Transferring money abroad has never been so easy. With thousands of banks and payments institutions - some of them even offering delivery service - it is truly easy today in comparison to what it has historically been. Yet, costs continue to be high and the reason is that new technology to perform transfers are in the hands of very few players in the market which means most companies would not be able to operate without charging the feeds they currently charge.
What are the options to do international wire transfers today? Here is a quick rundown of your options in order to find the lowest international wire transfer fees:
SWIFT transfers, also called international wire transfers, are part of the bread of butter of banking services. These are possible to be performed by virtually every bank in the world. These are some of the world's most expensive international money transfer operations because of a banks overhead and the fact that interbank operations count as an additional step that is usually paid by the person or company requesting the transfer.
Since it is impossible to avoid this traditionally international remittance route, banks find various ways to turn a profit via this system such as offering free of charge fees but hiding their gains in currency conversion that easily can reach 10% depending on the risk of a market. One thing is certain: the larger your remittance the better the exchange rate and since banks are in control they are more than motivated to take your small transactions - below 50 thousand Euros or equivalent currency - and profit millions in the process.
It is also important to notice that not all the costs associated with a traditional wire transfer. Being a completely manual affair, a wire transfer required manually filled and stored forms, faxing between banks and governmental departments and FX companies until finally the money reaches its destination. It is important to be aware of these costs because they are not free, not 30 euros as many banks claim to charge. They can be as high as 10% of the total transaction.
Retail Payment Services Providers
Western Union and MoneyGram have nearly 1 million agents around the world. Some of them offer delivery services right to your business or your home. having been in the market for over a century, in the case of Western Union, and since the 1940 in the case of MoneyGram, these are reputable business institutions that have offered value to its customers for a long time. In order to support their business model - these are companies with huge overhead costs - they charge a lot for a simple international transfer. In order to mitigate the risks of offering transactions to virtually any country in the world, charges can be outrageous.
The advantages are certainly the instant availability of funds in hard to reach places - you will find a Western Union agent in a remote corner of India or Sri Lanka for sure - but that comes at a price that is hard to overlook. We also know that these are companies you can trust, but it does not come without its problems such as having a one star rating at consumer affairs. We suggest that you investigate all options before choosing a retail payment services provider such as the aforementioned so you can save money.
Large online remittance systems
Transferwise, Transfermate, Paypal & Payoneer and the like have build a solid reputation in the past decade, with a positive track record of remittance deliveries. Each of them have their advantages and use exclusive technology and specific user experiences. This means that despite offering the same service, each service comes with its own set of routines that users need to follow in order to send money abroad.
Transferwise is one the newest players and they offer competitive pricing beating most players in key markets. Their biggest advantage being pricing, the user experience and difficulty in paying in can be a hassle for many users. For example, in order to complete a transaction to a few countries, you must deposit the money to their account in a separate process with a bank slip. Transferwise was not build for business payments and as such has one major disadvantage: you will have to complete each transaction individually even if you are sending money to the same person.
Paypal requires that you connect your bank account to its transactions and we find its system to be one of the most reliable in the market, but the charges can be substantially higher than all other competitors. The advantage is that -being Paypal - they are well recognized as a reputable party around the world and enjoy the perks of such high reputation. In the high tech finance world, they are considered a dinosaur which has become just like a bank with fees too high for most people.
Transfermate, CurrencyTransfer and Payoneer are smaller albeit important players worth checking out. Each come with their own set of perks and unique user experience. With all of them, you get an account in seconds and is able to manage transfers well, but still have similar issues as with Transferwise and Paypal: you can only perform one transfer at a time.
Bitcoin and other cryptocurrencies
You may have heard of bitcoin and how it is called the future of currency and so on. There are a lot of companies that currently utilize blockchain technology - the backbone of bitcoin - to perform international currency conversion and transfers utilizing currency conversion in the cloud service providers. These are multi-billion operations and should not be overlook as a possibility. If you are comfortable with the technology, meaning you understand how to use it and is aware of its inherent risks, we suggest that you look at companies that transfer cryptocurrencies between countries and offer conversion to your local currency.
These can be very advantageous to the end user because depending on the country to which you are transferring cryptocurrency to, the cost of transfer compensates for the cost of conversion which means that it is possible to convert major currencies to less known currencies (from Euros to the Brazilian Real for example) for an incredibly low fee. We suggest you google international transfers with bitcoin to find out more about the subject.
Online and virtual banks
Virtual banks are the future become of a combination of factors, such as the ability to utilize legislation and traditional banking infrastructure and combine these with technology to create safe and incredibly fast transactions to anywhere in the world. Take this example: by utilizing a virtual bank account with B2B Pay instead of PayPal, you will save an astounding 85% on a money transfer to India and depending on the region you are sending the money to (if it is a small market) we are talking a reduction in 90% of transit time. Is is true: if you send 100 thousand Euros to a small market in India, it will take over a week and you will be charged 6 or 7 thousand euros in currency conversion (FX) and fees. In other words, it will be cheaper and faster if you place a bag of money on a first class ticket to India and pay a currier to take the bag to the final destination.
There are many types of online banks or virtual banks performing this and many other banking activities with varying levels of quality, reputation and ease of use. We recommend that you investigate this well in order to keep it on the safe side. Some of these banks cannot open accounts to non residents and when they do it is required that you have a business purpose to your transfer such as B2B Pay.
Remember that these are not traditional "wire" transfers because they do not use the regulation in place that got banks talking to each other by giving each an international code which is the SWIFT. We connect account to account directly and once pre-approved, your transactions are monitored electronically which cuts costs and risk for us which means you save in transaction fees. Plus, our FX partners are also in the high tech field which means their currency conversion rates are significantly lower than the competition which is again why virtual banks can offer great deals on international money transfers.