Making international payments has become a regular thing for many people. We buy items from international shops, we run our own online businesses, hire people from all over the world and most importantly send and exchange currencies while doing all of these things. Therefore, it may be sensible to learn some tricks to cut down the transfer costs, as some banks can charge you up to $25 for a simple transaction. Moreover, in some cases you may need to pay to receive an international transfer as well…
Use online remittance platforms
Banks’ international money transfer rates
It’s been known for a long time now that banks don’t offer competitive rates when it comes to overseas transfers anymore. Let’s take a look at a quick example. Lloyds Bank, which is one of the top British banks, charges around $12 for an international money transfer. Similar transfer ordered at Australia's ANZ bank would cost you around $16. Depending on the amount of money you need to send, the charges at some banks increase to $25 per transaction.
Moreover, Barclays warns their users that if the sender doesn’t pay a special processing fee, you can be charged another $7 just to receive the transfer to your personal account.
How online transfer platforms work?
So why are online platforms cheaper than banks? The platforms let you send them a regular domestic payment (which in most cases is free of charge) and then they will take care of transferring your funds abroad. They establish connections and networks with various partnered financial institutions, therefore they can obtain better and cheaper transfer rates. Moreover, in most cases the money is delivered the same day.
Online remittance fees
With the variety of available remittance platforms and a very competitive market, each company tries to provide best transfer rates to encourage potential user to send money with them. The total costs depend on where you need to send money to and the transfer method. While it’s hard to give strict price brackets, you can easily send money for less than a dollar. However, in most cases, the larger the transfer is the more you need to pay.
To exchange and send 100 USD to EUR through PayPal, one needs to pay around $4.99. You can easily notice that it is much cheaper than most bank’s offers. Each online platform has its own rates and that way for example TransferWise offers the same transfer for around for $1.86. That leads us to another important point…
Compare the competition
Learn how much your transfer costs at different platforms
With thousands of remittance offers, it’s essential to compare the platforms and choose the one with the best rates or features. One way to do this is to use a site like Wirly.com, which gathers information about money transfers services. They have this convenient tool, where you can type in how much money you need to send and in which currencies and you will see the transfer costs in all of the available remittance platforms.
You may also want to look into the features of the chosen remittance platform, as the transfer can be cheap because it’s very slow. If you are in a hurry, you can sort the companies based on the estimated money delivery time. Many companies offer some kind of “instant” transfers, however you may need to pay extra for them.
Read customers’ reviews
While you at the point of choosing the service, remember to read some reviews and user experience with the platform. That way you can learn about the real advantages and disadvantages of particular platform. Good places to do this can be Google Reviews or TrustPilot, which gathers customers’ reviews about various services.
Avoid paying with Credit Card
When you order your transfer, you will be able to choose how you want to pay for it. In most cases a regular domestic bank wire is the best option, as you aren’t charged extra for this. Be careful with using credit cards, as you may be charged with additional processing costs.
Check exchange rates
Exchange rate markup
A popular trick used by many remittance services is to offer you low transfer fees, then charge you with a hidden markup on the exchange rates. That way when you convert one currency to another, you will only receive a fraction of the total amount. That’s why it’s important to learn if your platform rounds up the exchange rates or takes some percentage on conversions.
Try different currency pairs
Some currencies are cheaper to exchange and send them. It may therefore be worth trying out different currency pairs to find which options are the cheapest on your platform. For example, it may simply be cheaper to send GBP to EUR, rather than USD to EUR.
Find local connections
Some platforms specialize in handling transactions in particular regions. If you frequently make transfers to a particular country, you can easily find a platform, which provides transfers solely for this regions. That way, even though the services are limited, you receive much cheaper service. For example, Remit2India, as the name suggests, specializes in sending money to India region. Their exchange rates on pairs with Indian Rupees are more appealing than usual rates. You can also be sure that they know how to handle the transfer in this region, as they cooperate closely with local financial institutions. It’s just one example and you can find similar platforms for other countries as well.
By keeping in mind these 5 basic points, you can easily switch into a more cost-efficient transfers. If you run an international business or simply shop frequently online, these tips can save you a few dollars on each transfer. Which can quickly add up to more significant savings.