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How do peer-to-peer money transfers work?

Save money on the exchange rate when you use a peer-to-peer service.

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By

Adrienne Fuller

Updated

Fact checked

International money transfers were traditionally conducted via banks, but it’s now possible to take advantage of peer-to-peer banking services for money transfers. Similar to P2P payment apps like Venmo or Facebook Messenger that let you send money easily between friends or family domestically in the US, international peer-to-peer money transfer services provide networks where people can share access to currencies without the need of a central server, allowing you to cut out the middle man. As a result, the money transfer process is simplified and you can save money.

How do peer-to-peer money transfers work?

The process of a peer-to-peer money transfer is simple. First, you need to select how much money you wish to transfer and where you’re sending it. You can then upload your funds to your money transfer provider, which will then convert your money at the mid-market rate and match you up with a person sending funds in the opposite direction. So if you’re sending money from Australia to the United States, you’ll be matched with someone sending funds from the United States to Australia.

This allows customers to cut out the middlemen in the exchange—the banks—and enjoy better exchange rates and lower transaction fees.

Optimized-How peer-to-peer international money transfers work

Compare money transfer services

Our table lets you compare the services you can use to send money abroad. Compare services on transfer speeds and fees, then click Go to site when you're ready to send.
1 - 10 of 10
Updated regularly
Name Product Filter Values Fastest Transfer Speed Fees (Pay by Bank Transfer)
Remitly
Remitly
Within minutes
From $0
Special offers like free transfers and better exchange rates available for new customers.
Remitly has quick, affordable transfers around the world, with both express and economy options.
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View details
Instarem
Instarem
Within minutes
From 0%
New Instarem customers will get a special FX rate and zero-fees on their first transfer.
Instarem offers zero transfer fees on all transfers.
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View details
MoneyGram
MoneyGram
Within minutes
From $1.99
MoneyGram has fast cash pick-up transfers to more than 350,000 agent locations worldwide.
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View details
Wise (TransferWise)
Wise (TransferWise)
Within minutes
From 0.41%
Wise uses the mid-market rate and transparent fees to help you send money in 45+ currencies.
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View details
OFX
OFX
24 hours
$0
OFX has no maximum limit transfers, with competitive exchange rates for 45+ currencies.
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OFX International Money Transfers (Business)
OFX International Money Transfers (Business)
24 hours
$0
Business customers: Send safe, no-limit transfers with no fees and competitive exchange rates.
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Currencies Direct (business)
Currencies Direct (business)
24 hours
$0
Minimizes costs of international transactions and offers custom solutions for business clients. Currencies Direct may call you to confirm your transfer, so be prepared for a phone call shortly after initiating a transfer.
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Currencies Direct
Currencies Direct
24 hours
$0
CurrenciesDirect makes transferring money abroad simple with bank-beating exchange rates. Currencies Direct may call you to confirm your transfer, so be prepared for a phone call shortly after initiating a transfer.
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CurrencyTransfer
CurrencyTransfer
24 hours
$0
CurrencyTransfer lets you shop around for the best exchange rate on its online marketplace.
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View details
Remitly
Remitly
Within minutes
From $0
Special offers like free transfers and better exchange rates available for new customers.
Remitly has quick, affordable transfers around the world, with both express and economy options.
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View details
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Peer-to-Peer vs Bank

Lauren wants to send $1000 to her mother in the UK. In order to find the best possible money transfer deal, she compares the services offered by her ‘big four’ bank with a peer-to-peer money transfer service like Wise or CurrencyFair. The results can be seen in the table below.

Cost to send a $1,000BankPeer-to-peer money transfer service
Amount transferred$1,000$1,000
Exchange rate£0.52£0.55
Fee charged$25$2
Amount received£507£548.90

As can be seen in the example above, if Lauren sent her funds using a peer-to-peer service she would be sending an extra £41.90.

How do I compare peer to peer-to-peer money transfer services?

You’ll need to take the following features into account when comparing peer-to-peer money transfer services.

  • Exchange rates. The exchange rate is a very important factor when determining how much money you can save, so look for the company that offers the best rates. However, keep an eye out for companies that suck you in with great rates but then slug you with high fees.
  • Fees. Make sure you’re aware of all the fees attached to your transaction. Does the company charge a flat fee or is it a percentage based on the amount you’re transferring? Is the fee waived entirely if you transfer more than a certain amount?
  • Minimum and maximum transfer amounts. You’ll need to check how much a company will allow you to transfer, as minimum limits might be too high for some and maximum limits may be too little for others.
  • Transfer methods. Compare whether your transfer can be lodged only online, or whether there are phone and in-person options available as well.
  • Other extras. Compare whether providers allow you to lodge forward contracts—where you lock in an exchange rate for a transaction that will occur at a later date— or limit orders, which is where you lock in a minimum exchange rate and the transaction is not completed until the market fluctuates and your chosen rate is available.
  • Customer service. Is the company known for providing excellent customer assistance? Is there an online help center and live chat available? Can you email or phone for support, and during what hours is each provider’s support center open?
  • What currencies are available? You’ll need to compare which currencies each provider offers and which destinations you can send money to.

Phone apps make it easy to pay (and collect) among friends

What are the pros and cons of using a peer-to-peer money transfer service over a regular service?

Pros

  • Better rates. Peer-to-peer money transfer services usually offer better exchange rates than banks.
  • Lower fees. You’ll typically pay less to transfer money via one of these providers than you would through a bank.
  • Fast. Peer-to-peer money transfer services regularly offer faster processing times than banks, with transfers often able to be completed within one business day.

Cons

  • Supported currencies. While more supported currencies are added all the time, as peer-to-peer money transfer providers are relatively new, they do not yet offer the same number of exotic currencies and transfer destinations as major money transfer services.

Are there any risks?

When you’re making an international money transfer, it’s important to keep an eye out for exchange rates and fees. Poor exchange rates can eat up a big chunk of your money if you’re not careful, while hidden fees can be a nasty surprise if you don’t read the fine print before initiating a transfer. Compare all of your options before choosing a company that’s best for your needs.

Questions about peer-to-peer money transfers

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