How to Send Money Abroad
In our increasingly international world, there is more and more necessity for international services. Luckily, is a multitude of services available for transferring money internationally. That being said, the market can be overwhelming in its many options. That is why it is worth considering what your needs are when sending money abroad, in order to choose the best service for you.
There are many factors to consider when sending money abroad. These include, but are not limited to:
- The amount of money you want to send
- How regularly you are transferring money internationally
- How quickly you want the recipient to receive the funds
- In what format you want the recipient to receive the funds
- The associated costs of sending the money
Options Available for Sending Money Abroad
- Bank Transfer
- Online Money Transfer
- Foreign Exchange (FX) Brokers
Of the options available, each serves their own function. As a general rule of thumb, bank or building society transfers tend to incur the greatest costs. However, they are often a reliable and convenient option.
Online money transfers, or high street transfer services, are known for their high-speed transfers. Many services also look to get you the best exchange rate.
Foreign Exchange Brokers are recommended when managing large sums of money as they work to get you the best exchange rate and most reasonably priced offer on the market.
How Much Does It Cost To Send Money Abroad?
There are three distinct costs you should be aware of when making international transfers, each of which have a huge impact on the final price you end up paying.
These costs are:
Sending transaction fees – between services, there is a specific transaction fee associated with sending money. Some services pride themselves on their transparency, whereas others operate with “hidden” costs.
Foreign exchange rates = foreign exchange rates tend to be more complicated as they are constantly fluctuating. When comparing different offers, keep in mind that the figures may change again before the end of the day.
Receiving fees – certain services implement a receiving fee, meaning that the recipient may need to pay a fee in order to receive the money at the other end of the transaction. However, this is largely depending on the receiving body (e.g. bank), how they are receiving the funds and also the receiving country.
It should be worth noting as well that all of these three costs are dependent on how much you are looking to send. Typically, the more money you are wanting to send in one transaction, the lower the fees.
Cheapest Ways to Send Money Abroad
There are many online services available making it easier than ever to send money abroad but how do you know if you are getting the cheapest deal? The key factors to look out for when determining the cheapest methods of sending money abroad are the transfer fees per transaction, competitive exchange rates and whether there is an increased rate for sending larger sums of money. Some services offer the first transaction for free which is worth taking into account.
If a service boasts zero transfer fee, you have to question why as it is likely that they make their money by offering poor exchange rates. Additionally, if you are getting the best exchange rate on the market, make sure you are not paying through the roof in transaction fees. Services such as TransferWise, Remitly and WorldRemit usually strike a good balance between cost-effective transfer fees, and competitive exchange rates.
How Fast Can I Make International Transfers?
It has never been quicker to send money abroad via online services. Depending on the country and the service chosen, funds can arrive within seconds to the recipient account. Thus, online services are much faster than the traditional method of wiring money via your bank. Not only do online services cut out the need of physically going to a bank, they also increase the speed. Bank transfers will always take a minimum of 1-3 business days.
However, with online services, money can be received, in some cases, instantaneously. Services such as PayPal, TransferWise and Remitly usually have an instant transfer option available allowing for the rapid transfer of funds.
Is a Bank a Good Option When Sending Money Abroad?
Your bank or building society might be your first port of call when making an international transfer. It can often be the most convenient option as you are able to set up any international transfers at the same time as doing your regular banking, particularly if you will need to send money abroad regularly. It also offers the flexibility of having someone on call to speak to directly and ask for advice. Also, it guarantees protection. When sending money abroad via a UK bank or building society, your money is protected.
However, banks do not always offer the most appealing offer on the market. They are known for being one of the slowest options available, often taking between 4-6 business days to reach the receiving account (depending on the bank). Whilst you can pay an additional fee for an express service, this can still take between 1-2 business days. They also offer uncompetitive exchange rates compared to online money transfer services. Especially when dealing with large sums of money, it is recommendable to choose a foreign exchange broker instead of a bank in order to get a better exchange rate.
Should I Use Online Money Transfer Services When Sending Money Abroad?
There are so many online or high street money transfer services available for international transfers that it can be difficult to know who is trustworthy. On the plus side, money transfer firms offer a great deal of flexibility and convenience. Depending on the service, they usually offer a range of services including instant cash or transfers directly into a bank account. Additionally, they are one of the fastest options available, with many offering transfers in a matter of minutes.
However, they are not typically as safe. Even though they may be regulated by the FCA, transactions made using money transfer services are not covered if the firms suddenly go out of business. Additionally, there is a large amount of discrepancy between fees and exchange rates depending on the service used. For this, it is always recommendable to use a comparison service to make sure you are getting the best option for your needs.
When Is It Advisable To Use A Foreign Exchange Broker?
People tend to look to foreign exchange (FX) currency brokers when sending a large sum of money – usually £5,000 and more – as they offer the best deal. There are many positives of using an FX broker. The majority of brokers will not charge you any transaction fees if you are transferring over £3,000. In addition, they promise one of the best exchange rates on the market as it is their business to explore the best currency exchanges. This service typically tends to be very fast, often offering same-day transactions or within one business day.
On the other hand, although the transactions may be quick, the initial account set-up can be time-consuming as you will need to open a specific account and pay the money into that. It should be noted that FX brokers only offer the best exchange rate when dealing with large sums of money. If you are needing to transfer smaller amounts of money, there might be better deals available. Finally, like money transfer services, FX currency brokers are not protected by the Financial Services Compensation Scheme (FSCS) if they go out of business meaning that your money may not be protected.
Sending Regular Payments Abroad
When making regular international transactions for personal use, your needs may be slightly different with other factors to assess. Here, the bank may be your best option in terms of cost and convenience. Many UK banks have a corresponding overseas branch, making it easy to manage transactions between the two. It can also lead to better exchange rates and lower fees (or no fees) for international transactions.
This can be incredibly useful for those who have to make regular international payments (for example bills on a holiday home or fees for international schools).
How to benefit from reduced fees for regular international payments:
- Hold an account in both countries under the same name
- Have access to your BIC (Bank Identifier Code) and IBAN (International Bank Account Number) for the account you are paying money into
- Have access to the bank account from which you are sending money
Is it Safe To Send Money Abroad?
No international transaction is ever fully without risk. That being said, one of the best practices is to look out for FCA approval. The Financial Conduct Authority (FCA) is the regulatory body which regulates the conduct of nearly 60,000 financial services firms in the UK. Through this, they commit that these companies are offering the services that they say they are offering.
In order to achieve FCA approval, the company must be adhering to essential regulatory requirements and comply with certain codes of behaviour. You can usually find this information fairly easily on a company’s website – typically in the small print at the bottom of the page. This information should include a FCA registration number. This ensures that any money you send through these companies will be in a safeguarded account. Online money transfer services pride themselves on being one of the safest and securest ways to send money. Always be sure to look out for FCA regulation on their websites.
Risks of Sending Money Internationally
As previously stated, there is always an element of risk associated with sending money abroad. Sending funds internationally opens you up to risk of transfer scams. There are many scams and illegitimate businesses which target people who are looking to transfer money meaning that you need to be extra-cautious when choosing an offer.
Best practices include:
- protecting your private data, especially in any phone or email correspondence
- Until you have confirmed legitimacy of the company or individual never disclose any bank details or other sensitive data
- Always look out for FCA authorisation when dealing with money transfer services
- Keep a paper trail of any receipts or paper correspondence in case something goes wrong