How to get a better deal than the banks when sending money online
International money transfer is a big business globally. Data from The World Bank shows that remittance to low- and middle-income countries reached $529 billion in 2018. These transfers have a huge positive impact on the population of the receiving countries, as well as on the economy of the country itself.
But a number of factors impact this negatively: namely transaction costs and weak exchange rates.
The World Bank goes on to say that the global average cost of transferring money internationally is around 7% — meaning approximately $37bn was lost in 2018. To put it into context, if you send £1,000 home, £70 of that could be eaten up in fees. If you’re making regular transfers, that soon adds up to an awful lot of money that could be better used by you or your family.
What are your options when sending money?
Understandably, sending money to another country can seem like a challenge at first, so it might be tempting to do so via your bank without really looking into other options. It makes sense… because it’s so much more straightforward and banks will obviously be the best option both in terms of efficiency and value. Right?
Well, not necessarily. Where international money transfer is involved, it pays — literally — to shop around. Exchange rates, transfer fees and the time the transfer takes are all factors to consider. And, interestingly, banks don’t always come out on top.
Could the money you send go further?
Add to this the current lockdown restrictions due to COVID-19, and there are a whole host of other reasons to consider options that don’t involve face-to-face contact. Given that your money could well be going towards paying medical bills, it’s even more important too to make your money go further. So, what do you need to consider? And what are your best options?
Money Transfer Fees
Fees include transfer charges and those generated from an overseas bank receiving fees. They are the charges you see up front but there can be a number of different fees, premiums, charges and commission that can apply both to the sender and the recipient.
Keep an eye out as some providers will disguise the real costs by adding multiples of small charges to the transaction.
Many banks claim to be ‘commission free’, which makes them sound appealing, but to make money they load the exchange rate in their favour. It can be difficult to find and compare the exact rate they change throughout the day and many providers do not update them.
Fees and exchange rate are both important because they have a very real impact on the amount of your money that actually gets transferred. You are looking for a strong exchange rate (using a site like Travel Money Max can help you to gauge whether an exchange rate is in your favour or not) and minimal, transparent fees, so you know exactly how much your money is going to be worth on the receiving end.
Small World vs banks
So how does an international money transfer provider like Small World compare to the banks?
According to The World Bank, in 2019, banks charged an average remittance fee of 11% and were the most expensive channels; post offices were the next most expensive, with their fees averaging at over 7%.
Small World is a financial services company that handles more than 1 million transactions a month and is tried and tested by its customers.
Small World offers a range of services for international online money transfer, so there is bound to be one that meets your needs. We offer a number of services that allow money to be transferred within minutes as well as cash pick-up services in many countries (although some of these are currently affected by lockdown regulations).
While fees related to sending money abroad are always fluctuating, Small World pays close attention to the charges levied by the banks and is constantly adapting to ensure they are offering the very best value when it comes to both exchange rates and transfer fees.