Sending money internationally can be daunting for first timers. Exchange rates to consider, transfer fees to add up and a host of providers with different options.
The good news is:
It doesn’t have to be that way. With the right approach, sending money overseas can be easy for beginners.
In this article, we break down everything you need to know about cross border transfers. By the end, you’ll understand how to transfer money abroad more efficiently than ever before.
What You Will Learn
- Why Sending Money Overseas Matters Today
- The Hidden Costs of International Money Transfers
- How to Select the Right Transfer Method
- Top 10 Tips to Increase Transfer Efficiency
Why Sending Money Overseas Matters Today
International money transfers are big business. As per World Bank, the global remittance market grew by 4.6% last year, reaching a record $905 billion.
That’s not chump change. Millions of individuals rely on international transfers each day.
Whether its to help support family abroad, pay school fees overseas or manage emergency expenses… cross border transfers keep the money flowing.
In most countries, family support is the most common purpose for sending money abroad. A massive 95% of US remitters report sending money to friends or family at home. The vast majority of cross-border transactions go to loved ones.
For anyone interested in how to send money to Guatemala, or any country for that matter, it’s important to know how the process works and how to get more value from each transfer.
The Hidden Costs of Sending Money Internationally
Most people don’t realize…
Sending money overseas is not free. There are hidden costs. The most obvious is the transfer fee. But there is another cost you need to be aware of:
The exchange rate markup.
Most providers charge money in two ways. An upfront fee PLUS a margin on the exchange rate. The rate you are offered is nowhere near as good as the mid-market rate.
For reference, the global average cost of sending $200 is 6.49% right now according to the World Bank. Doesn’t sound that bad, right? But for frequent senders that quickly adds up.
Sending $500 per month with a 6% charge equals $360 per year lost to transfer costs. Money that should be going to your intended recipient.
The best part? Not all transfer methods cost the same. Digital transfers average 5% in fees, whereas non-digital methods average closer to 7%. Selecting the right channel matters.
How to Select the Right Transfer Method
Not all international money transfer services are created equal. Each option has its pros and cons regarding speed, cost and ease of use. Here is the low down:
Banks
Banks are the most well-known option for international money transfers. They feel trusted and safe. But beware…
They often have the highest fees. And less competitive exchange rates. Banking charges can really nibble away at funds for frequent transfers.
Banks are best for large one-off transfers where security is the number one concern.
Money Transfer Operators
Western Union and MoneyGram are the household names that have been around for decades. They provide cash pickup options. Handy if recipients don’t have bank accounts.
Fees can be very variable depending on the corridor. Cheaper in some cases but can also be more expensive than you would expect.
Digital Transfer Services
Enter the disruptors.
Online money transfer platforms are changing the game. By offering:
- Lower fees than traditional banks
- More competitive exchange rates
- Faster transfer speeds
- Convenient mobile apps
For beginners, digital services are often the best all around in terms of balance of cost and convenience. Most transfers are completed within minutes to a few days depending on destination.
Mobile Wallets
In some countries mobile money has become the preferred method to receive funds. Services to allow recipients to access their money directly on their phones. No traditional bank account needed.
Mobile to bank transfers typically have the lowest fees out of any channel. Availability is highly dependent on the receiving country infrastructure.
Top 10 Tips to Increase Transfer Efficiency
Eager to get the most value out of every transfer? Here are some strategies to help maximize efficiency:
Compare Providers
Exchange rates and fees are never fixed. What was cheapest a week ago might not be today. Take 5 minutes and compare.
Send Larger Amounts Less Frequently
Fixed fees disproportionately affect smaller transfers. Instead of sending $100 per week, consolidate to $400 per month. Fees as a % of total reduce significantly.
Avoid Weekend/Holiday Transfers
Currency markets are closed on weekends. Providers often hold transfers until markets open. This can delay delivery and lock in worse rates.
Check the Mid-Market Rate
Before accepting a quote, look up the real exchange rate. Makes it easy to see who is adding large markups.
Use Digital Platforms
Online services nearly always have better rates than traditional methods. They also display fees transparently up front.
Set Rate Alerts
Some platforms will notify you when exchange rates hit a level you want. Helps time transfers to get the best value.
Verify Recipient Details
Sending to the wrong account or misspelling a name causes delay and sometimes extra fees. Double check information before hitting confirm.
Common Mistakes to Avoid
Everyone makes mistakes when first starting out. Here are some costly ones to look out for:
Choosing a Provider based on Brand Recognition Only
Big names are not always the best deals. Spend some time comparing prices.
Not Looking Beyond the Transfer Fee
The exchange rate markup is often the larger expense. Don’t focus on the fee alone.
Waiting Until Last Minute on Urgent Transfers
Providers charge rush fees which are usually steep. Plan ahead and keep costs down.
Not Reading the Fine Print on Delivery Times
Transfers marked as instant can sometimes take a few days depending on the receiving method.
Wrapping It All Up
International money transfers don’t have to be a drain on your wallet. With a little know how and the right approach, you can be a pro.
The 5 Key Takeaways
- Compare providers before every transfer
- Beware hidden exchange rate markups
- Select digital services for the best rates
- Send larger amounts less frequently to minimize fixed fees
- Verify recipient details with care.
The market for international transfers is changing all the time. New digital solutions are continuing to drive prices down. Staying on top of your options means more money reaching those that need it every time.
