The ins and outs of international money transfers

International Money Transfers

Sending money abroad can be a stressful experience, particularly if it’s the first time ever you do it. If you are a foreign worker you might also be unsure why it costs so much to send money to your home country. This detailed guide on international money transfers will answer many questions people have about this topic.

What are international money transfers?

The name ‘international money transfer’ refers to when people send money to someone else or to a business in a foreign country. One can do this via an international money transfer service or through a bank.

What steps are involved in making an international money transfer?

The process typically involves three main players: the recipient, the sender, and a money transfer service.

It starts with the sender contacting a money transfer service provider to commence a money transfer request. Depending on which company you choose, you will either have to go into their offices to start the process, or do it online. Make sure you have the following information ready: the recipient’s name, contact details, bank details, address. etc. You must also have the correct amount available, including the costs involved with the transfer.

Once you’ve paid the requested amount, the service provider or bank will proceed to transfer the money to the recipient. Depending on various factors, the money will appear in their bank account or be available in cash virtually immediately, although the process can take up to 5 working days or even longer.

The different ways in which you can send money overseas

[1] Your bank

You can go into the nearest branch of your bank and make a money transfer in person. However, it’s cheaper and more convenient to use an online service; either your bank’s or an independent one. The reason is that your bank will typically charge you an additional amount if you make a transfer from a physical branch.

Although many people still prefer to send money overseas through their banks, it has become a very costly exercise. With so many low-cost money transfer services available online, a bank will probably be the most expensive option. You are welcome to confirm this with your own bank but the information at our disposal shows that banks on average charge a whopping 11% fee for overseas transfers.

Many people also find it difficult to determine in advance exactly how much the transfer will cost them because banks are not always transparent with their pricing. Another potential issue is that the recipient might not receive the same amount that you paid in. Many international money transfer services even charge the recipient an additional fee.

[2] An online money transfer service

To counter the sometimes exorbitant fees charged by many banks, online money transfer providers cut costs by using state-of-the-art technology. They pass on at least part of the money they saved in this way to their customers.

To make a money transfer with such a service is easy. You simply sign up for an online account and wait for it to be verified. Once all of that has been completed, you will be able to make your first online transfer at a time that suits you. Most of these services operate 24 hours a day, 7 days a week.

A reputable online money transfer service will be totally transparent with its fees, so it will not be a problem for you to calculate exactly how much the transfer is going to cost you before you even start. Examples of a few providers include the following:

[3] A cash transfer service

If you have to pay for your overseas money transfer in cash, you probably have no choice but to use a cash transfer service such as Western Union.

The big difference between a cash transfer service and a money transfer service is that with the former there is no need for either you or the recipient to have a bank account. You physically pay in the amount you want to send (plus the necessary costs) at your end and the recipient can withdraw that amount in cash at an office on their side.

To initiate a cash transfer, simply find your way to one of their offices and complete a money transfer form. Once you’ve paid the required amount, the person or business on the other side will get a message that the money can be withdrawn at the transfer service’s local office. It typically doesn’t take more than a few minutes before the cash is available on the other side.

There is one major drawback though: a cash transfer is typically much more expensive than an online money transfer.

How secure are money transfer services?

Most people have one major concern when they want to send money overseas. This is whether or not they can be sure that their money will safely arrive on the other side. Before you use a money transfer service, you should do a quick Google search about the provider to confirm that they are being regulated by relevant authorities and follow industry standards. The business should also have security measures in place to prevent theft or fraud.

Although most people have a certain degree of familiarity and trust with their bank, not all of us are aware of the importance of first assessing the security record of a money transfer service, particularly one they’ve never dealt with before. It’s not a good idea to simply download the first available money transfer app from the internet and part with your money without doing your homework about the business behind the app.

If you, for example, want to transfer funds from the United Kingdom, make sure your provider of choice is registered with the FCA (Financial Conduct Authority). This is the best way to ensure that your funds are fully protected against errors or wrongdoings from the moment you’ve paid it in to the moment the recipient withdraws it.

How to choose a money transfer service

Before you choose a money transfer service, it’s important to first familiarize yourself with the following important matters regarding that service:


Start by doing a Google search for reviews of the company you want to use. It is not good enough if a company has only five (brilliant) reviews – it could be the owner and his family who wrote fake ‘reviews’. What you want is a firm with as many as possible reviews, the vast majority of which are positive.


Foreign exchange firms face the same running costs as any other type of business. They have premises to rent, employees to pay, and licenses to renew. If you use their services, you are in fact paying part of these costs in terms of fees.

Guard your funds against banks, FX brokers, high-street transfer services, and building societies that are not prepared to clearly explain their costs upfront. If you are, for example, personally exchanging money, the employees would often just include the fees as part of the transaction without mentioning this.

Look for services that clearly set out their costs and fees before the time so you can calculate exactly how much you will have to pay and how much of that your recipient will actually get.

Exchange rates

Exchange rates can be a very complex topic, but the underlying principle is actually very simple. The exchange rate between the GBP and the USD, for example, is basically just how many US Dollars you will get for one GBP.

Some international money transfer businesses add a huge mark-up over and above the real market exchange rate. This is a discrete way of charging more for their services.

For example, if the real-time exchange rate between the USD and the GBP is e.g. 0.71 (i.e. you have to pay 71 GBP for 100 USD), these firms might quote you a very low transaction fee when you enquire about this, but they add the rest (and more) to the exchange rate. You might, therefore, end up paying 81 GBP or even more for 100 USD.

It’s not too difficult to calculate the real cost of a deal. Do this by searching for the real-time exchange rate on Google or Reuters and then adding the ‘hidden’ exchange rate mark-up explained above to the transaction fee you have been quoted. If the company advertises a fee-free money transfer service, you can be fairly certain that a fee has been added to the exchange rate.

The processing time of the transaction

When you have to choose between two otherwise very similar international money transfer services, enquire about how long it will take before the recipient will be able to withdraw their money. Depending on the company, the process can take anywhere from a couple of minutes to five or more business days. If time is of the essence, choose the company with the shortest processing time.

Sending and withdrawal options

Some services require you to open an account with them and deposit money into that account, while with others funds can be sent from any debit or credit card. Most transfer services will be able to pay funds directly into the recipient’s bank account, but not all of them offer a cash withdrawal service or even a home delivery service. Some services also allow the money to be paid directly into a credit card or even in the form of mobile phone credit.

Wrap up

Online international money transfer service providers give senders and recipients numerous benefits over traditional banks. Users are advised to consider service providers that have low fees, short processing times and have good reputations.