What is an international money transfer? How to send money to the UK and other overseas destinations
The international money transfer market is constantly growing with person-to-person money transfers representing up to USD $200billion a year in international flows (according to a 2005 Research and Markets report). Migrant workers sending remittance payments back home, importers, exporters, travelers and expatriates make up the largest sectors of people using international money transfer services.
Travellers and Expats overseas loose millions of dollars in foreign exchange transactions each year by dealing through uncompetitive mainstream providers like banks.
So, what exactly is an international money transfer and how do you reduce the costs?
An international money transfer is an electronic transfer of funds, usually between countries. Money is sent via internet or phone banking between an account in one country, to an account in another country. Instead, an international money transfer service will wire or transfer cash for a small upfront fee starting from £7 ($15-20) + a margin starting at about 0.7% on the amount you are transfering.
Total Cost = Fee + Margin
Fee = The upfront transactional charge regardless of the amount
Margin = A percentage of the total amount sent
On-line money transfer companies usually incur smaller fees as they don’t have the overhead costs that banks or financial institutions and far more effective at minimising the exchange rate risk they carry while moving your money.
Using an international money transfer service – send money to and from the UK (and overseas)
Once you have set up a personal bank account overseas, you will be able to send and receive money between the account and your home account.
Your two options when making an international money transfer are to set up a money transfer account with an international money transfer service company or to use the money transfer services at your bank. Below is a look at the pros and cons of both international money transfer services:
Features |
International Money Transfer Company |
Bank – international money transfer service |
Registration |
Yes, you must register with the company on-line and must present a certified copy of your ID. They may also need to call you to verify your details. |
Must already be an account holder at the bank. |
Cost = Fee + Margin
|
£7-£10
+
0.7 – 1% of amount
|
£15 -£35
+
1.2% - 2% of amount
|
Minimum amount |
£1 - £50 |
none |
Maximum amount |
Amounts over |
Per day limits often apply for online transactions
(£2500 or $5000) |
Time frame |
3-5 business days |
2-3 business days |
Added features |
Added control in choosing when to convert your funds |
Depends on each bank |
Method |
Electronically only: On-line or over the phone |
On-line, over the phone or in person at the nearest branch |
Required |
Access to a secure internet or phone line and access to internet and phone banking |
You must know your home bank’s SWIFT code and banking details |
If you select the cheaper option of using a money transfer company to send money to the UK, to your new account, or back home (most companies offer services in both directions to countries such as Australia, New Zealand, Canada and South Africa), you will have to register online with the company and may need to provide a certified copy of your ID (usually your passport).
Once you have registered, you must follow the below steps to make an international money transfer from your home personal bank account into your new UK personal bank account using a money transfer company:
Send money UK - How to make an international money transfer:
Step 1. Once you are registered with an international money transfer service or company, you must fill out an online form specifying where, when and how much money is to be transferred from one account to the other. You must enter all of your banking details including account numbers, sort codes and BSB numbers. Step 2. You will be issued with the money transfer company’s bank account details in your home country. Using your own home internet or phone banking systems, you must transfer the specified amount into the money transfer company’s home account. Step 3. Once this amount has been cleared, the international money transfer service/company will notify you of this via e-mail or SMS and they will then transfer the money into your new UK account from the money transfer company’s UK account. The money transfer company therefore works as the intermediary enabling funds to be transferred between accounts in different countries. |