Perhaps you are looking to send money to a relative or friend in another country or just wish to buy a home abroad. Irrespective of your reasons behind it, what you want to achieve is sending money internationally. Since various transfer methods are available in the market, selecting the ideal one can be a little overwhelming. So, skip on the time-consuming research and read our quick guide to effortlessly make an international money transfer.
We will guide you through the pitfalls, and our top tips will help you move your money at a low cost, conveniently and quickly.
An international money transfer is a method of sending money from one country across borders to another. The mediums of money that can be sent are cash, or electronic payments, such as a settlement directly into a bank account. This process of transferring money internationally can simply take place with a single currency. However, it almost always involves exchanging local currencies from the sender's country to the recipient's. This currency exchange is a very important topic to discuss, and we will refer back to this later in this article.
So, let us begin with understanding the different types of international funds transfer available in the market.
The likes of money remitters mainly process these types of money transfers. The main operators of such international money transfer services are the likes of Moneygram and Western Union.
These services function for significantly 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 identity proof and qualifying documents to make an out of country money transfer.
Once you qualify, 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 collect their cash from a nominated agent of the money remittance firm. Although effective, this service can be extremely expensive as you as transferring cash.
Remittance firms like the one above also operate this money transfer solution. However, such a type of money transfer is now under a much greater level of scrutiny. Hence, you can only transfer a small amount of money.
Over the years, it has been found that a large number of international money transfers that took place in this manner were funding the black economy. As a result, banks and financial institutions have decided to pull away from this method of international money transfer. But at places where it is still available, the process is significantly costly.
Bank to bank international money transfers refers to a transfer of funds from one bank account to another situated overseas. As this can be completed electronically, it can therefore be the most cost-effective way of international fund transfer. Moreover, you can send both small amounts and large amounts of money through it without any issue.
If you are sending money from an account in one currency to another account abroad, you might face certain issues. For example, unless clearly specified, the recipient's account will likely be in a foreign currency. Similarly, if you expect payment through an international money transfer, there is probably a currency exchange taking place.
Now that you know how to transfer money from your country to abroad internationally, the next thing you need is to select the correct financial institution. Of course, you have to select properly as that will also decide the course of our entire transaction. The two main options available in the market are:
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 of sending money abroad, it is marred with hidden costs. Something that will be later discussed more deeply in this article.
Currency specialists, also known as currency brokers, use their buying power in the currency markets and offer better deals to their customers. They do this by undercutting the banks and providing services at a significantly lower cost. That is usually within the rate of exchange that they charge, but it's not all that simple!
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 charge exchange rates from their customers.
The idea is that a currency broker sets their exchange rate for their clients based on the live interbank exchange rate. This is done 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 broker's profit.
The problem is that the interbank price of a currency is constantly changing. So, with the model above, that initial quote you were offered on your currency exchange before you signed up could become much more costly when the transaction takes place. This is what we refer to as "hidden fees".
The most straightforward answer to this is availing assistance from a transparent currency specialist. Of course, an international money transfer is not free of cost, but it should not cost excessive as well. So, go for a currency specialist that gives you the option to see the live interbank price when you want to make transfer money internationally. Also, confirm your exchange rate to clearly determine the difference and ensure you are receiving good value.
At Currency Club, we provide exactly that to our clients. Whether you are buying travel money or making an international fund transfer, you will always receive the best exchange rate. Moreover, we charge no hidden fees and provide complete transparency. You can use our low cost service by clicking here
The length of time to send money abroad depends on a variety of components. However, when talking about an international fund transfer, it has two main components.
1) The currency exchange (also known as the FX deal)
2) The onward payment instruction
If both components are settled and paid for at the same time on the same day, the payment can be released on that day itself as well. But it heavily depends 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. Thus, 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.
The three kind of pay-out methods you can come across while processing an international money transfer are:
1) SWIFT
2) SEPA (for within the EU only)
3) Local account pay-out
Most payments are done and settled between 1 to 3 working days. For most quick abroad 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 that 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 where you would like to send money.
Yes, it can be but make sure that you always do your homework. For example, if you decide to use a currency specialist, always check if they are regulated by the FCA (The Financial Conduct Authority) or not. Also, ask them if they hold a valid money service business licence to provide the services they offer. You can cross verify their details by inspecting their company directly from the money services business register from HMRC. And to verify their registration or authorisation, check the FCA's website.
All FCA authorised companies are required to safeguard client money and follow strict guidelines under the Payment Services Directive's terms. In addition, the FCA is the watchdog of the currency services space amongst other financial institutions.
We at Currency Club are specialist currency providers, providing transparent pricing online. We provide international money transfer and travel money at the best exchange rates with no hidden fees. Furthermore, we offer access to the live interbank exchange rate before confirmation of the trade.
The Currency Club is a trading name of Sterling Consortium Ltd. that is registered with the Financial Conduct Authority under the Payment Services Directive. We also hold a valid Money Services Business Licence with HMRC and for more details about us, feel free to 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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