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July 8, 2015
1. Why is it cheaper to send money with a money transfer firm than a bank?
Money transfer firms offer a better exchange rate and lower fees than banks for the same service. They make their money on the large volume of transactions they handle daily. Whereas a bank will generally charge between $20 and $45 for a single transfer, most FX firms charge around $5. Some even offer free transfers! Private money transfer firms are also willing to offer better exchange rates than banks and happy to make 1% as opposed to the 4% or 5% banks try and profit.
2. What is the cheapest way to send money between countries?
There is not cut and dry answer to this question. A number of variables come into play including the currencies being exchanged, the destination country and the amount sent. As a blanket statement, foreign exchange transfer services are usually your best option because they charge the lowest fees and give the best exchange rates. Your best bet is to use the Send Money Cheaper Comparison Tool to compare the rates offered by different providers.
3. How secure is sending money through a money transfer firm?
Security is of the utmost concern to most money transfer firms. Most comply with U.S. anti-money laundering laws and many are also registered with specific governing bodies in their country of incorporation. Your funds are kept completely segregated from business funds. Regulated companies are required to keep sufficient capital to safeguard customer transfers in case of any issues. That being said, there are a number of irreputable firms out there and if one of them goes bust, there is a chance you may not get your money back.
All of the companies recommended by Send Money Cheaper are regulated and reputable. If choosing other transfer servicers, do your research to make sure they are complying with all local and national laws. As with any online based service, any time you make include your bank account information there is a potential to be hacked, but these instances only happen in rare occasions and could just as easily happen to your bank.
4. What kind of information do I need to send money overseas using a money transfer service?
Sending money with a private foreign exchange firm is easy. In most cases, all you need is your personal information like name, contact information, country of residence, address, etc. You’ll also need some form of legal identification. This could be a passport, driver’s license, or military ID. If conducting the transaction completely online, you will need your bank account, credit card, or Paypal info as well.
For the recipient, you will need their name, phone number and country as a minimum. If you are having the money directly deposited into their bank, you will need their bank account info and the currency type in their account. For a cash pick up, you just need their full name as it appears on their official ID and phone number.
5. Where can I send money to?
Just about every country has some money transfer firm that services them with a few exceptions like Somalia or other war torn countries where there is a worry money could be sent for the purpose of funding terrorist activities. Using the Send Money Cheaper Comparison Tool, you can see which providers service the country you need to send money too and choose the lowest cost option.
6. How much money can I send at one time?
The sky is the limit. Money transfer firms specialize is sending small and large amounts. Whether you want to send $200 to help a struggling family member or want to transfer $400,000 to purchase a home or business overseas, foreign exchange firms can help.
7. Is it better to send lots of little amounts or a large amount at one time?
It depends on your needs. If you are sending money to a child studying overseas who isn’t great at budgeting, it might be better to send regular small money transfers. In general though, you will usually wind up paying less fees doing a fewer amount of large transfers as opposed to lots of little ones. When initiating large transfers over $10,000 you will often get a better exchange rate meaning more of your money arrives at its destination.
8. How long before the money is available to the recipient?
This depends on the fees you want to pay, the services you use, and which option you choose. You will generally have the choice of paying little or no fees and having the money available within three days, or you can choose to pay a little more and the money can be available nearly instantaneously.
9. Does the recipient have to pay any fees?
The recipient of the funds won’t have to pay any fees to pick up the money. All of the fees will be paid on your end and you can choose to have them deducted from the transfer amount or you can set the amount you want the recipient to receive and pay an additional amount to cover the fees.
10. In what currency will the recipient receive the funds?
With most money transfer firms, you can specify what type of currency you want the recipient to receive, but there are a few countries out there that will only allow transfers of their local currency to received or deposited into bank accounts. Check with their local laws or your money transfer firm of choice if you are unsure.
11. Can I send money to somebody who doesn’t have a bank account?
Yes. The recipient does not need a bank account for cash pick ups. All that will need is a valid government I.D. and special password that you choose when initiating the transfer. With these two things in hand, they can go to the specified pick up location and receive the funds.
12. What is FinCEN?
FinCen is the United States Department of Treaury’s financial crimes unit. They safeguard the financial system from money laundering by collecting, analyzing, and disseminating financial intelligence. They work with financial authorities around the globe to monitor money transfers between countries and ensure that your personal information and money is safe. In addition to keeping a close watch on the global money transfer industry, they also oversee securities and futures, casinos, the jewelry and precious metal industry and more.
13. If I am an importer, can I use a foreign money transfer firm to save money?
Yes. Once registered with one of our preferred providers like USForex you catalog all of your suppliers in your online beneficiary library. This will save you time during future transactions as you won’t have to input their information before every transfer. In addition to saving time, you’ll save quite a bit of money on each trade through lower fees and better exchange rates which can have a large affect on your bottom line.
14. If I am an exporter, can I use a foreign money transfer firm to save money?
As with importers, exporters can use a money transfer firm to save time and money by expediting the transfer service and getting better exchange rates with lower fees. You can use one of our preferred providers to automatically convert funds from overseas clients into your local currency. You can even provide your clients with your account details so they can make payments directly into your foreign exchange firm account which you can either have transferred immediately into your home country bank account or use to pay off your overseas suppliers. You can also lock in favorable rates ahead of time so when your client pays you, you are guaranteed a good exchange value for your money.
15. What are SWIFT codes, IBAN and ABA numbers?
SWIFT stands for the Society for the Worldwide Interbank Financial Telecommunication. It is a secure messaging system that allows banks to communicate with each other for payment and currency transfer instructions. Each country has its own codes that allow them to identify bank branches so they know where money is coming from and where it should be going. In the US, we use ABA codes (also known as routing numbers), in Australia they use BSB codes, Europe uses IBAN numbers, etc. Each country has their own way of identifying bank branches and they all use the SWIFT system to communicate this information so your money winds up in the right place.
16. What is a forward contract and who can use them?
A forward contract is simply a way of locking in exchange rates before the money transfer ever takes place. Depending on the transfer firm you are using, you may be able to lock in an exchange rate up to two years in advance using a forward contract. It is a way of safeguarding against any sudden drops in currency values when you are anticipating a large transfer. Everybody from large corporations to individuals can use forward contracts and our preferred money transfer firms have customer service reps who can help guide you in setting up your forward contract. Though the transaction won’t take place until a future date, you may be asked to give some kind of deposit on the transfer amount to lock in your rates. To learn more about forward contracts, read this article.
17. What are limit orders and who can use them?
Limit orders allow you to set up a money transfer so that once the value of a currency hits a specified threshold, the transfer is automatically placed even if you are not online monitoring it. This allows you to enact a foreign currency transfer at a favorable rate no matter what time it happens, even if you are asleep. It’s a great way to take advantage of currency swings that may happen overnight while other markets around the world are trading.