Did you know that individuals sent more than $68 billion from the United States of America to low and middle-income economies in 2017 alone? According to the world bank, this large transfer of money makes the United States the leading source of critical remittances to other middle and low-income countries.
Essentially, much of the money was sent by immigrants living and working in the United States to their families back home. Currently, the world bank believes that the remittances from the developed countries to less-developed ones are bound to top $550 billion. Now, out of this figure, 7 percent goes to transaction costs and other charges. Essentially, this translates to approximately $38.5 billion going to transaction charges and other fees.
Typically, these transaction costs arise from explicit transaction charges and exchange rates that are sometimes unfavorable. Scaling it down to a personal level, if you were to send $1000 to your relatives, the transaction fee would be $70. This is quite absurd, and you could put the money to better use.
Fortunately for you, some tech companies have developed platforms that allow sending money faster and cheaper. In this guide, you will get to learn about some of the best money transfer solutions.
Formerly known as TransferWise, Wise is for me the cheapest way to transfer money abroad. With wise, it does not matter what your bank or banking company is.
Additionally, when compared to phone or in-person overseas money transfers, Wise is cheaper. You can send any amount below $7000 at very competitive rates and friendlier exchange rates with the online platform. Their website offers a seamless process that is more convenient than an in-person wire transfer.
Wise has also crafted a mobile application to ease customer service and improve international transfers.
What are the transaction fees?
- Transfer fees: Percentage-based Service fee
- Exchange rates: There are no margins. The platform uses the interbank rate as the base.
You probably have heard of PayPal. If you haven’t, it is time to check it out. Now, PayPal is more of a peer-to-peer money transfer platform serving both the domestic and international markets. The platform is easily accessible and offers a range of payment methods that some other platforms don’t. If you send some cash to your friends or relatives, the funds get transferred instantly to the recipient’s account – a PayPal account. If the recipient wishes, they can transfer the money to their bank accounts or other third-party banking solutions.
Additionally, PayPal allows its account holders to use the PayPal option to pay for goods and services. You can use debit and credit cards, a traditional bank account, or mobile money options regarding payment options.
Transaction fees for PayPal are dependent on the region and the currency in the recipient’s country. The platform imposes no limit for transactions carried out by verified accounts. However, single transactions are limited to $60000.
On the other hand, HSBC is a UK platform that allows its clients to make international transfers to over 150 countries in different regions, including the US. Essentially, a customer can use either the HSBC application or the online banking platform.
Additionally, you are afforded the chance to make payments by physically visiting an HSBC branch, sending an email, or through your mobile phone.
However, if you choose to use these options, the transaction is bound to attract higher fees. Assuming you were to send 1000 USD to a friend in France or Germany, you would have to consider:
- The upfront transfer costs
- Third-party fees
- Exchange rates
Depending on your provider, the total transfer cost can be relatively high or low. HSBC will charge you four euros in addition to the exchange rate and third-party fees.
Other fees: wire transfer charges, bank debit, credit, and debit card fees, depending the bank account offer you have.
Essentially, Xoom is an international fund transfer platform. It allows its clients to send money overseas, pay for invoices and bills abroad, and buy utilities such as airtime for other people globally.
As part of PayPal, the platform is growing exponentially worldwide by offering great alternatives for payment services. With Xoom, you can send money to your international friends without having to use your local bank. Normal traditional bank transfers to international locations can be relatively inefficient and expensive. With Xoom providing an alternative option, it becomes attractive and more convenient.
The transaction fees for Xoom transfer include:
- Exchange rate fees
- Third-party fees
- Transaction fees
Essentially, if you want to send your money abroad, you will need to pay attention to the fees and exchange rates charged. Different platforms charge different amounts, and the amounts may differ depending on the type of service. WorldRemit is one of the platforms where your transaction gets charged a very little transaction fee. The exchange rates on this platform are better and convenient than those of its competitor Xoom. To use WorldRemit, you must sign up with them. The registration process is free and only requires important details such as your contact and personal information.
The payment options include debit cards, credit cards, bank account, Google Pay, Trustly, Apple pay, and many others. The transaction fees vary depending on where you want to send your cash to. For instance, if you were to send $50 to a person in Mexico, the fee would be $3.99.
Normally, the transactions are instant, and so are the transfers. The amount of time is, however, dependent on the location itself. In the case of home delivery, it can take approximately 24 hours or seven days.
With WorldRemit, the transaction limits vary from one country to another. For clients sending money from the United States of America, the limit per transaction is $5000. Transactions from a similar location are limited to $9000 in one day.
Generally, you can choose the best platform by evaluating their transaction fees, other charges, and transfer duration. Additionally, these platforms offer very competitive transaction limits, thereby giving you convenience.