Section name: Money Transfers

International money transfers can be complicated. With the different types of fees, exchange rates and estimated transaction times it’s not easy for customers like you to understand what is a fair price and what delivery time you should expect. With the development of online money transfers and digital banking, the market has become more transparent and accessible, so you can transfer money internationally and exchange multiple currencies having access to the information you need.

But if you’re not careful, you might end up paying more than you should for the convenience of a fast money transfer, which is not always necessary nor the best option. With this guide, we’d like to help you navigate the international money transfer market and introduce you to TransferWise as our preferred provider.


Fees

When you’ll make an international money transfer to pay for your accommodation abroad, your studies or just adjusting to life in a new country, you’ll find various providers who charge different prices for their services.

What you should know about pricing is that banks and most online providers charge a transaction fee for transferring your money and add a fee for converting it. While a transaction fee is a usual charge which companies have to stay in business, the conversion fee is a margin which is most times hidden in the exchange rate. So when you see different exchange rates at banks and online providers it means that you might be paying more than you should.

More about the exchange rate and the conversion fees in the next section.

Bank Vs Broker

Many people choose to use their bank to move money overseas as they think it’s the simplest solution. However, when it comes to making that money go further, using a leading currency broker like TorFX could prove both more convenient and more cost-effective.

So, what’s the difference between using a bank and using a currency broker?

  • Exchange Rates: As banks tend to work from different margins than currency brokers, the exchange rate they offer their customers can be less competitive. Even a variation of a couple of cents per Pound can have a massive difference on how much you receive, so securing an excellent exchange rate is important if you want to get the most for your transfer.
  • Transfer Fees: The type of international money transfer provider you pick also has an impact on whether or not you’ll have to pay transfer fees. While most banks levy fees, currency brokers like TorFX won’t charge you a thing for managing your transfer. If you need to make regular overseas payments, not having to pay transfer fees could result in significant savings over the course of the year.
  • Dedicated Account Management: As currency brokers focus solely on international payments, they’re able to offer their customers a far more personalised service than banks. At TorFX, for example, all customers are assigned their own dedicated Account Manager. As well as being a constant point of contact, Account Managers are able to keep you informed of the latest market movements and offer invaluable guidance about the best transfer options for your needs.
  • Expert Insight: The currency market is extremely volatile, with exchange rates having the potential to move dramatically in a very short space of time. All the movement makes it tricky to plan the best time to move your money abroad, so the expert insight currency brokers are able to provide really comes in handy. As well as being able to answer any questions you might have, they can send you regular market updates, covering all the latest currency news and exchange rate forecasts.
  • Specialist Services: With some banks your only transfer option may be a ‘spot contract’ – where your currency is bought and sold on the spot at the current exchange rate. However, currency brokers offer a range of specialist services which can be adapted to suit your particular requirements. For example, if you know you’re going to need to move money abroad in the future and are concerned the market may move against you, you can use a ‘forward contract’ to fix an exchange rate for up to two years in advance. Alternately, if you need to move money abroad numerous times throughout the year, you can set up a Regular Overseas Payments plan and arrange for transfers to be carried out automatically on your chosen date. Transfers managed this way will also benefit from an excellent exchange rate and no transfer fees.

TransferWise was founded by two friends who realised they were paying too much for their international money transfers and thought it wasn’t fair to be charged hidden fees on the exchange rate. This is why TransferWise is different; they charge a small, upfront fee for international money transfers and always use the mid-market rate being transparent about how much your transfers will end up costing.

For transfers up to $300 USD, they charge $3. For transfers between $300 and $5,000, they charge 1%. And for transfers over $5,000, they charge 1% on the first $5,000, and 0.7% on the rest.

So a $70 transfer would cost $3. A $700 would cost $7. And a $7,000 transfer would cost $50 (for the first $5,000) plus $14 (0.7% of the remaining $2,000), for a total of $64.

The reason TransferWise can afford to charge you so little, and use the mid-market rate, is because your money never crosses borders. They have bank accounts in each of the countries they operate in so when you make a money transfer, your money goes into the account in your country, and your recipient gets paid from the account in theirs. Since the money never crosses borders, currencies don’t need to be converted and a lot of the usual costs are avoided.

Depending on the currency you need to transfer, the process should be completed within 1-4 days. It could take a few minutes for currencies in Europe and a few days for less popular currencies.

In terms of safety, from what we’ve seen TransferWise is as safe as any major bank or financial services company. It follows strict regulations in every country it operates in, and it goes to great lengths to verify customers’ identities, and to protect them from fraud.

Similarly to their customer product, the TransferWise business product saves companies money when paying freelancers or invoices. What’s interesting about it is their Borderless account, which can hold multiple currencies so you can pay and be paid in different currencies.

Lastly, you can reach the TransferWise support team via email, chat, or phone, and if you do call them, you will never have to navigate your way through an automatic message. You’ll always get a nice human being on the other end of the line. We might even say that TransferWise problems can be fun to solve.