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What is an international money transfer?
An international money transfer is the process of sending money between people or financial accounts in different countries. Every day, trillions of pounds are transferred between people and businesses all over the world.
Typically, you need to give a bank or money transfer service your recipient’s details and the money you want to send. The bank or transfer service then converts your funds to the currency in which it will be received and electronically sends the payment to your recipient.
Depending on the money transfer service, you may be able to send funds online, via mobile app, over the phone or in person.
How much does it cost to transfer money internationally?
The cost of sending an international money transfer varies between service providers. Factors like the type of transfer, destination country and amount being sent can affect your total cost.
Generally, banks and money transfers services make money from international transfers in two ways:
Transfer fee. This is typically a flat fee or a percentage of the transfer amount. When transfer services give you a quote, they usually don’t deduct the fee first, and assume that you’ll find separate funds to cover the fee. That makes the coversion look better.
Exchange rate margin. Most banks and money transfer services make a profit by using an exchange rate that’s not quite as good as the interbank rate, and pocketing the difference. This is called a “markup” or “margin”. When you see a service that boasts “zero commissions” or “no transfer fees”, it’s more than likely using its own exchange rate to ensure it can cover costs and turn a profit.
Bear in mind that transfer fees can vary depending on how much you’re transferring, how you pay for the service, how quickly you need it actioned and how your recipient receives the funds. Cash pickup can cost more than transfers to a bank account, for example, because it can require having local branches. You’ll usually incur higher fees for larger transfers, but when it’s a percentage-based fee, services may actually slash the percentage for larger transfers.
Realistically, it can be a bit of a moving target. Exchange rates change all the time and are hard to predict. On top of this, transfer services adjust their own fees or exchange rates, meaning that even if the interbank exchange rate is fairly static, a tranfer service’s rate could still change. After all, it’s in their interests not to rush when passing on improvements in exchange rates!
So how do I get the cheapest money transfers?
To get the best deal, focus on the final amount that your transfer receipient will get, after any fees have been deducted. Companies that offer fee-free transfers may make up for it with a poor exchange rate. This is why it’s important to look at the total cost of your transfer, not just the transfer fee or exchange rate.
To manage the shifting nature of exchange rates, it’s worth running a quick comparison at the point of transfer (quotes are usually “locked in” for a specific number of minutes), but you can also set rate alerts so that your transfer is only actioned if and when a rate hits a threshold of your choosing. To do this you’ll need to first create a free account with a transfer service such as TorFX.
How can I pay for my money transfer?
Not all money transfer services accept the same payment methods, but you may be able to pay by the following:
Bank transfer (requires your account number)
If you want to pay in cash, you’ll need to visit a bank branch or money transfer agent in person. If you transfer funds online or via mobile app, you can only pay electronically by card or bank transfer.
How can my recipient receive the money?
Again, receiving options vary between transfer services, but your recipient may be able to receive funds the following ways:
Cash pick-up at a bank or money transfer location
How can I send money overseas?
There are multiple options to consider when sending money overseas:
Online money transfer service
Electronic funds transfer through an online money transfer service.
What are the benefits of using an online money transfer service?
While it might be easy to assume that big banks are the best way to go when sending an international money transfer, there are many reasons why an online money transfer service might be just as good if not better:
Security. Similar to banks, online transfer services usually follow industry-standard security practices to protect your money and personal information. This often includes encrypted data transfer, SSL certificates, two-factor authentication, security questions/answers and personal identity verification.
Regulation. Money transfers are regulated by the Financial Conduct Authority.
Cost savings. Online transfer services often translate to lower fees and stronger exchange rates
Fast. Online money transfer companies often use the latest financial technology to get your money where it needs to go fast.
Easy. Mobile apps and convenient online platforms make it easy to send money anytime from anywhere. Additionally, many money transfer services offer features that let you set up recurring transfers, making it easy to pay bills, send regular remittances, manage international business payments and more.
How to send money using an online money transfer service
Online money transfer services are increasingly competitive with big banks, in many cases offering more flexible options and lower fees. Sending an international money transfer through an online service is simple:
Create an account by entering personal details like your name, email, address and phone number.
You may need to submit a scanned copy of your personal ID (i.e. passport photo page or driver’s license) to qualify for higher transfer limits.
Link your bank account, debit card or credit card to your newly-created account, so you can pay for transfers. Alternatively, you may need to transfer funds from your bank account.
Most of time, you can access your account immediately after submitting all the required information. For some services (particularly transfer services for businesses), there may be a delay while your information is reviewed and a transfer specialist is assigned to your account.
How to send money through a bank
Bank transfers have long been regarded as reliable and safe. The steps for sending an international money transfer through your bank are generally as follows:
Login to your online banking portal.
Navigate to the international money transfers section of your account. It’s usually a good idea to check your bank’s exchange rates before sending money.
Typically, you need the address and SWIFT code of your recipient’s bank and their account information. SWIFT codes are used internationally to identify banks.
To send a bank wire transfer or money order, you need to visit your bank in person. You may also be able to get money orders at other financial institutions like post offices, credit unions, retailers and even some convenience stores and fuel stations.
What do I need to send and receive money abroad?
Make sure you have the following on hand when sending an international money transfer.
Your personal details. Name, phone number, and government-issued identification like a driver’s license or passport. Additional details may be required for security purposes, particularly for very large transfers.
Your recipient’s personal details. Name, phone number and residential address.
Your recipient’s bank information. Bank name, address, routing number, SWIFT code and your recipient’s account number.
Payment. Check beforehand what types of payment methods are acceptable. For example, not all money transfer services accept credit cards.
What documents do I need to send money abroad?
For money transfers, you don’t need any particular documents for sending money overseas other than government-issued personal identification.
If you receive a large money transfer from abroad, then you may be required to pay tax. The UK doesn’t charge a gift tax, but it does impose inheritance taxes on large gifts. Whether you are required to pay tax depends on whether you are “domiciled” in the UK or abroad.
Account number. A unique string of numbers used to identify a single bank account. Usually 8-12 digits long.
“Buy” rate. The amount of currency a bank or financial institution pays to get (or “buy”) a foreign currency. For example, if you’re exchanging GBP for CAD and the rate is 1.28, then the bank will pay 1.28 Canadian dollars to buy each Pound you have.
Currency. A government-recognised form of money used for buying and selling. Can be digital or physical in the form of bank notes and coins.
Currency pair. Any two currencies paired for the purpose of comparing how much each currency is worth relative to the other.
Domestic money transfer. Money transferred within your country of residence.
Exchange rate. The value of one currency when exchanged for another currency. For example, if 1 GBP = 0.87 EUR, then the GBP to EUR exchange rate is 0.87.
Fees. Money paid for services. In the context of money transfers, this could include transfer fees, currency conversion fees, service fees, wire transfer fees and more. Not all money transfer services charge the same fees, and some may even waive specific fees under certain circumstances.
Forex. Short for “foreign exchange.”
IBAN. Short for “International Bank Account Number.” An IBAN—which can be up to 34 alphanumeric characters, but is usually between 8 and 11 characters—identifies a specific bank account for international money transfers. Countries may have different standards on what an IBAN should look like.
Intermediary bank. A “middleman” bank through which money passes when transferring between two financial institutions. Intermediary banks may take a small fee from the funds being transferred. The fee charged by the bank or money transfer service you use to send funds does not include intermediary bank fees.
International money transfer. Money transferred from the country in which you live to another country.
Margin (on exchange rates). The exchange rate offered by banks and money transfer services is lower than the midmarket rate by a small percentage. This is known as a “margin” on the exchange rate. When converting your funds, banks and money transfer services pocket this percentage as a fee to make a profit.
Midmarket rate. The “true” exchange rate between two currencies, or the mid-point between the buy and sell rates for a currency (relative to another currency). The midmarket rate updates every 60 seconds during trading hours and is not available to customers.
Mobile transfer. A money transfer conducted on a smartphone using a mobile app owned by a bank or money transfer service.
Mobile wallet. Also known as a digital wallet or e-wallet, a mobile wallet is a digital application that lets users store and exchange currency electronically. Popular mobile wallets include Google Pay, Apple Pay, Venmo, Samsung Pay, Cash App and PayPal.
Recipient. The person receiving funds via money transfer, or the person to whom money is sent.
“Sell” rate. The amount of foreign currency a bank or financial institution asks for to give (or “sell”) another currency. For example, if you’re exchanging CAD for GBP and the rate is 1.22, the bank will sell you 1 GBP for every 1.22 Canadian dollars you have.
Sender. The person initiating a money transfer, or the person who is transferring money to someone else.
Sort code. A unique, 6-digit string of numbers used to identify a specific bank branch in the UK.
SWIFT code (BIC code). Short for “Society for Worldwide Interbank Financial Telecommunication.” Also known as a bank identifier code (BIC). A SWIFT code is a string of 8-11 alphanumeric characters used to identify a specific bank for international money transfers.
Transit number. A unique, 5-digit string of numbers used to identify a specific bank branch in Canada. Similar to routing numbers in the United States or sort codes in the UK.
Wire transfer. A type of electronic funds transfer offered by major banks in which money is sent around the world through electronic networks operated by various banks and money transfer agencies. No physical cash is exchanged. Transfers can take up to several business days to settle.
Tips to save money on your international transfer
Looking for low fees and strong exchange rates isn’t the only way to save on your next international money transfer besides. The following tips can also help keep your costs down:
Use a service that offers zero markup the exchange rate. The mid-market rate is the “true” exchange rate between two currencies. While most transfer services add a margin on the mid-market rate to make money, some don’t. Instead, these services prefer to make money through transfer fees and possibly other charges. Depending on the type of transfer, it may work in your favour to use such a service.
Send larger transfers. Some services offer discounted or waived transfer fees if you send at, or above, a minimum amount.
Use forward contracts and limit orders. A forward contract lets you lock in a favourable exchange rate for future transfers. This means you’ll avoid unpredictable movements in exchange rates. A limit order allows you to wait until a favourable exchange rate is found before locking in your transfer.
Watch out for scams. With an increasing number of scams each year, it’s important to keep an eye out for the most common money transfer scams. It’s usually best to avoid sending money to anyone you don’t know personally.
Pay attention to taxes and regulations. Every country regulates money transfers differently. Make sure your recipient is aware of any tax or reporting obligations that apply to your transfer.
Usually, online money transfers directly to a bank account are less expensive than sending funds for cash pickup. However, fees and options vary between service providers, so the cheapest option depends on which service you choose and the type of transfer you want to send.
It depends on the service provider and transfer method you choose. In general, if you pay with a credit or debit card, your money will arrive fast — often within the day. Paying by bank transfer is a lot slower and could take up to 2-5 days to process. Check out our guide on factors that can affect your transfer to learn more.
It's possible to send money within seconds up to an hour if you use services WorldRemit, MoneyGram or Western Union. Funds transferred electronically typically pass through a national clearinghouse and other intermediary financial networks before being released to your recipient. If you opt to send an international money transfer with an instant cash transfer, then this could be available for collection as cash within as little as 20 seconds.
Most transfer services impose minimum and maximum transfer amounts, but the exact amounts can vary. Check with your service provider to find out what limits apply to your transfer. Note that some services may raise your maximum transfer amount if you provide additional documents to verify your identity and employment.
Legally, there are no limits to the amount you can send out of the UK. But you may be required by law to provide extra personal and/or employment information for large transfers. These laws are designed to track and prevent illegal financial activities such as fraud and terrorist financing.
That depends on the tax laws in the country in which your recipient lives. In the UK, whether you are required to pay tax on money you receive from overseas depends on whether you are 'domiciled' in the UK or abroad. Learn more about UK tax on large money transfers in our guide.
Ultimately, no. Banks and money transfer services must make a profit to continue providing international money transfer services. Some services offer zero transfer fees but charge a margin on the exchange rate. Others don't add a margin to the exchange rate, but you'll have to pay a transfer fee.
You may be able to find special promotions designed to attract new customers like zero fees on your first transfer.
Yes. Money transfer services typically provide a tracking number once payment is received. You can use this number to check the status of your transfer online, by phone or by mobile app (options vary between services).
International money transfers and wire transfers are both types of electronic funds transfers. But international money transfers are typically handled by companies that offer money transfer services exclusively, while wire transfers are offered by banks. Additionally, wire transfer must usually be submitted in person at a bank branch, while money transfer services can be sent online.
Money transfer services have different strategies for making a profit, which results in different fee structures. Some may choose to cater specifically to a certain target audience like businesses or those who send recurring transfers. Fees are set up to carve out a market niche and appeal to different customers with different needs.
It's best to transfer money on regular business days. Try not to send money on, or just before, holidays and weekends to avoid delays. Note that you may be able to submit transfers online outside of regular business hours, but funds may not be processed and received until financial institutions reopen.
Many money transfer services implement industry-standard measures for protecting your personal data and money, similar to banks. This can include data encryption, SSL certificates, multi-factor authentication and regular monitoring to detect and prevent fraudulent activity.
You can send an international money transfer to almost any country in the world. Certain countries may be restricted due to government sanctions that have been put in place because of political instability, extreme social turmoil, economic instability or other reasons.
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