According to the World Bank, migrant workers sent close to $800 billion worth of remittances to their home countries in 2022. One of the main reasons why migrant workers send remittances is to provide support for their families back home. Approximately 75% of remittances help cover essentials, such as food, medical expenses, and school fees.
Approximately 800 million people worldwide receive and benefit from remittances sent by family members working overseas. However, while migrant workers usually send remittances every one or two months, sending money abroad can be very expensive due to factors like currency conversion and fees. In addition to costly transaction fees and varying conversion rates, there is the risk of falling for scams.
The good news is that more technological innovations and cost-effective alternatives are on the rise, which may help cut down the cost of sending money abroad and make it more secure. Some of the most common ways of sending money abroad include international bank-to-bank transfers, mobile money, ACH transactions, and wire transfers.
What to Consider Before Sending Money Abroad
Below are key considerations to keep in mind before sending money abroad:
Exchange Rates
Exchange rates are volatile. If you send money to another country, it’s subject to a fluctuating exchange rate, ultimately affecting the recipient’s value. Some services offer seemingly competitive rates, but once you factor in transfer fees and interbank exchange rates, you might find that you’ll end up paying more.
The best way to ensure you get the best rates is to research your preferred currency’s current mid-market rate.
Fees
Another thing to consider when sending money abroad is the transfer fees, which can vary between banks. If you want faster transfers, you’ll likely pay more expensive fees. To help you get an estimate of how much you’ll be paying, many service providers offer calculators on their websites, which give you an idea of just how much a transfer could potentially cost. For example, companies like BOSS Revolution have handy money transfer calculators that lets you know how much your recipient can potentially get. It also shows the exchange rate for your selected currency, as well as any fees, so you get a good idea of how much a transaction will actually cost.
Transfer Speed
International bank transfers will take longer than domestic bank transfers, which can be done instantly. Factors affecting transfer speed include security checks, transfer type—interbank transfers tend to take longer than money transfers using Western Union or MoneyGram, when the funds are transferred, and the recipient’s destination. To ensure you get a good estimate of when the recipient can access the funds, it’s best to check with your selected service provider. Additionally, you may want to avoid sending money during bank or public holidays, as this can cause delays and can further subject your money to volatile exchange rates.
Limits on the Amount You Can Send
Depending on your chosen service provider, your transaction may be subject to limits, which enable banks or transfer services to comply with international banking regulations. Ask your preferred bank or service provider about their limits so you’ll know how much you can send.
Recipient’s Location
The recipient’s location may have different banking regulations or infrastructure. Additionally, not all countries may accommodate transfers from the US, for example, so it’s best to compare different services, focusing on those that provide services to your recipient’s location. Lastly, there are service providers that may require the recipient to create an account with them before the latter can receive your money. It’s best to figure out which option is most convenient for both you and the recipient prior to sending money abroad.
Scams
Unfortunately, money transfer scams are still prevalent, which is why it pays to be aware of such scams. Make sure that you’ll only be working with reliable providers and don’t fall for claims that are too good to be true. Common red flags you need to be aware of include the following:
- The scammer asking you to use unusual means when sending money abroad
- Someone claiming that they’re from a government agency or a famous company
- The scammer pressuring you to part with your money
If you think you’ve sent money to a scammer, the FTC recommends that you:
- Report it to them
- Contact your service provider to inform them that the transaction was fraudulent and ask them to reverse the transfer (for wire transfers)
- Contact your bank to report the fraudulent transaction and ask if it can be reversed (for bank transfers)
Ways to Send Money Abroad and Their Pros and Cons
Bank Transfers
In a bank transfer, you’re electronically moving money from one bank to another. Banks typically use the SWIFTs system to facilitate accurate and secure transfer of funds.
Pros
- Secure and reliable
- Fully electronic
Cons
- Transfer limits and transfer speeds may vary from one bank to another
- Banks may charge a base fee on top of other transaction or processing fees
Money Transfer Services
Money transfer services function like bank transfers, except that they can transfer funds physically or electronically.
Pros
- Flexible and convenient way to transfer money
- Traditional wire transfer services often have accessible physical locations
- Allows recipients with no bank accounts to receive money
Cons
- May charge additional fees
- Fees are subject to factors like how the money is transferred and the recipient’s location
Online Platforms
Online platforms offer greater convenience, often allowing you to send money abroad without going to the bank. Simply use your phone or computer to send remittances instantly.
Pros
- Reduced user fees
- Lower transaction costs
- Doesn’t require you to fill out extensive forms
Cons
- Requires internet connection
- Limited availability in certain countries
- May require the recipient to have an account with the service provider
How to Save Money on International Money Transfers
Sending money abroad shouldn’t break the bank. Below are practical tips to help you cut costs on international money transfers:
- Opt for a provider with lower fees but don’t forget to review your service needs to ensure you’re getting consistent and affordable deals.
- Use a forward contact to access a favorable exchange rate.
- Refrain from sending cash via mail as it can be difficult to trace in the event of a loss.
- Compare different providers. Shop around and compare key components like fees and exchange rates.
- If possible, send a single, large amount rather than sending funds piecemeal, as transfer fees tend to add up.
- Avoid using your credit card to transfer funds, as this can entail higher transfer fees.
- Look for service providers that have introductory offers or regular discounts. BOSS Revolution, for example, lets first-time users enjoy free money transfers for transactions up to $300.
Conclusion
Sending money abroad gives you a way to provide constant support to your family back home, wherever you may be in the world. Given that there are now many channels to send money abroad, it’s crucial that you take the time to research and compare options to ensure that your chosen solution works best for both you and the recipients.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
