Just like there are many ways to spend and exchange money in theUnited States, there’s more than one way to send money outside of the country.
While you can’t always pick how you send and receive money internationally, here are some methods to consider if you have a choice.
This method is just what it sounds like: converting cash in one country to cash in another. You take cash to a money transfer service location, such as a Western Unioncounter, and have that money sent to someone in another country, where they receive it in cash in their local currency.
Cash-to-cash transfers are popular in developing countries where many people are unbanked, meaning they don’t have a bank account.
Cashing a check or finding a bank branch can be difficult in places without a lot of banking infrastructure, such as rural and low-income areas. A cash-to-cash transfer allows the recipient to access the funds in cash immediately.
With the ease of access comes risk. If the money in a cash-to-cash transfer is lost or stolen, there’s no recourse for getting it back. For a stolen credit card, companies typically refund fraudulent purchases and issue a new card, but cash is only useful when it’s in your wallet.
If your bank has branches or partner institutions in other countries, you may be able to send money from your account to an international recipient’s account with the same institution.
It usually requires providing the account and routing numbers for both parties, either online or over the phone.
One of the main benefits of a bank-to-bank transferis that it can be very inexpensive or even free, depending on your bank’s rules and how quickly the recipient needs the money.
Many banks don’t charge anything for three-day bank-to-bank transfers, and the fees for faster transfer times can be as low as a few dollars per transfer.
To do a bank-to-bank transfer, you’ll need a fair amount of information, such as the recipient’s bank account and routing numbers.
If the person you’re sending money to is a stranger instead of a friend or family member, they might be reluctant to give you this information.
Also, the recipient must have the same financial institution as you. This method won’t work if either party has a smaller regional bank or credit union instead of a large multinational bank with many branches.
Account-to-cash transfers can be used to send money from your bank account to someone overseas who doesn’t have a bank account.
Your bank sends the money to the recipient, who can pick it up at a location such as a Western Union counter in their country.
Not all banks are equipped to handle this kind of transaction, so check with your bank to see if it’s an option. You can also explore a standalone service, such as TransferWise.
One of the main benefits of account-to-cash transfers is that the recipient doesn’t need a bank account. In countries without much banking infrastructure, many people turn to account-to-cash transfers.
Just as with a cash-to-cash transfer, one big drawback of an account-to-cash transfer is that the recipient picks up the money in cash. That means there are no protections against fraud or loss.
Credit-to-Credit or Debit-to-Debit Transfer
Another method that’s just what it sounds like, a credit-to-credit or debit-to-debit transfer is when you use your credit or debit card to send money to an international recipient’s credit or debit card.
This method is simple and straightforward. People usually use it when they don’t have access to other options for sending money internationally.
If you choose this method, make sure you understand all the fees associated with it. It may prove so costly that a different method would be a far less expensive choice.
If both the sender and recipient will be hit with fees from their card companies, it’s probably more economical to wire money using a service such as MoneyGram or send a prepaid debit card.
Prepaid Debit Card
Prepaid debit cards are cards you can load with a specific amount of money. The recipient can then spend down that money until the balance is zero. Not all prepaid debit cards can be used internationally, though.
Prepaid debit cards are reloadable, so once the recipient spends the balance, the card can be reloaded with more funds. For people with bad or no credit, prepaid debit cards can be a good way to build credit.
Prepaid debit cards can come with many different kinds of fees, so be sure to read the fine print closely if you choose this option.
Some prepaid cards have so many fees and costs associated with them that they can be borderline predatory.
Digital wallets are popular in countries where there isn’t much traditional banking infrastructure but many residents have a smartphone. Some of the most popular digital wallet brands are Samsung Pay,Venmo, and M-Pesa.
A digital wallet securely stores your payment information, including passwords, allowing you to send money digitally to recipients using the same digital wallet.
Depending on which app or service your recipient uses, you may need to know only their email address or username to send them money. Digital wallets are becoming an increasingly popular way to send and receive money across the globe.
The recipient must have a smartphone or access to a Web-enabled computer. These are the only ways they can securely store payment and balance information and receive funds using a digital wallet.
Things You Need To Consider Before Sending Money Abroad
Fees: Businesses state low, upfront fees or even offer consumers fee-free transfers. But, like an iceberg, most of the expense of sending money abroad is hidden. The bulk of consumer costs can be concealed in poor exchange rates.
Exchange Rate: A quick Google search will show you an exchange rate. But if you compare it to the exchange rate offered by banks and traditional money transfer services, you’ll find their rate is often much worse.
Speed: How long it will take Traditional international money remittances often take several working days, but a lot of transfers are completed on TransferWise within 1 business day. Many of our transfers are even instant.
Security: Safe money transfers With TransferWise, you’ll know where your money is every step of the way. And, as a company authorised by the FCA, you can sleep well knowing your money is in good hands.
Ways to Minimize Fees
While there’s no way to send money abroad without losing a little cash in the process, there are reputable companies and services that can make the transaction a bit less painful for both parties.
Based in London, TransferWise is a service that’s been around since 2011. It was founded by Estonians frustrated with the fees and poor rates associated with living in one country and frequently needing to send money to another.
How it Works
TransferWise keeps its costs low by routing payments in a unique way that isn’t as pricey as traditional currency conversions can be.
Instead of simply routing the sender’s money directly to the recipient, TransferWise matches the money with other users who are sending currency in the other direction.
That way, TransferWise doesn’t have to pay the currency conversion on every single transaction, only on those they can’t match with money traveling in the other direction.
By matching exchanges in this way, the company can avoid incurring expensive currency conversions across countries in most cases.
OFX, an Australian-based company previously called OzForex, has been headquartered in Sydney since 1998. It operates the money transfer abilities of companies such as Travelex and MoneyGram.
How it Works
OFX makes money by keeping the difference between the market exchange rate and the rate it offers customers, otherwise known as a markup rate.
One of the reasons OFX is popular is because its markup rate is often far less than the rate other money transfer companies and banks charge. OFX rates usually hover around 1%, while some banks charge as high as a 7% markup.
Founded by Somali-born Ismail Ahmed in 2010, WorldRemitprovides online money transfer services to migrant communities and other underbanked populations around the world.
WorldRemit doesn’t have brick-and-mortar offices where users can convert cash to transfers. Because of this, the service is often cheaper than traditional money transfer companies such as Western Union.
How it Works
Ease of use is a big part of WorldRemit’s appeal. Customers can sign up on their phones and send money electronically to recipients’ bank accounts, in cash at pickup locations, via mobile wallet, and in the form of more airtime to recipients’ prepaid cell phones.
This feature is especially appealing in countries without a vast network of landlines where many residents rely on prepaid phones for communication.
Originally used to send telegrams from one end of the U.S. to the other, Western Union is also the granddaddy of sending and receiving money abroad. It’s been helping people send money far and wide since the late 1800s.
How it Works
Western Union charges fees for their money transfer services, and these fees can vary widely depending on where you and the recipient are located, how quickly you need to send the money, and how you choose to send the money.
Fees are the primary way that Western Union makes money for their services.
Xoom by PayPal
Xoom, which was launched in 2001 and acquired by online payment giant PayPal in 2015, is another popular option for sending money abroad because of the speed with which the company can handle these transactions.
For some destinations, a transfer can be completed almost instantly, as opposed to the three-business-day ACH handling time – although it will cost you in fees.
How it Works
Xoom makes money through the transaction fees it charges users, which start at $4.99, and from foreign exchange fees.
You can only send money with Xoom via checking account, debit card, or credit card; it does not accept cash as a way to send money. Recipients, on the other hand, can receive money via bank deposit or cash pickup.
As the internet and other tech advancements have overcome the barriers of geographical distance, more and more countries have opened their doors to trade and become global citizens.
As a result, the need for Americans and citizens of other countries around the world to send money overseas has rapidly expanded. Those who most commonly need to send money overseas tend to be:
People moving overseas
People with friends or family members traveling overseas
1. How long do transfers usually take?
Transfer speeds vary greatly depending on the provider, where you’re sending your money to, how you’re paying, and how your recipient will access your funds. It could be anywhere from 10 minutes to several business days.
2. What if I only want to transfer a small amount of money?
Companies like PayPal and TransferWise can be useful for sending smaller amounts. Other providers impose minimum transfer limits of $250, $500 or more, so you should confirm any transfer restrictions before registering for an account.
3. Can I transfer money from my smartphone?
Yes, you can transfer through your provider’s website, and many also offer apps that allow for more convenient transfers.
4. Can I change or cancel an international money transfer?
Federal protections are in place that require banks, credit unions and money transfer companies to give you 30 minutes to cancel a transfer, assuming it hasn’t yet been picked up or deposited.
5. Is it free to register for an account with an online money transfer provider?
Yes, in most cases you will not pay anything to sign up for an account.
Whichever option you choose, be sure that you’re sending money to the correct person; that you keep records of your transaction and any confirmation information; and that you’re informed about any possible fraud or scams.
Finally, pay attention to how long the transfer will take to ensure the money gets to the recipient on time, especially if they’re on a tight deadline or need it to pay an upcoming bill. In all cases, reading the fine print will make you a more informed, savvy consumer.
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