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How to send money internationally from Canada
Here are the best ways to transfer money internationally for cheap.
Looking to send money internationally? Here’s what you need to know about ways to send money overseas, the importance of exchange rates and how to manage your costs.
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How to send money overseas
Sending money overseas can be done in a variety of ways. In general, your options include:
Many Canadian banks offer global money transfer options and wire transfers to countries around the world. This includes major banks like TD, RBC and CIBC as well as digital banks like Simplii Financial and EQ Bank.
Bank transfers typically come with lower exchange rates and higher fees than companies that specialize in money transfers like Western Union and TransferWise. However, we may see this change over time as traditional banks respond to competition from newer fintech companies by developing more competitive digital money management solutions.
Digital money transfer services
Online money transfer services let you conveniently manage transfers from anywhere in the world through online platforms and mobile apps. Some services like Xe and Remitly offer same-day money transfers.
Acceptable payments usually include bank transfer, debit and credit. One downside is that you can’t pay for your transfer with cash, as digital money transfer services don’t operate physical branches.
Providers with cash pickup
Industry giants like Western Union and MoneyGram offer the advantage of giving your recipient fast access to the cash you send — sometimes within minutes. These companies offer the choice of paying online or in person at an agent location.
However, depending on the type of transfer, you may pay higher fees than if you used an online-only money transfer service that has less overhead costs to maintain. Some online-only transfer services like WorldRemit and Remitly offer cash pickup as a receiving option.
Xoom (offered by PayPal)
PayPal offers online transfers to 150+ countries and territories around the world through its international money transfer service, Xoom. Before Xoom became available, PayPal had a reputation for offering poor exchange rates and high fees, particularly for large transactions.
However, with the advent of Xoom, PayPal has made it much easier to send money overseas using its platform. Xoom’s exchange rates and fees are competitive with other online money transfer service providers.
Cheques and money orders
Not the quickest option for sending money internationally, you can mail physical cheques or money orders around the world from your bank or Canada Post. Compared to an electronic transfer, there are added costs involved like a fee for each cheque or money order you request and the cost of postage. Your recipient may also be charged a fee by their bank when cashing in.
How to send an overseas transfer with an online specialist
Although the exact process may differ between service providers, these are the steps you’ll generally have to follow to send money internationally:
- Create an account. Creating an account is usually free. You’ll need to provide details like your name, contact information, birth and Social Insurance Number (SIN). Some service providers may ask you to upload a scanned copy of ID (i.e. driver’s license or passport) to lift the sending limits on your account, so you can send large transfers.
- Enter your recipient’s info. Provide the name of the person receiving the transfer as it appears on his or her personal ID, as they may need to present ID to receive the funds. You’ll also need their contact info. For deposits directly to a bank account, you’ll need the name of your recipient’s bank, the bank’s SWIFT code and your recipient’s account number.
- Enter the details of your transfer. Enter how much money you want to send, the destination country and currency, the way you want funds to be received (cash, bank account etc.) and how you intend to pay (bank transfer, credit debit etc.). Note that sending and receiving options will vary between service providers.
- Review the details of your transaction. Most providers will provide a summary of your transfer for you to review. Make sure you fully understand the fees, exchange rate and exact amount your recipient will get. If anything is incorrect, go back and make changes where necessary.
- Submit payment. Payment methods vary by company but can include credit card, debit card, bank account, cash or mobile wallet transfer.
- Track your transaction. After payment is received, you should receive a confirmation number and/or tracking number to monitor the progress of your transfer online or through an agent location. Your recipient may also need this number to receive funds.
Once the transaction is complete, you may receive an email or text notification that the funds have been received. Details of the transaction may be saved to your account to make future transfers quicker and easier.
How to keep costs down when sending money internationally from Canada
When you send money internationally, fees and exchange rates play a huge role in determining your costs.
Why you need a competitive exchange rate
The exchange rate is the value of one currency when converted to another currency. Technically, exchange rates change every second, but banks and money transfer services may update their rates daily, hourly or even sooner.
The mid-market rate is the value of one currency in another currency. For example, if the mid-market rate for converting CAD to USD is 0.75, then CAD$1 is worth USD$0.75.
Most banks and money transfer services make a profit by taking a fee worth a small percentage of the mid-market rate. So, if the mid-market rate for converting from CAD to USD is 0.75, you might actually be offered a rate of 0.71. This means your recipient will get USD$0.71, and the bank or money transfer service will pocket the remaining 4 cents.
While losing a few cents per dollar may not sound like a lot, it can really add. A lower exchange rate means you lose more of your money to fees, and your recipient gets less. A higher exchange rate means more of your money goes to your recipient instead of fees.
Compared to banks, companies that provide money transfer services exclusively usually offer rates that are closer to the mid-market rate.
Crunching the numbers: Sending $2,000 to Mexico
Let’s say you need to send $2,000 to family in Mexico. Here’s what you might face as far as fees and exchange rates as of October 26, 2021.
|Online money transfer||Cash transfer (in-person)||Bank transfer|
|Fee||$5||$10||$50 + intermediary bank fees|
|Exchange rate||1 CAD = 16.1995 MXN||1 CAD = 16.0286 MXN||1 CAD = 15.8740 MXN|
|Transfer speed||1-2 day||Within an hour||2-5 days|
|Amount received||MXN 32,318||MXN 31,897||MXN 30,954|
In this case, your recipient will receive more money in less time if you go with an online money transfer service instead of a bank.
How transfer fees affect your total cost
Transfer fees can range from a few dollars to up to $80 or more, with some providers taking even more by charging a percentage fee instead of a flat fee.
Depending on the provider, your transaction fee could follow one of the following schemes:
- A flat fee that stays the same regardless of how much you send.
- A tiered-fee structure in which the flat fee varies depending on how much your sending (i.e. $5 for sending up to $500, $10 for sending between $500 and $1,000 etc.)
- A percentage fee in which you’re charged a percentage of the transfer amount
- $0 for transfers above a certain amount
Note that other fees that could apply. For example, a money transfer service could charge your recipient a fee to cash a bank cheque or pick up cash in person instead of by direct deposit.
Tools to save more on an international transfer
While finding competitive fees and exchange rates can help keep your costs down, you may be able to save even more with the following tools.
- Forward contracts. Forward contracts let you agree to convert funds in the future at a pre-specified exchange rate. This helps you avoid unfavourable fluctuations in currency values.
- Limit orders. A limit order allows you to convert your funds only if a specific exchange rate is reached.
- Stop-loss order. A stop-loss order prevents you from converting funds at unfavourable rates by automatically stopping transactions if the rate hits a certain low.
- Recurring transfers. Some transfer services may offer savings if you set up a schedule of regular, pre-authorized payments.
- Same-currency transfers. It can sometimes be cheaper to send Canadian dollars to your recipient and let them convert the funds to their local currency. They may be offered a better exchange rate and lower fees.
There are many ways to send money internationally from banks and online transfer services to in-person cash transfers and popular apps like PayPal. Always compare fees, exchange rates and transfer options before choosing a service provider to make sure you’re getting the best deal for your needs. Learn more about how to send money overseas in our guide to international money transfers.
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