What You Need To Know Before Using International Wire Transfer Companies
Whether you are sending a new friend a few dollars to cover your share of a taxi ride or paying your virtual assistant who works halfway around the world, sending money via international wire transfer companies is more common than ever. But is it easier? There are a host of options available to people looking to share funds with their friends, family, and business contacts. Each option has its own pros and cons to consider when you are managing your money. There are several factors to consider when sending money internationally. From cost to flexibility to user experience, here are some things to keep in mind when assessing the best international wire transfer companies and which ones will work best for you.
Your Home Bank
Most American banks offer money wire services. This is a secure and reliable form of transferring money and it usually does not matter how much you send. Whether your transaction is large or small, it is not a problem. Plus, it is something you can do in person while you are attending to other business and many banks have online options as well. Yet there are also several downsides. For instance, bank fees for these transactions are high. There is also an exchange rate markup to take into consideration if you are dealing with different currencies. For the most part, other money wire transfer services offer more competitive rates and flexible services.
Western Union
Western Union is one of the oldest money transfer institutions in the world. Certainly, it’s the brand name with the greatest global recognition. Western Union boasts coverage in over 200 countries with more than 550,000 locations. This makes it the largest transfer organization in the world. You can use Western Union through their website, their app, or by going to one of the brick-and-mortar locations. Customers can use cash, your debit card, or your credit card to send money. It will either be deposited directly into the recipient’s bank account or picked up at a Western Union location.
The pros of using Western Union include its security, its flexibility, and low fees. However, compared to its competitors, it has a slow delivery rate of four or five days. If you want a faster timeline, you pay for rush delivery. And while it does have many online wire transfer options, its website is not as user-friendly as many of its competitors.
PayPal
PayPal allows people to send money to friends and family or to business contacts using a credit card or a linked bank account. If you are sending money to friends and family using your linked bank account, you will pay fees to PayPal. However, if you are sending money to a business, such as paying for goods and services, the recipient pays the fees on their end.
PayPal is quick and easy to use. The fees are reasonable when sending money domestically but higher when you are sending money overseas. However, the recipient must also have a PayPal account. It takes several days to transfer money from PayPal to a personal bank account and you must pay extra to fast track this transfer.
TransferWise
TransferWise stands out from its competition by using the actual exchange rates of the day, with no markups. It offers straightforward pricing, an easy to use website, and mobile platforms. You pay a small fee for your transfer and the money goes directly to the recipient’s bank account. TransferWise’s fees are some of the lowest in the industry if you are using a bank account (as opposed to a credit card). That said, it does take a couple of days for the international wire transfer to be finalized and rush fees cost more. TransferWise is available in more than 70 countries, which is fairly comprehensive but not nearly as widespread as Western Union.
OFX
OFX is very similar to TransferWise with one notable exception. Unlike TransferWise, OFX takes a small margin off of the exchange rate of the day when you make a transfer. This usually amounts to less than 1%. However, they charge no additional fees. While some companies charge larger fees for larger transfers, OFX does not. In the end, whether you prefer TransferWise or OFX depends on how you prefer to pay for their services (through fees or markups) and whether or not you are sending a particularly large sum of money.
OFX has an easy to use online platform, no maximum transfer limits, and same-day service between some countries. However, there is a minimum amount of $150 per transfer and thus not an ideal option for small transactions.
Related: Foreign Exchange Currency Providers
Xoom
Compared to many online providers, Xoom is a pricey provider. While their upfront fees are low, sometimes less than $5 when you use a bank account instead of a credit card, the exchange rate markups can be more than 3%. However, they are still cheaper than bank-based transfers. They are also one of the speediest options. Some transfers arrive within minutes. They also offer great flexibility, as you can fund a transfer with a bank account, a debit or credit card, or a PayPal account (which is Xoom’s parent company). There is also an option for cash pick up at supermarkets or other authorized locations in a number of countries. Finally, Xoom is known for strong customer support, with phone services offered in French, Italian, German, Arabic, English, Spanish, and Filipino. In short, you do get a lot of service and support for your money.
WorldRemit
Founded to provide online money transfer services to migrant communities and other populations lacking banking services and support, WorldRemit is big on ease of use and flexibility. Customers can sign up on their phones and send money electronically to bank accounts and mobile wallets, in cash at designated pickup locations, and in the form of increased airtime to recipients prepaid cell phones. This latter option is particularly popular in countries without landlines where the population strongly relies on prepaid phones for most communication.
Overall, WorldRemit has low costs, flexibility and services not found with other money transfer providers, and a commitment to security, fraud prevention, and economic development. However, as part of their efforts to prevent fraud, you can’t convert cash into an electronic transfer, which is a disadvantage to people who cannot access bank accounts. As well, their security requirement that you must have a government-issued piece of photo ID to open a WorldRemit account excludes some potential users.
MoneyGram
Similar to Western Union, MoneyGram is active in over 200 countries, with more than 350,000 locations. Having physical locations has the advantage of allowing people without bank accounts both pay in cash to transfer funds and to receive funds in cash as well. It also has online options that allows people to use their bank accounts, debit, and credit cards. Delivery may occur the same day, though it sometimes takes longer depending on banking hours and other factors. However, it has moderate fees which include an exchange rate margin that’s usually more than 3%.
Digital Wallet Options
Digital wallets, like Venmo and M-Pesa are ideal for transferring small amounts. You only need to know the recipient’s email or username to activate the transfer. They also work well in countries where there is not much in the way of a banking infrastructure but smartphones are widespread. However, the very thing which makes them popular is also their drawback. Users must have a smartphone-enabled app and access to data so they can receive funds and securely store their payment and balance information.
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