The world continues to shrink in more ways than one. Advancements in technology now let you send money overseas through different means, with some service providers even offering same day transfers. What also helps is you get a plethora of options to choose from. If you wish to send money from New Zealand to any other country, going through this guide is in your best interest.
What is an international money transfer?
Simply put, an international money transfer involves sending money from one country to another. More often than not, the process requires changing one currency to another at some point. For example, if you wish to send money from New Zealand to the UK, while you’ll send New Zealand dollars, the recipient would receive the money in Great Britain pounds.
There are instances when you may have to carry out an international same currency transfer. This can be if you’re sending money to dependent territories or self-governing states such as Cook Islands, Tokelau, Ross Dependency, Niue and Pitcairn Islands, where the New Zealand dollar is legal tender.
How does an international currency transfer money transfer work?
When you wish to send money overseas, you have to choose from a number of service providers, which include banks and money transfer companies. Various aspects that can vary from one service provider to the next require your attention. These include ways to send and receive money, exchange rate, fees, payment options as well as turnaround time. The process you have to follow depends on the method you choose.
Joseph Brown wished to send $1,500 to his brother who lived in the UK. The bank he had an account with allowed him to transfer funds to the UK from New Zealand. However, he felt he could get a better deal by comparing his options. This is what he found.
|New Zealand bank||Money transfer company|
|Exchange rate||$1 = £0.4475||$1 = £0.4521|
|Transfer options||Bank account||Bank account|
|Transfer time||3-5 days||One day|
|Amount received for $1,000||£661.41||£678.15|
Joseph’s decision to go with the money transfer company was obvious. Not only did his brother stand to receive extra money, it would get to him sooner as well.
Why are online currency transfers so cheap?
Money transfer companies that limit their operations to the online world tend to offer cheaper currency transfers when compared to banks. One reason is they don’t have to deal with the typical overhead costs associated with financial institutions such as banks.
The exchange rates that banks offer include a markup through which they make money. Since money transfer companies specialise in international money transfers, they deal with considerably larger volumes when compared to banks. This is also why they can offer more competitive exchange rates.Back to top
How do I send money overseas?
The steps you have to follow when sending money overseas depend on the method you choose.
- Transfer from bank account. If you wish to send money directly from your bank account, you can initiate the process by visiting a local branch, or by using your bank’s online or phone banking system. You’ll have to provide the recipient’s name, account number, bank’s name and SWIFT code to complete the transfer. A reference number lets you track the transfer at any time.
- Money transfer company. There are some money transfer companies that let you send money in person, by visiting a store or a kiosk. If the recipient wants to collect transferred funds at a cash pickup centre, you have to provide the recipient’s name along with a desired centre. If you want to transfer money directly into the recipient’s overseas bank account, you’ll have to provide the recipient’s name and account details. You’ll have to provide your bank account details as well. Tracking the transfer is easy using a reference number you get when you complete the transfer. Some money transfer companies such as PayPal allow fund transfers between user accounts.
- Mail. Sending cash via mail is never a good idea, given that it can fall into wrong hands easily. However, you can consider sending a bank-issued international money order, draft or cheque via mail.
What are the pros and cons to using a specialist service compared to a bank?
- Quicker. Most money transfer companies tend to offer quicker turnaround times when compared to banks. While the former can take one to three days, the latter can take up to 10 business days. If you’re sending money to a cash pickup centre, the transfer can go through almost instantly.
- Can save money. You can find money transfer companies that offer fee-free transfers. In such cases, you may have to deal with a minimum transfer limit. Typically, money transfer companies offer more competitive exchange rates when compared to banks.
- Not as diversified. While money transfer companies normally limit their operations to transferring funds overseas, you’ll find more diversity in the offerings of banks. Some banks let you open accounts using foreign currencies. Some offer international travel insurance as well.
Are there any risks?
The online foreign exchange marketplace has its share of unscrupulous elements, so it is important that you deal with a reputable business. If you find a business that offers no more than an email address as contact information, move to your next option.
Remember that exchange rates are subject to fluctuations. What this basically means is that a favourable rate today might not remain the same tomorrow.