade currencies with one another is referred to as the "mid-market exchange rate".
Every currency pair have its mid-market rate influenced by national and international macroeconomic forces. For example, there is the USD to INR mid-market exchange rate which is subject to change depending on imports, exports, trade agreements, economic conditions, and a variety of other factors.
When converting one currency for another, these factors affect how much money a person can receive. If you are sending or receiving money internationally and there is a currency exchange involved, you may want to keep an eye on the exchange rates.
Due to banks being the major seller or buyers of currencies, the mid-market rate is commonly called interbank rates. This rate is used to exchange currencies between banks. The middle or interbank rate can vary from time to time based on several parameters.
Global banks calculate the mid-market rates as the midpoint between the buying and selling prices of any two currencies.
Currency buys and sells rates are based on the constantly shifting supply and demand for the currency in the FX markets.
Price differences between purchase and sale are called Spreads. The average of this spread (buying and selling prices) determines the mid-market rate.
The mid-market exchange rate is essentially the exchange rate found in the results of Google searches and the rates displayed by currency exchange providers like XE.
In general, sending money at the mid-market exchange rate is not possible. Banks and other currency exchange providers set their exchange rates, different from the mid-market exchange rate for customers, known as exchange rate margins.
The exchange rate margin is the percentage difference between the mid-market rate and the rate offered to customers. This is one of the ways banks and other providers make money from cross-border money transfers.
These margins might range from 0.01% to 10% or more of your transfer amount, depending on the provider you choose to send your money through.
Some money transfer businesses charge 0% fees or no commission to attract customers. They may be hiding the charges in their exchange rate.
If you want to save money on international money transfers, you should transfer money as closely as possible to the mid-market exchange rates. Mid-market rates are considered the fairest rate possible. It will probably be the rate when you find a foreign currency rate on Google.
This rate is a good starting point in comparison with other transfer companies to see if it is a fair exchange rate that is being offered to you.
The closer you are to the mid-market rate, the more money your recipient will ultimately receive because most money transfer providers and banks make money from the exchange rate margin.
Several money transfer companies, including Wise and Instarem, provide the mid-market rate for your international money transactions. Other providers may let you lock in a good rate, protecting your transfer from rate fluctuations for a limited time.
Before transferring money overseas, it can be helpful to compare the exchange rates offered by the providers to that of the mid-market rate.
When using international wire transfers via banks, you can find that FX rates are not nearly as favorable as inter-bank rates. Banks often add a markup to the interbank rate. The costs of currency conversion are sometimes not disclosed to the customer. And they wind up paying exorbitant fees without even realizing it as hidden fees.
While the majority of money transfer providers will display the offered exchange rate to you once you have entered all the necessary details for your currency exchange before you press the send button.
Furthermore, compared to bank fees, third-party money transfer services' transfer fees and exchange rate margins are substantially lower.
Now, the straightforward method is an international wire transfer through your bank, although they are not the cheapest. Keep in mind that banks use the SWIFT system to carry out transactions which tend to take 3 to 5 business days. If you are not in a hurry and don't mind paying extra money on correspondent banks fees, banks may be your best option.
Other options include cashier's checks, bank drafts, and ACH transactions. They are safe because if the checks or drafts do not reach the intended recipient in another country, it is possible to track them down. However, it takes them longer to get to the recipient.
On the other hand, money transfer companies tend to be more specialized and offer more affordable services because they have lower overhead costs than traditional banks. This results to lower transaction costs, more transparent pricing, quicker delivery, a better exchange rate than banks, and an improved user experience with international money transfers.
Comparing service providers is strongly advised because different money transfer service providers have varying charges, rates, and promotional offers.
Using CompareRemit's comparison engine can help you save money on international money transfers by ensuring that you get the best exchange rates.
CompareRemit's tool enables you to quickly and easily compare exchange rates provided by various money transfer services in real-time. You can compare transfer fees, speed, and amount receivable to help you find the best option for your transfers.
To check out top money transfer companies' best currency exchange rates, compare remittance providers using CompareRemit today!
Growth in digital remittances can be a game-changer in international remittances, mainly in terms of reducing the cost of global money transfer, increasing accessibility, and being more customer-centric. In the case of Nepal, which is one of the highest recipients of remittances in the world, youth are leading the mobile and digital revolution in the country. 50% of the users of eSewa, Nepal's most prominent digital wallet, are between the age of 18 to 30 years. With eSewa, users can make various payments such as pay utility bills, pay internal bills, recharge phones, book airline, and bus tickets, scan and pay to merchants, make a bank transfer (from eSewa to a bank account), and so on. There are also cashback and reward points upon registration. Established in the year 2019, eSewa Money Transfer is affiliated with F1Soft Group. With 15 million users (almost half of the country's population), F1Soft has been the leading fintech company in Nepal since 2004. eSewa is licensed by Nepal Rastra Bank under foreign exchange regulation, so it is a safe and highly regulated mode of money transfer. It offers traditional brick-and-mortar and agent-based remittance services along with the non-traditional digital modes of remittance.Money Transfer Services from the U.S. to Nepal with eSewa eSewa is partnered with various leading money transfer companies such as MoneyGram, WorldRemit, Remitly, Skrill Money Transfer, TerraPay, WireBarley, enabling customers from the U.S. to send money to friends and family in Nepal directly into the recipient's bank account or eSewa wallet.The account deposit service is available in more than 65 banks in Nepal. With more than 4.2 million registered eSewa wallet users, the addition of remittance service to eSewa wallet will provide a boost in remittance inflow to Nepal.Remittances to Nepal constitute a major portion of the country's foreign exchange reserve, surpassing both the official development assistance and the total foreign direct investment. In 2019, Nepali migrant workers sent home $8.64 billion which constituted 25.4% of the country's GDP. Sending Large Amount of Money from the U.S. to NepalThe U.S. to Nepal money transfer corridor is a thriving one, with many money transfer operators competing for business. Here are the top 5 money transfer service providers from the U.S. to Nepal.XoomPayPal-owned Xoom, a leading digital money transfer provider is one of the fastest, secure and convenient ways to send money from the U.S. to Nepal. The Xoom mobile app or website allows users in the U.S. to send money in an instant to friends and family in Nepal using their U.S. bank account, debit card, or credit card. Xoom has partnered with major banks in Nepal - Everest Bank Ltd., Nabil Bank, Himalayan Bank, Nepal SBI Bank, and others offering instant bank deposits. The money can be transferred to a bank account or picked up from an agent location (from over 4000 cash pickup locations) in Nepal. The maximum transfer amount is $9,000 per transfer when using Xoom transfer. The transfer fee varies depending on the method. Bank transfers are usually free of cost. Fees for payments by card are percentage-based.Do keep in mind that a margin is added to the exchange rate when converting U.S. dollars (USD) into Nepalese rupees (NPR).Wise (formerly known as TransferWise)Wise (Ex-TransferWise) is a London-based financial technology company regulated by (Financial Conduct Authority) FCA in the UK. For online money transfers from the U.S. to Nepal, Wise is a secure, fast, and low-cost option. There are no hidden charges, no marked-up exchange rate. Wise gives you the interbank exchange rate for your transfers. You can pay by direct debit, bank transfer, debit card, or credit card. Bank debit or ACH is the cheapest followed by bank transfer. While payment via credit cards has more fees. Depending on the transfers, the money can be reached in one day or even within seconds. There are limits to how much you can send to Nepal. For larger transfers, Wise might ask you to provide your ID card. To initiate the transfer process, sign up online or in Wise's app for free.WorldRemitWith WorldRemit, Nepalese immigrants in the U.S. can send money online to recipients in Nepal. The money can be received via cash pickup, bank deposits, mobile money, and even airtime top-up.The cask can be pick-up from thousands of Samsara, NIC Asia, and Citizen Bank locations within minutes. The bank transfer may take 1 business day.You can send up to $5,000 per transfer with bank transfer and up to NPR 300,000 with the cash pick-up option. A maximum amount of NPR 1,000,000 can be sent in a day. The transfer fee will depend on the transfer amount. WorldRemit adds a margin to the exchange rate.Muncha Money TransferMuncha money transfer lets you send money to Nepal from all the 50 states in the U.S. It is a preferred choice for many NRN (Non-resident Nepalese) as an online payment gateway. Muncha Money Money Transfer and ThamelRemit are popular ways of sending money.An individual with a U.S. bank account can transfer money to the recipient's bank account in Nepal. It takes about 48 hours to complete the transfer. It is licensed by Nepal Rastra Bank, so your money is safe and protected. It offers ACH transfer and can send up to $10,000 per transaction from the U.S. to Nepal. The first transaction is free for all customers.ThamelRemitThamelRemit is an online money transfer platform for sending money from the U.S. to Nepal. It is trusted by more than 50,000 Nepalese in the U.S.The platform is supported by Siddhartha Bank Ltd., one of the fast-emerging banks in Nepal, and is powered by MachNet.The transfer is carried out via ACH where money is directly debited in USD from your bank account in the U.S. and transferred to the recipient's bank account in Nepal in NPR. There is no charge or bank processing fee within Kathmandu Valley.Outside Kathmandu Valley, there may be a bank processing fee that is deducted from the recipient's bank account as per the particular bank's rules and regulations. The exchange rates offered are highly competitive and fees are affordable. You can send up to $10,000 per transaction and get the money deposited into the destination account in 48 hours.TakeawayThanks to the increasing number of users of digital payment platforms like eSewa and others, the cashless transaction is becoming a reality in Nepal.The above list is not an exhaustive list of all the services available to send money from the U.S. to Nepal. It can be difficult to choose one from a plethora of options. Before you make the transfer, compare the money transfer service providers to get the best value for your money while sending money from the U.S. to Nepal.Nepalese living abroad prefer to send remittances directly through mobile banking, internet banking, or digital wallet. It offers ease of use, convenience, lower cost, and a competitive marketplace of the money transfer industry that gives better service and better exchange rates.
How do you pay your employees? As an employer, paying your employees is an important part of your business. Direct deposit to your employee's bank account or issuing paper checks are two of the most common ways of compensating them. Gone are the days when employees used to get paid in cash.But what happens when some employees have no bank accounts? This is where paycards come in. Paycards for employees are an alternative option when the employees do not own a bank account, and the employers do not want to pay in hard cash.It is estimated that about 5.4% of U.S. households (approximately 7.1 million) were "unbanked" in 2019, according to the U.S. Federal Deposit Insurance Corporation (FDCI). An unbanked household means no one in the household had a checking or savings account at a bank or a credit union.For small businesses with employees with no bank accounts, paycards can be a convenient option as a payment option.Direct deposit and paycards both offer the benefit of a paperless payroll distribution process and allow the employer to electronically transfer funds conveniently. While direct deposit is the norm for many businesses, paycards are gaining popularity each year.There are pros and cons of using paycards, and in this blog, we will discuss if paycards are right for your business and employees.What is a Paycard?Paycard is a lot like a prepaid debit card as it is made of plastic and can be pre-loaded. In the case of a paycard, the money loaded comes from the employer in the form of an employee's pay. The card carries the issuer name such as MasterCard, Visa, or Discover.Are Paycards Good, and Who is it For?A pay card can be used to pay an employee who does not have a bank account. Paycard holders or employees can cash out from paycards at a bank, ATM, or other point-of-service locations.Employees can also pay bills over the phone using their paycard number or authorize electronic bill payments to specified companies.Employees can use paycards at any merchant, grocery store, retail shop, or gas station that accepts debit cards.Do Paycards Have Fees?By law, employees must be able to access their wages in full without any fees. They can obtain the cash at a bank teller, ATMs associated with the card issuer, pay bills by telephone, or use the card for point-of-sale purchases.However, there may be fees for electronic fund transfers or for cash withdrawals at ATMs that are not in the issuer's network. There may be fees for card replacements, balance inquiries, inactivity fees, or other reasons. The Consumer Financial Protection Bureau issued a rule in April 2019 that paycard issuers must disclose all the fees to cardholders.Employees must be informed of the potential fees. The paycard issuer is required to give you disclosures on such fees before you sign up for a paycard or a payroll card.Also, paycards are regulated by state laws, so you might have to check for additional details depending on your state. Some states are making efforts to reduce fees that affect employees.As you can see, paycards fees mostly affect employees. In the case of direct deposits, employers are the ones who have to pay fees for setting up the payroll distribution system and a transaction fee for each time they transfer wages into an employee's account. The payroll software may also charge a fee for their service.Can Employers Save Money When Using Paycards?Since paycards are reloadable cards, employers can have the banks reload the paycards with their employees' wages for the pay period, avoiding the costs and hassle of issuing paper checks, mailing them, or re-issuing lost checks. The savings may not be a substantial amount but they can add up gradually.Can Employers Choose between Direct Deposit and Paycards?While there is no mandate that employers can only offer either direct deposit or paycards to their employees for their wages, it is safe to check with your state's law on payroll distribution.One-third of states allow employers to require employees to have bank accounts for direct deposit. In such a case, paycards may not be needed. Also, there is no law preventing employees with bank accounts to opt for paycards as their payment option.Though generally, employees tend to prefer direct deposit because of its efficiency and the least costly method of payment, as a business owner or an employer, it is better to give options instead of imposing only one method.Ask your employees about their preferred method of payment and what benefits (convenience, low fees, etc.) serve them the best.In fact, Federal law requires employers to offer alternative payment methods like paper checks or direct deposits.Should Employer Provide Pay Stub?Pay stub provides details of the employees' pay for each pay period. Employers are not required by federal law to give employees their pay stubs. However, many states have laws that require some form of written pay statement.Even if your state doesn't need you to provide pay stubs, you are still required by the Fair Labour Standards Act to keep track of your employees' working hours.For employees, a pay stub gives a record of their wages, deductions, contributions, and other information. It is also proof of income or employment, which is often needed when applying for a loan, credit card, or housing.For employers, a pay stub is useful for tax purposes, and it can be used to resolve any discrepancies with employee pay.Is it Possible for Paycards to be Overdrafted?Usually, paycards works like debit card, allowing cardholders to withdraw up to the limit of the loaded amount. However, there are paycard that allows overdraft for employees. But it can come with hefty overdraft fees if employees use funds over the limit in their account. Usually, you should be able to prevent misuse by subscribing to an overdraft protection service.Will Paycard Affect Credit Score?Paycards, like all prepaid cards, do not affect an employee's credit score.What is a Paycard Gets Lost or Stolen?A replacement card can be issued in such cases. The employee needs to notify the employer, and then the employer should immediately notify the card issuer. The employee is not liable for the incident as long as the issue is timely reported. Paycards come with similar protection as that of a prepaid card.The reporting time is determined by the card issuer. If you wait longer to report after learning of the loss and theft, the fraudulent charges may increase. You may have to pay a fee for the replacement card.Pros and Cons of PaycardsProsA win-win situation for unbanked employees and their employers.Green alternative to paper checks.Immediate payment to employees.No hassle of cashing a paycheck.No monthly or maintenance fees.Added security when assessing their funds (paycards require a PIN).Employees can report to the issuer if funds are used unauthorized.Paycards can be reloaded during each payday, saving money on issuing paper checks.Added efficiency for the employer as the employer would not have to physically present or mail paychecks to unbanked employees.ConsEmployees may incur fees for several reasons. Be aware of such potential fees.Employers have certain responsibilities to educate employees about the usage of paycards.Limited range of services and flexibility in managing your funds compared to bank accounts and other prepaid cards.The best paycards programs are easy to set up, have lower fees, quick access to funds, and provide a range of benefits such as cashback and discounts. We have made a list of popular paycards providers for businesses:Wisely Paycard by ADPOnline portal and mobile appCompatible with Apple Pay, Samsung Pay, and Google PayZero cost sign upNo hidden feesNo credit checkNo overdraft feeZero cost direct deposit of pay and other sources of income (including government benefits)Accepted wherever Visa is acceptedKeep track of spending and account balances 24/7 on the appGet cash back at major retailersSurcharge-free ATM withdrawalsFDIC insuredSecurity features include instant card lock, purchase protection, and travel alert notificationsRapid PaycardDirect Deposit onto rapid paycardLoad funds from approved checks with Ingo Money mobile appsNo fee for cashing paycheck24/7 account access with rapid! Access mobile appNo credit checkCan be used at ATMs, merchants worldwide, wherever Debit Mastercard or Visa debit cards are acceptedPay bills and make purchasesBook airline and hotel reservations onlineEarn interest on savings accountGet cash back rewardsFDIC insuredMoney protected with Zero Fraud LiabilityKittrell PaycardNo fees to use (there are fees for certain situations)Fee-free ATM network with MoneyPassWebsite and Kittreall AppGet real-time alerts and push notificationsCash back at point-of-sale terminals2-way texting to manage your card and accountCompatible with Apple Wallet, Google Pay, Samsung PayEasy portability (Get direct deposit of stimulus checks, tax refund, benefits)Freeze or unfreeze card on-demandSkylight PaycardZero sign up feeNo credit checkNo minimum balance Personalized your card with a family photo or unique imageManage money anywhere on Mobile AppDirect deposit your government benefits, tax refundsUse anywhere where Visa Debit & Debit Mastercard are acceptedFDIC insuredZero liability protectionPay bills onlineEarn interest on savings accountEarn cash back with Payback RewardsSend money to or receive money from friends and family with Netspend cardsSet text alerts about transactionsRefer a friend and boost your card balanceSkylight overdraft limit is $100 & 3 times/ monthConclusionOverall, paycards can be convenient and cost-effective for employees and employees when compared to paychecks or for those employees with no bank account. And the paycard fees are becoming more transparent and competitive.While paycards can be challenging at times, especially when you are employed in multiple jobs and have a separate paycard with each employer, your funds are scattered in multiple cards so it becomes difficult to manage your finances. Some may prefer to put all their money in one place, like a checking account.However, if you can't open a bank account, a paycard is a great option to get paid. Read the fine prints before signing up for a paycard and know the potential fees that come with it.
When traveling abroad, be sure to get the most out of your money by gaining a better understanding of foreign currency exchange. There are many resources for exchanging money and making purchases abroad, but many include hefty fees or restrictions. Make sure you understand all of the advantages and disadvantages of each currency exchange option, so you can avoid dealing with any unforeseen charges after your trip. The easiest way to exchange currency may not always be your best option. You can choose to exchange your currency before leaving for a trip or after arriving at your destination, but selecting the right one depends on where you exchange your currency.Where Can I Exchange Currency?Know what options for exchanging currency are available before you exchange so you can get the best exchange rate possible. These are the most commonly used currency exchange options.1. Airport Kiosks and Foreign Exchange Desks:Although exchanging currency at the airport may sound convenient, it is best to avoid, given the outrageously high exchange fees. According to NBC News, airport kiosks can charge up to 20% in fees and have a much lower exchange rate compared to banks and private exchange companies. Exchanging currency at the airport should be avoided at all costs and saved only for emergencies.2. Credit Cards:Before relying on your credit card abroad, first, be sure to find out if it will be working internationally. If so, look into the potential fees that may apply while abroad. Some fees may include currency exchange fees, transaction fees, or service charges on cash advances. Overall, credit card companies get the best rates and can offer you an exchange rate closest to the official rate.3. Debit Cards:Debit cards may charge foreign transaction fees and international ATM fees. Be sure to only use debit cards for cash withdrawals. If any complications arise from a purchase made using a debit card, your account is immediately debited, and it may take anywhere from a few days to over a week for the erroneous charge to be corrected.4. Foreign Currency Cards:Prepaid foreign currency cards work like credit or debit cards. They are preloaded with a set amount of currency, which is deducted as the traveler uses it. However, there are many fees and restrictions that may apply, such as withdrawal and inactivity fees and withdrawal minimums and limits.5. Traveler's Checks:Traveler's checks work like US dollars; you must find somewhere that will exchange the traveler's check for the local currency. But unlike cash, traveler's checks come with the added security of being replaced if lost or stolen. However, due to the declining use of traveler's checks, they may not be accepted by some businesses.6. Private Money Exchange:Private money exchange businesses or currency exchange businesses often compete with each other to provide the best exchange rate, so you have a good chance of finding a higher exchange rate. Some fees apply and vary depending on the provider. Also, keep in mind that these companies are less prevalent in rural towns, so be sure to complete your transactions before traveling out of large cities.Ways to Avoid Foreign Exchange FeesForeign exchange fees may seem inevitable when exchanging currency, but these options may help you avoid paying hefty fees.1. No Foreign Transaction Fee Credit Cards:Unlike your current credit cards, which on average charge 3% of every dollar spent while abroad, certain international credit cards have no foreign transaction fees.2. International Travel Cards:For inexpensive cash withdrawals, go for international travel cards or travel money cards. Cheaper than credit cards or debit cards, international travel cards are prepaid with a certain amount so you can make purchases or withdraw money as you travel. Some even have the option of carrying more than one currency.3. Local Banks:Exchanging money at local banks is not only convenient but also much less expensive than exchanging at airports or hotels. They also tend to give decent exchange rates.4. NO to Cash Advances:Using your credit card as an ATM card requires you to pay a cash advance fee in addition to the cash advance APR, which can both add up to large sums.5. YES to Local Currency:Always decline if given the opportunity to charge your purchase in USD. This may bring hidden transaction and conversion fees that will amount to much more than charging your purchase in the local currency. Insist that all purchases are charged in the local currency. There are always financial risks involved with traveling internationally, which is why it is important to take extra precautions making exchanges, purchases, or withdrawals abroad.