In today’s complex financial world, many savvy shoppers can no longer afford to assume they know which methods of global money transfer really offer the best deals. Constantly evolving regulations, increasingly hidden fees and fluctuating currency exchange rates require real strategy to negotiate a good balance between convenience and price. In some circumstances, the most cost-effective method may involve stuffing an international money order into a courier envelope and sending it on an overseas voyage.
The first important step is to ask a series of logistical questions: Is this a one time payment or might you need send more later? How soon does the money need to get there? Do you have a bank account or bank card? Does the recipient have a bank account or bank card? Does the recipient have access to online services? What currency will the recipient need? Are you concerned only with front-end costs or those of the whole process?
Finding and Comparing Fees
In order to understand and compare all applicable fees, break each money transfer option down according to user and recipient fees. These options include mail/courier, bank account transfer, money transfer services, bankcard transfers and some combination thereof.
Although initially only an issue for travelers abroad, currency conversion costs are an increasingly important factor all bankcard purchases . According to the "Ecommerce Journal," the definition given by financial services companies of “foreign transaction fees” has been expanding since 2006. These fees can appear as hidden charges on credit card transactions and have been surprising many customers when their bills arrive. They are subject to appear anytime currency conversion is linked to bank card activity even if the purchaser is in the U.S.
A general rule of thumb is that any time a bankcard is involved in the process, the fees climb exorbitantly. One surprising exception, especially when the purchaser does not have a bank account, may be a pre-paid or load card.
Who Are The Money Transfer Companies?
The major money transfer companies in the United States are MoneyGram, Western Union and PayPal. All three have wonderful websites that allow you to see what countries you can send funds to and compare rates. There are still some countries, especially in Africa, not served by the big three. If you don’t find the destination you are looking for on these provider sites, check with online alternatives such as Ikobo and Xoom.
Many customers without bank accounts use agent offices for sending funds because they need to pay in cash. This is not necessarily the best option available, nor is it the cheapest. If both sender and recipient have Internet access, a combination of a pre-paid card offered by green dot MoneyPak and PayPal international transfer service might be the best bargain. PayPal does require that the recipient sign up for a PayPal account and the rules for recipient access to funds varies in many countries.