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The Currency Club

The Cheapest way to make an International Money Transfer

travel exchange rates international transfers

Perhaps you are looking to send money to a relative or friend in another country or you could be looking to buy a home abroad. You may just need to send money internationally. If you find the various options overwhelming then read our quick guide to making an international money transfer below.

We will guide you through the pitfalls and our top tips will help you move your money, at low cost, conveniently and quickly.

What is an international money transfer?

An international money transfer is the method of sending money from one country across borders to another country. The mediums of money that can be sent are cash, and electronic payment, such as a settlement directly into a bank account. Although an international money transfer can simply take place in a single currency, the process almost always involves an exchange of currency from the sender's country's local currency to the recipient's country's local currency. This currency exchange is very important to discuss and I will refer back to this later on in this article.

Cash to cash money transfers

These types of money transfers are mainly processed by the likes of money remitters. The main operators of such services are the likes of Moneygram and Western Union.

These services function for much smaller transfers typically below £1000 and remittances abroad.

In most cases, you are required to walk into a branch of the money remitter. Provide physical documents that prove your identity and ensure you qualify to make the international money transfer.

Once passed, the cashier will then initiate your transfer. The recipient in the country can then be provided with a pick up code and can then proceed to collecting their cash from a nominated agent of the money remittance firm.

Although effective, this service can work out extremely expensive due to the cash nature of the international money transfer.

Cash to bank transfers

Again, a solution of a money transfer which is operated by remittance firms like the above. This type of money transfer is now under a much greater level of scrutiny and although still takes place, but only for much smaller amounts.

Why are cash to bank international money transfers in decline?

Over the years it has been found that a large amount of international money transfers that took place in this manner were funding the black economy. Banks and financial institutions have decided to pull away from this method of international money transfer and if its still available, then it is likely for limited amounts of money and is still going to work out very costly.

Bank to bank international money transfers

Finally, this brings us to bank to bank international money transfers. What this effectively refers to is an international money transfer from one bank account to another bank account situated overseas. As this can be completed electronically, it can therefore be the most cost-effective way to send both small amounts and large amounts of money by way of an international money transfer.

Before discussing the options available, its important to discuss currency exchange

Like I mentioned before, if you are sending money from an account in one currency to another account abroad, unless clearly specified, it is likely that the recipients account will be in a foreign currency and likewise, if you are expecting payment of an international money transfer, then there is likely a currency exchange taking place.

If a currency exchange is taking place, then beware of hidden fees.

So now that I know the cheapest possible type of international money transfer, what are my options?

In order to make an international payment, you first need to decide what type of financial institution you would like to make your international money transfer with. The two main options are:

1) Banks - the ones to avoid!

Banks tend to be the most common and usually the most expensive when it comes to transferring money internationally. Although it can be a very convenient way to send money abroad, it is marred with hidden costs. Something that I will go on to explain later on in this article.

2) Currency Specialist firms also known as Currency Brokers - choosing the right one is key!

Currency specialists exist because of the true fact that they use their buying power in the currency markets to offer a better deal to their customers by undercutting the banks. They usually do this within the rate of exchange that they charge, but its not all that simple!

Currency Specialist firms and Currency Brokers typically quote their exchange rate based on the live interbank exchange rate

The live interbank exchange rate is the exchange rate that the banks usually transact with one another at. These rates move millisecond by millisecond and are used as the benchmark by which most currency brokers and specialists price exchange rates to their customers.

The idea is that a currency broker sets their exchange rate to their customer based on the live interbank exchange rate at the time when the customer wishes to make their international money transfer and book their exchange. This could be done over the phone or via an online platform.

Traditionally a rate of exchange is quoted by the broker to the customer. The mark up is within this exchange rate while the broker obtains the currency from its source of providers. The difference between the two exchange rates is the brokers profit.

So everyone has to make money right? What is the issue with this model?

The problem is that the interbank price of a currency is constantly changing and with the model above, that initial quote which was offered to you on your currency exchange before you signed up could end up being much more costly when the time of the transaction takes place. This is what we refer to as hidden fees.

So then without constantly comparing with multiple currency brokers, how do I go about making the best choice?

Use a transparent currency specialist. An international money transfer is not free of cost. Go for a currency specialist that gives you the option to see the live interbank price when you want to make your international money transfer and confirm your exchange rate, You can then clearly determine the difference to ensure you are receiving good value.

The Currency Club provides exactly that. Whether you are buying travel money or making an international money transfer abroad, you will always receive the best offered exchange rate with no hidden fees and with complete transparency. You can use our low cost service by clicking here

How long does an international money transfer take?

The length of time to send money abroad depends on a variety of components. An international money transfer is made up of two main components.

1) The currency exchange (also known as the FX deal)

2) The onward payment instruction

If both components are settled at the same time on the same day, and are also paid for with settlement on the same day, the quickest a payment can be released is on that day itself depending on the cut off time for that specific country and currency. [For a list of our cut off times click here]

The FX Deal must take place and settle before the onward payment instruction takes place, therefore the currency has to be purchased before the payment gets initiated.

To understand more about the time that payments can be received we have to look into the pay-out methods.

What types of international money transfer pay-out methods are there?


2) SEPA (for within the EU only)

3) Local account pay-out

The majority of payments take place and settle between 1 and 3 working days. For the majority of quick international money transfers, they will be sent out via SWIFT which can settle as soon as the next working day however for European payments, SEPA is an option which takes slightly longer but costs less than a SWIFT payment.

Local pay-outs are also an alternative as some currency specialists have their own local currency accounts in countries in the country where you would like to send the money to.

Is an international money transfer safe?

Yes, it can be but make sure that you always do your homework. If you decide to use a currency specialist, always make sure they are regulated by the FCA (the financial conduct authority) and hold a valid money service business licence. You can cross verify their details by verifying their company directly from the money services business register from HMRC and you can verify their registration or authorisation from the FCAs website.

All FCA authorised companies will be required to safeguard client money and is required to follow strict guidelines under the terms of the Payment Services Directive. The FCA is the watchdog of the currency services space amongst other financial institutions.

About Us

The Currency Club is a specialist currency provider which is providing transparent pricing online. It provides international money transfers and travel money at the best exchange rates with no hidden fees and access to the live interbank exchange rate prior to confirmation of the trade.

The Currency Club is a trading name of Sterling Consortium Ltd which is registered with the Financial Conduct Authority under the Payment Services Directive and holds a valid Money Services Business Licence with HMRC. For more details about us, click here.

Whether you are looking to buy travel money or send money abroad, we can help you. Call our dealers today on 020 7723 7000 and use our handy converter to see how much you could save compared to banks and brokers.

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