Methods for Sending Money Internationally

Quick answer

• Research exchange rates and fees before choosing a service.
• Compare providers like Wise (formerly TransferWise), Remitly, Xoom (a PayPal service), and traditional banks.
• Understand the difference between spot rates and marked-up rates.
• Consider transfer speed versus cost.
• Look for services offering transparent pricing with no hidden fees.
• Check if the recipient needs a bank account or if cash pickup is an option.

Who this is for

• Individuals needing to send money to family or friends living abroad.
• Businesses making international payments for goods or services.
• Anyone looking for cost-effective and reliable ways to transfer funds across borders.

What to check first (before you act)

Goal and timeline

What is the purpose of this transfer? Is it a one-time payment for a specific purchase, or a recurring remittance to support family? Knowing this will help you prioritize speed, cost, and convenience. For urgent needs, a faster (though potentially more expensive) service might be necessary. For regular transfers, a more cost-effective option with slightly longer delivery times could be ideal.

Current cash flow

Before sending money internationally, ensure you have sufficient funds available. Review your budget and account balances to confirm that the transfer won’t strain your personal finances or impact your ability to meet your immediate financial obligations. It’s wise to have a buffer.

Emergency fund or safety buffer

An emergency fund is crucial. Before sending money overseas, especially for non-essential reasons, ensure you have a readily accessible emergency fund. This fund should cover at least 3-6 months of essential living expenses. This prevents you from needing to access funds earmarked for international transfers in a pinch, or worse, resorting to high-interest debt.

Debt and interest rates

High-interest debt, such as credit card balances, can quickly erode any savings you might have. Prioritize paying down expensive debt before sending large sums of money internationally, unless the international transfer is for an absolute emergency. The interest you pay on debt likely outweighs any potential savings on a money transfer.

Credit impact

While sending money internationally itself doesn’t directly impact your credit score, the methods you use can. For instance, if you need to borrow money to fund an international transfer, this could negatively affect your credit. Also, ensure you are using reputable services to avoid falling victim to scams that could lead to identity theft, which can have severe credit implications.

Step-by-step (simple workflow)

1. Define Transfer Details:

• What to do: Determine the exact amount you need to send, the currency required by the recipient, and the urgency of the transfer.
• What “good” looks like: Clear understanding of the total cost in your currency and the amount the recipient will receive in their currency.
• Common mistake and how to avoid it: Assuming the amount you send is the amount the recipient receives. Always confirm the final amount after all fees and exchange rate conversions.

2. Research Transfer Providers:

• What to do: Explore various money transfer services, including online platforms (like Wise, Remitly, Xoom), mobile apps, and traditional banks.
• What “good” looks like: A shortlist of 2-3 providers that appear to meet your needs for cost, speed, and convenience.
• Common mistake and how to avoid it: Only checking your bank. Banks often have higher fees and less favorable exchange rates for international transfers.

3. Compare Exchange Rates and Fees:

• What to do: For your shortlisted providers, compare the exchange rate offered and the transfer fees. Look for transparency – does the provider show you the “real” exchange rate or a marked-up one?
• What “good” looks like: A clear breakdown of the total cost, including the exchange rate margin and any fixed or percentage-based fees.
• Common mistake and how to avoid it: Focusing only on the advertised “no fee” transfers, which often hide costs in a less favorable exchange rate.

4. Check Transfer Speed and Limits:

• What to do: Verify how long the transfer will take to reach the recipient and if there are any sending limits (daily, monthly).
• What “good” looks like: Understanding the estimated delivery time and confirming it meets your urgency requirements, and that there are no limits preventing your desired transfer amount.
• Common mistake and how to avoid it: Not realizing a transfer might take several business days, causing issues if the payment is time-sensitive.

5. Verify Recipient Information:

• What to do: Gather all necessary details for the recipient, such as their full name, address, bank account number (IBAN/SWIFT code if applicable), or mobile number if cash pickup is an option.
• What “good” looks like: Accurate and complete recipient details to prevent delays or failed transfers.
• Common mistake and how to avoid it: Typos in bank account details or recipient names, leading to funds being sent to the wrong account or being returned.

6. Choose Your Provider and Method:

• What to do: Select the provider that offers the best combination of cost, speed, and reliability for your specific transfer.
• What “good” looks like: A confident decision based on your research, with a clear understanding of the provider’s terms and conditions.
• Common mistake and how to avoid it: Making a hasty decision without fully comparing options, potentially leading to higher costs or longer wait times.

7. Initiate the Transfer:

• What to do: Follow the chosen provider’s instructions to set up and authorize the transfer. This usually involves entering your payment details and the recipient’s information.
• What “good” looks like: A confirmation of the transfer initiation and an estimated delivery time.
• Common mistake and how to avoid it: Not double-checking all entered information before submitting, which can lead to errors.

8. Track the Transfer:

• What to do: Use the tracking number or link provided by the service to monitor the progress of your transfer.
• What “good” looks like: Real-time updates showing the transfer moving through different stages.
• Common mistake and how to avoid it: Forgetting to track and not realizing a transfer is delayed until the recipient contacts you.

9. Confirm Receipt:

• What to do: Once the estimated delivery time has passed, confirm with the recipient that they have received the funds.
• What “good” looks like: The recipient confirming they have received the correct amount in their account or via cash pickup.
• Common mistake and how to avoid it: Assuming the transfer is complete without confirmation, which can leave you unaware of potential issues.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not comparing exchange rates	Paying significantly more due to unfavorable conversion rates.	Use comparison tools and look for services using the mid-market exchange rate.
Ignoring transfer fees	Underestimating the total cost, leading to less money reaching the recipient.	Always check for both fixed fees and percentage-based fees, and factor them into your total cost.
Using your bank by default	Often results in higher costs and slower transfer times.	Explore specialized money transfer services; compare your bank’s rates with others.
Not verifying recipient details	Delayed or failed transfers, potential loss of funds, or incorrect delivery.	Double-check all names, account numbers, and routing information before submitting.
Choosing speed over cost without need	Overpaying for a service when a cheaper, slightly slower option would suffice.	Assess the actual urgency of the transfer and balance speed with cost-effectiveness.
Falling for “no fee” promotions	Hidden costs in the exchange rate make the transfer more expensive overall.	Always check the final amount received after conversion and fees, not just the advertised fee.
Not checking transfer limits	Being unable to send the full amount needed in a single transaction.	Understand the daily, weekly, or monthly limits of a provider before you start.
Ignoring tracking and confirmation	Unawareness of delays or potential issues with the transfer.	Actively track your transfer and confirm receipt with the recipient.
Sending money for illegal activities	Legal repercussions, loss of funds, and potential identity theft.	Only use reputable services for legitimate transactions. Be wary of unsolicited requests.
Not understanding recipient’s options	Recipient may not have a bank account or face difficulties receiving funds.	Check if cash pickup or mobile wallet options are available if the recipient lacks a bank account.

Decision rules (simple if/then)

• If the transfer is urgent, then prioritize speed and be prepared for potentially higher fees, because faster services often charge a premium.
• If the transfer is for a small amount, then look for services with low fixed fees, because percentage-based fees can be disproportionately high on small sums.
• If the transfer is for a large amount, then compare providers that offer competitive rates on larger sums and consider services with lower percentage fees, because these can add up significantly.
• If the recipient does not have a bank account, then look for services offering cash pickup options, because this is essential for them to receive the funds.
• If you are sending money regularly, then research providers with loyalty programs or better rates for recurring transfers, because this can save money over time.
• If you are unsure about a provider’s legitimacy, then check reviews and look for official regulatory compliance, because this helps avoid scams.
• If the exchange rate offered is significantly different from the mid-market rate, then be cautious, because this likely indicates a hidden markup.
• If you need to send money in a less common currency, then check which providers specialize in that currency, because availability and rates can vary widely.
• If you are sending money for business purposes, then investigate business-specific transfer services, because they may offer better features and pricing.
• If you are concerned about security, then choose providers that use two-factor authentication and encryption, because these protect your transaction.
• If you find a provider with a very low fee but a poor exchange rate, then calculate the total cost, because the hidden exchange rate cost might be higher than other options.
• If the transfer involves sensitive information, then ensure the provider has a clear privacy policy, because this outlines how your data is handled.

FAQ

Q: What is the cheapest way to send money internationally?

A: The cheapest method usually involves specialized online money transfer services that offer competitive exchange rates and transparent, low fees. Always compare multiple providers before sending.

Q: How long does it take to send money overseas?

A: Transfer times can vary from a few minutes for instant services (often with higher fees) to several business days for traditional bank transfers or slower online options.

Q: Are there limits on how much money I can send internationally?

A: Yes, most services have sending limits, which can be daily, weekly, or monthly. These limits vary by provider and your verification status. Check with your chosen service for specifics.

Q: What information do I need to send money internationally?

A: Typically, you’ll need the recipient’s full name, address, and their bank account details (like account number, SWIFT/BIC, or IBAN). Some services also allow sending to mobile numbers for cash pickup.

Q: Is it safe to use online money transfer services?

A: Reputable online services are generally safe and secure, often regulated by financial authorities. Always use well-known providers and ensure they use encryption and have strong security measures.

Q: What’s the difference between a bank transfer and a money transfer service?

A: Banks often have higher fees and less favorable exchange rates for international transfers. Money transfer services specialize in this, aiming for lower costs and faster delivery.

Q: Can I send money internationally without a bank account?

A: Some services allow you to pay for a transfer using cash at a physical agent, and many offer cash pickup options for the recipient, meaning they don’t necessarily need a bank account.

Q: What is a mid-market exchange rate?

A: The mid-market rate is the midpoint between the buying and selling rates of currencies on global markets. Services that offer this rate are generally more transparent and cost-effective.

What this page does NOT cover (and where to go next)

• Detailed tax implications of sending or receiving international funds.
• Specific regulations for business international payments or payroll.
• Investment strategies involving foreign currencies or international markets.
• Legal advice on international contracts or disputes.
• Currency hedging strategies for businesses.