We compare a popular service with a relative newcomer to see how they compare on fees, rates and speed.
When it comes to international money transfers, you’ve inevitably heard of MoneyGram. MoneyGram is a major player that has been sending money overseas since 1940 to more than 200 countries worldwide.
On the other hand, UK-based newcomer TransferWise is a fundamentally different way to send money online. Using peer-to-peer technology, it matches users looking to send money in one currency with customers in other countries looking to receive the same money. So if need to get pounds to someone in the UK, TransferWise will find someone in the UK looking to send dollars to the US, essentially swapping your funds.
Both MoneyGram and TransferWise will safely get your money where it needs to go, but TransferWise is superior to MoneyGram in a few key areas. However, if your recipient needs to pick it up in cash, you may find that MoneyGram has a slight edge.
MoneyGram and TransferWise: How they work
MoneyGram and TransferWise both offer easy online processes to exchange and send money around the world.
With MoneyGram, you go to its site, enter how much you’re transferring and confirm how you’re sending it and how it should be received. (You also have the option of visiting or calling an agent.) Once you’ve approved the exchange rate and fees you’ll pay, MoneyGram converts and delivers your money to your recipient’s bank account or for cash pickups at locations worldwide.
TransferWise is a fully online process. You’ll need to create a free TransferWise account, but it’s easy to set one up at the same time of your transfer. You also have the option of signing in with your existing Google+, Facebook or PayPal account.
To send money, you go to its site, select the currencies you are exchanging and indicate how much you want to send. After reviewing your rate and fee, money is pulled from your bank account.
Who offers lower fees?
Fees vary depending on how much money you’re transferring, how you’re sending it and the country you’re sending it to. It’s difficult to pin down exactly how much you’ll pay to send money internationally without actually initiating a transfer. As an example, to send $1,000 to China from a bank account, you’ll pay $8 in fees; to pay for that same amount by credit or debit card, you’ll pay $48. To send $1,000 for cash pickup in the Philippines, it’s $4.99 from a bank account and $10 by credit or debit.
Fees depend on where and how you’re sending money. They range from 0.5% to 1.5% of your transaction — and sometimes a bit higher, depending on the currency you’re transferring to. To send $1,000 to China, you’ll pay 1.5% of your transaction (or $15); to the Philippines, the fee drops to 1% ($10). You can easily find out what you’ll pay by visiting its “How much does TransferWise cost?” page.
With consistently lower fees, TransferWise takes the lead.
Who offers better exchange rates?
To understand who offers better exchange rates, you’ll need to first look at the mid-market rate. This is the true exchange rate that averages the buying and selling rate of a global currency — and the rate banks and transfer services use when they trade among themselves.
MoneyGram and TransferWise have two very different approaches when it comes to respecting the mid-market rate.
MoneyGram makes its money from transfer fees and by skewing the exchange rate for a profit, also called “padding” the rate. Depending on where you’re sending your money, the exchange rate could be 5% or more above the mid-market rate. If you’re sending a large sum, this means hundreds of dollars that goes straight into MoneyGram’s coffers.
Say you’re sending $1,000 to the UK:
- If the mid-market rate is 1 USD = 0.82 EUR
- MoneyGram’s exchange rate may be 1 USD = 0.768 GBP
Exchange rates is where TransferWise shines. It’s one of the only money transfer services that offers you the mid-market rate. So if you’re sending $1,000 to the UK and the mid-market rate is 1 USD = 0.82 EUR, that’s the rate you’re going to get.
There’s no denying the power of paying the mid-market rate. Lesley wants to send $1,000 to her daughter Rory, who is studying in Rome. She wants to send money from her bank account and initially thought she’d just wire the money from her local bank. But after speaking with well-traveled friends, she looked into comparing the services of MoneyGram and TransferWise to see which has better exchange rates and fees. By going with TransferWise, Lesley saves almost $5 in fees over MoneyGram. Not only that, but Rory gets an extra $20 for books and other necessities.
Case study: Sending $1,000 to Italy
Moneygram Transferwise Transfer fee $4.99 $9.90 Exchange rate EUR 1 USD = 0.9218 EUR 1 USD = 0.9401 Processing time 2–4 days 1–4 days Amount received in euros 921.80 EUR 940.10 EUR
Lesley wants to send $1,000 to her daughter Rory, who is studying in Rome. She wants to send money from her bank account and initially thought she’d just wire the money from her local bank. But after speaking with well-traveled friends, she looked into comparing the services of MoneyGram and TransferWise to see which has better exchange rates and fees.
By going with TransferWise, Lesley saves almost $5 in fees over MoneyGram. Not only that, but Rory gets an extra $20 for books and other necessities.
Delivery speed varies with transfer options. At an agent location or by phone, your transfer could be delivered in minutes (though with higher costs). In general, your cheaper options will take two to four business days for receipt.
Depending on the currencies involved and your payment method, it could take up to four business days for your recipient to see your cash.
Your average transfer may take about the same time with both services.
Who offers more options?
|Providers||Payment Methods||Minimum and maximum transfers||Delivery methods||Transfer speeds||Countries and currencies|
|MoneyGram||Bank account, credit or debit card, in person||Minimum and maximum varies by country||Bank account, cash pickup, other options by location||2–4 days||190+ countries and 45+ currencies|
|TransferWise||Bank account||$1 minimum; $36,000 maximum||Bank account||1–4 days||Nearly 40 currencies|
TransferWise is the new kid on the block that offers easy, secure transfers online in 40 currencies around the world. Real-time mid-market exchange rates and low fees crush MoneyGram’s often complicated fee structure. But if you don’t have time on your side, you may opt to pay more with MoneyGram to get it there faster or in cash. Ultimately, you’ll need to compare your options to find the service that’s right for you.