Peer-to-peer Transfers: Save Money by Cutting out the Middle Man

peer-to-peerWondering what peer-to-peer international money transfers are all about? Here’s the information you need.

If you wish to send money overseas, to an individual or to a business, you’ll have to deal with the foreign currency exchange market in some way. This is because while you’ll be sending New Zealand dollars, the recipient would receive a different currency.
There are several ways you can use to transfer money overseas, which include peer-to-peer transfers. The reason this method is finding an increasing number of takers is it can lead to noticeable savings when compared to transferring money through banks or brokers.

TransferWise International Money Transfers

TransferWise Peer 2 Peer Money Transfer service

When you need to send money overseas, you can benefit from competitive exchange rates and low transfer fees when you send funds globally with TransferWise.

  • Send money with the real exchange rate
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  • TransferWise only charges a fair service fee and uses the real mid-market rate for conversion

    Compare peer to peer money transfer services so you can cut the middleman

    Rates last updated October 18th, 2017

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    What is a peer to peer transfer?

    The use of peer-to-peer in foreign currency exchange first took place in 1999. The use of this concept in forex trading was revolutionary, since it provided fair and transparent accessibility to foreign currencies.

    Peer-to-peer international money transfer companies work by matching individuals and businesses with peers who wish to trade currencies. You would register with a peer-to-peer transfer platform, then trade currencies with other participants in the marketplace. The service provider would, in all likelihood, charge a flat fee for the exchange.

    By using a peer-to-peer transfer company you can send money to any individual or business, or even to your own account, in another country.

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    How does an international peer to peer money transfer work?

    The first thing you’ll need to do is register with a peer-to-peer money transfer company. To do this you’ll have to provide some basic information such as your name, contact details and identification details.

    You choose the currency you wish to transfer and the country you wish to send it to. At this point you get to see the exchange rate and how much you would have to pay as fees. Once you accept the given offer, the company you’re working with makes the transfer.


    Nicholas Dawning wished to send some money to his brother in the UK. While he could use his local bank’s service to transfer the money, he decided to compare it with some peer-to-peer companies upon the suggestion of a co-worker. This is what he found.

    New Zealand bankPeer-to-peer transfer company
    Exchange rate$1 = £0.4425$1 = £0.4552
    Transfer fee$40£2.5
    Amount received for $1,000£424.82£452.70
    Difference of£27.88

    Nicholas choosing to go with the peer-to-peer money transfer company comes as no surprise. Not only did it offer him a better exchange rate, it also charged lower fees.

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    Why do peer to peer transfers look so cheap?

    Since peer-to-peer money transfers companies match people with foreign exchange requirements directly, they do away with the need for the ‘spread or margin’ component from transactions. The technology in use eliminates the need for brokers and middlemen as well as the spread imposed by market makers.

    It is owing to this that users manage to avoid the cost of ‘bid-ask spread’ typically charged by banks and forex brokers, which can vary from 2% to 5%. Peer-to-peer money transfers companies tend to use the midpoint of real-time interbank market rates. These companies normally charge a flat fee for their services, which can vary depending on the amount you wish to transfer.

    What also helps is that this system uses the same midpoint interbank rate even with smaller sized transactions.

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    How do I compare peer to peer specialist transfer services?

    When you’re comparing peer-to-peer specialist money transfer services, several aspects require your attention.

    • Exchange rate and fees. While the exchange rate is an indicator of the kind of deal you’re getting, don’t base your decision on this aspect alone. Find out how much you’ll have to pay as transfer fees. This may not be the same for major and exotic currencies. Some companies charge withdrawal fees as well.
    • Reach. Some peer-to-peer money transfer companies offer their services in limited countries in Europe and Australasia. Some others have a wider outreach, having a presence in North America and Asia as well. The number of currencies on offer can also serve as an indication of a company’s reach.
    • Payment options. Most of these companies let you make payments through wire transfers and debit cards. Not many accept payments through credit cards.
    • Keeping funds in account. If you wish to keep money in your peer-to-peer money transfer company account, you can find a suitable service provider. Some companies provide their users with eWallets, using which you can keep any amount of money in any currency for any period of time.
    • Transfer time. The time taken for peer-to-peer transfers to process is normally one to two days. Some service providers charge extra for same-day transfers.
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    What are the pros and cons to using a specialist service compared to a bank?


    • Save money.This, without doubt, is the biggest advantage of using a peer-to-peer money transfer company. You can get a better exchange rate when compared to banks and you can also save in fees.
    • Save time. When you use domestic banks to transfer funds to an overseas bank account, you make use of the international banking payment system, SWIFT. Peer-to-peer companies bypass this system which is why their transfers get through considerably sooner.


    • Limited currencies.Peer-to-peer money transfer companies tend to have fewer currencies on offer when compared to conventional banks and brokers. If you’re thinking about sending an exotic currency, you’ll have limited options.
    • Limited services. These companies tend to offer little more than spot rates for currency exchange. A conventional money transfer company, on the other hand, would let you choose between market orders and forward contracts as well.
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    Are there any risks?

    Exchange rates are subject to fluctuation, so make sure you initiate the transfer soon after you get a favourable rate. Know that while an appreciation in your currency’s value can lead to a profitable exchange, the reverse can hold true in the event your currency depreciates.

    Make sure you deal with a reliable and licensed transfer company, failing which you can put your hard earned money at risk.

    Frequently asked questions

    This depends on the business you choose. Some companies let you repeat transfers using details from previous transfers.

    Typically, you can use your passport, national ID card or driver’s license.

    Depending on the company you deal with, you may be able to cancel a transfer within a given time frame.

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