We live in a global village and that’s a fact, which means our income and expenses are no longer necessarily limited to the country we live in.
For many of us, sending money abroad or receiving payments from a client/family member in another country is relatively common.
Whether you’re an expat, a freelancer with foreign clients, an international student or own property abroad, you are probably familiar with this necessary evil. And, with excessive bank charges and extended waiting periods, evil it often is.
However, as the need for more user-friendly international money transfer has grown, so have the number of financial start-ups offering banking alternatives.
So, chances are, you stumbled upon this article because you’re about to send money abroad for the first time and have no idea where to start.
Well, you came to the right place.
While it may have sounded simple in theory, in reality there are quite a number of factors to keep in mind to do this successfully.
Here’s a list of some of the most important:
Are you transferring to another currency?
In other words, before just sending your money off with the first, most convenient option, you may want to spend some time researching which will be the most beneficial to both you and your recipient but also what the do's and don'ts are.
Kick off your research by checking out this handy money transfer tool.
Simply select the country you’ll be sending money to, enter the amount you’d like to send and hit the ‘compare’ button.
You’ll receive an overview of the current exchange rate, as well as a complete list of financial service providers able to assist you and the costs connected to each.
You can then opt to view the list by whichever of the following is most important to you:
While your trusted local bank may offer uncomplicated – even helpful – service with ordinary monthly transactions, you’ll probably find that things get a bit intricate the moment you want to send money abroad.
Regardless of where you have an account, banks tend to offer poor exchange rates and are also often guilty of levying hidden charges.
Before sending money abroad, be sure to ask your bank what:
Once you have this information, you can establish how large a chunk of your money will essentially get lost in translation.
Fortunately, there are a growing number of financial start-ups that are offering much more affordable alternatives to high street banks for sending money abroad.
Here are three MoneyMagpie reccommend:
Born out of frustration, TransferWise is the brainchild of two Estonians - Taavet Hinrikus and Kristo Käärmann - who live and work in London and just got fed-up with the headache of monthly currency transfers.
The TransferWise story Taavet had worked for Skype in Estonia, so was paid in euros, but lived in London. Kristo worked in London, but had a mortgage in euros back in Estonia. They devised a simple scheme. Each month the pair checked that day’s mid-market rate on Reuters to find a fair exchange rate. Kristo put pounds into Taavet’s UK bank account, and Taavet topped up his friend’s euro account with euros. Both got the currency they needed, and neither paid a cent in hidden bank charges.
Needless to say, TransferWise was built on the same principle and has proven to be up to 8x cheaper than normal banks.
Fees They do charge a fee for their services, based on a number of factors, but will be upfront about this as soon as you initialise your transaction.
Speed While they aim to move your money as quickly as possible, the speed with which it reaches your recipient’s account depends on
Based in the UK and founded by four Lithuanian friends, TransferGo is a global money transfer company that supports migrant workers to send money back to their relatives without paying unnecessary bank fees.
As of 2017, TransferGo had processed over £500 million in online transfers via the web and app, achieving a run-rate of 1 million transfers per year, having been founded in 2012.
They work according to principles of local in - local out, which means customers make money transfers into a local TransferGo bank account and then the company makes a local payment to the bank account of the recipient.
Fees They charge a different fee according to how quickly you want the money to show up in your recipient’s account:
Speed As mentioned above, this can be anything between one working day and half-an-hour, depending on how urgent your transaction is and how much you’re willing to pay.
The world’s first and only genuinely fee-free international transfer service, Xendpay was founded by a group of ethical innovators whose aim it is to reduce the cost of sending money abroad while still maintaining great customer service.
Apart from being a highly competitive financial service, Xendpay is also a global cause. International money transfer is the largest overall source of external financing to developing countries - $436 billion in 2014 according to World Bank estimates. That’s three times the total global aid budget! But every year 9% of money transferred is swallowed up by fees and bad exchange rates and never reaches it's intended destination.
So, the idea behind Xendpay is to contribute to a better global economy and, in so doing, ensure that more money reaches its intended destination.
Fees As mentioned, the service is available for free, however, they do offer you the option of making a small voluntary payment with your transfer.
While these donations aren’t their sole source of income, they are integral to sustaining the service.
Speed If you’re sending the money to a European country, it should take 1 – 2 days, while destinations further afield take 2 – 3 days.