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How do international money transfers work?
An international money transfer allows you to send money to a recipient overseas. Generally, a transfer involves you providing funds to a bank or an independent transfer provider, which then sends the money to your recipient in another country — in this case, Iceland. This can be done in person, over the phone, through a mobile app or online. You can use cash, a credit or debit card, or transfer funds from your bank account, which will then either be deposited into your recipient’s bank account or mobile wallet, or made available as cash for them to pick up at a location in their country.Back to top
Banks versus money transfer companies
The first place many people go when they need to send an international money transfer is to their bank. While banks can certainly send money overseas for you, their fees are often higher compared to companies that specialize in international money transfers. These money transfer companies focus on international transactions and can offer much better exchange rates than most major banks. Check out the services these companies offer before deciding which company should handle your next international transfer.Back to top
Case Study: Isaac sends money to Iceland
Isaac wants to send money to Iceland to help out his sister Katie. Katie is on a two-week holiday in Iceland but lost her wallet at a bar one night, leaving her desperately short of cash. Isaac agrees to transfer her £500, but since his bank doesn’t transfer exotic currencies, he decides to compare two money transfer companies in an effort to find a cheaper option.
As you can see in the table below, using the second transfer company allows Isaac to send an extra 720 ISK and also save £6 in transfer fees.
|Money transfer company 1||Money transfer company 2|
|Exchange rate||£1 = 133.92 ISK||£1 = 135.36 ISK|
|Transfer method||Online bank account transfer||Online bank account transfer|
|Processing time||1-3 days||1-3 days|
|Amount received (in ISK)||66,960 ISK||67,680 ISK|
How do I compare transfer companies when sending money to Iceland?
- Exchange rates. The higher the exchange rate, the more money your beneficiary will receive. Also, make sure that companies with high exchange rates don’t also charge high fees.
- Transfer fees. You will usually need to pay a fee each time you send a transfer, so compare transaction fees between companies to see which one offers the most value for your money.
- Transfer methods. Some companies offer online or in-branch transfers only, while others may also offer over the phone and mobile app transfers.
- Transfer options. Can you lock in an ideal exchange rate now and transfer the money later, known as a forward contract? Does the institution offer limit orders, which allows you to take advantage of changing market conditions by executing the money transfer when a certain exchange rate is met? Can you schedule recurring payments?
- Minimum and maximum limits. If the company has minimum or maximum transaction limits, will you still be able to send your transfer?
- Processing times. Some companies offer fast transfers within 10 minutes, while others may take several business days to deliver the funds to your beneficiary.
- Pickup options. How will the money be delivered to your beneficiary: bank account deposit, cash pickup or another option?
- Customer service. Check a company’s customer assistance options to see how you can access help.
Foreign exchange rates explained
The exchange rate determines how much one country’s currency is worth in another currency. When a country’s currency is strong, it will yield more money when exchanging it in a country with a weak currency. For example, in December 2016, the pound was worth approximately 26 Mexican pesos. However, most countries’ exchange rates are flexible, which means it can change from moment to moment. Factors that influence the exchange rate include interest rates, economic stability and inflation.
What are my options for sending money to Iceland from the UK?
- Specialist transfer providers. Companies such as Currency Fair and OFX offer this affordable service.
- Cash pickup transfer companies. Western Union and MoneyGram have large international transfer networks.
- Bank transfers. Banks offer transfers to countries all around the world, but they often don’t offer affordable transactions.
- PayPal. PayPal offers an international money transfer service that allows you to send money to Iceland.
- International cheques. Have you considered mailing an international guaranteed cheque to Iceland?
What are the steps to send money to Iceland?
- Provide your details. You will usually need to register for a free account before you can send a transfer. This is often done online and you will need to provide your name, contact information and proof of ID.
- Enter your transaction information. The provider will need to know where you’re sending a transfer, in what currency, and the amount you’re sending.
- Pay for your transfer. The final step is to review your transaction details and then submit your transfer request. Many companies also allow you to monitor the transfer’s progress using an online tracking service.
Emergency cash transfers in Iceland
If you need to get funds to Iceland as soon as possible, companies like Western Union and MoneyGram offer the convenience of international cash transfers in as little as 10 minutes. However, make sure you’re aware of the full cost of your transaction before you part with your money. High transfer fees and lower exchange rates often apply to emergency cash transfers, so if you’re not careful you could end up paying more than you realise.Back to top
Tips for picking up cash in Iceland
When picking up cash, make sure to:
- Never go alone
- Avoid any high-crime areas or areas where you don’t feel safe
- Keep your cash hidden
- Deposit the funds in your bank account rather than carrying them around