Sometimes we need to send money abroad, either to someone else or to yourself. But if you’ve every tried to transfer money internationally, well, you know it’s not as simple as it might seem. There can be many factors that surface such as exchange rates, service fees, and the time required before the recipient actually gets the money.
This is one area that is worth your time…and money to find the best way that suits what you are trying to do. You can save a lot of money and time by spending a little time now on the research!
And while there are a lot of different services that can be used to transfer money, there are a few standout services that are specifically better than the rest if you need to transfer money abroad or to international destinations.
We’ve updated this article for with the cheapest methods of sending money in the 2017 year.
Other How to Send Money articles of interest:
Factors to Keep in Mind That Determine the Best Money Transfer Service
What service is the best for transferring money abroad depends upon the situation. For example, some services offer better terms for larger amounts of money but the higher fees make them less suitable for transferring smaller amounts of money.
Keep in mind the following factors will all play a role in determine what the best (and cheapest) way to transfer money abroad
- The current exchange rate between currencies
- Are you transferring one currency to another or keeping the same currency (i.e. transferring USD to a CAD account in Canada or transferring USD to a US Account in Canada)
- How much money you want to send (a small amount or large amounts)
- Is it a one off transfer or a reoccurring one
- How quickly you need the payment to get there
- The country you are sending from and the country you are sending to (we are assuming you are sending from the US)
- Where your funds originate from (a bank account, from a credit card, cash, a digital wallet with a balance on it, bitcoin, etc)
Other things to think about:
- Cost (how much the transfer will cost after all the fees and the exchange rate, balanced out by the convenient and speed factors you get)
- Safety (how ‘safe’ is the money transfer)
Keep in mind that not a single service offers the lowest cost, the fastest speed, the best convenience, and the most safety. You will have to balance these out and find an acceptable compromise. For example, some of the cheapest transfer money abroad options are also the slowest and least convenient methods, while the most expensive options are the fastest and often, most convenient.
Often the more convenient methods of sending money overseas are the most expensive to send.
So you need to ask yourself what factors are the most important, then make the selection from there.
1. Online Payment Services
This is most likely your most convenient option to send money or transfer money to another country as you can do it from your own home on a computer, in only a couple minutes at most. These companies are ubiquitous and easy to use. If you use an online payment service such as Paypal you do not have to worry about any hidden or extra fees outside of the initial fee and the exchange rate (if you are sending abroad).
Paypal makes sending money internationally an easy and convenient process . With Paypal you can send money to 190 countries in 20 different currencies. To send the money all that is needed is the recipients email address or mobile phone number. Paypal allows you to preview the conversion and exchange rates before you send the money so you know how much exactly you are spending.
Best Suited For: Smaller sums (under 500) where both parties have access to email and the person receiving the funds does NOT need immediate cash. Remember, if you transfer money from paypal to someone else’s Paypal, they will still need to withdraw that amount to their bank account to get access. This can take up to 5 – 7 business days.
Pros: There is a large convince factor as you do not need any confusing banking information, just the recipients email or phone number. No hidden fees as Paypal lists all the fees before you make the transfer. The fees are also reasonably priced and it’s easy to join up and send. And of course, everyone these days has heard of PayPal by now, so there is a lot of trust. Paypal works very well for merchants who need to accept payments online and freelancers who want to accept and send payments abroad.
Cons: Paypal has been known to freeze funds without first contacting you if anything looks a little bit out of the ordinary. This can cause big issues and take some time to resolve even if there was no issue in the first place. People have had their account locked when trying to access Paypal in a different country. Paypal is not so well suited for sending larger sums (over 2000 dollars). They have a habit of locking accounts up and blocking larger transfers for security reasons. This can place your account in limbo until it gets resolved.
There are different fees when transferring money internationally as compared to sending money domestically. The fees are based on the country of the recipient so if for example you were sending money to someone in Germany the fee would be based on the European Paypal fees. The fees all depend on which country you are sending to with the range being form 1%-4%.
Keep in mind the following:
- Paypal always charges percentage of the amount sent. This means for BIGGER amounts, you are better off looking for another method that won’t take such a cut but only charges a fixed fee.
- Paypal s you to see the final currency exchange rate before agreeing to the deal, but uses the inter-bank rate on its website calculator.
- For the US or Canadian dollars, Paypal tacks on a a 4.5% margin on top of the inter-bank exchange rate. They add a whopping 5% for other currencies.
Cost Per $1000 USD
The cost per $1000 USD varies depending on which country you are sending the money to.
For example the fee to sending money to the United Kingdom is 0.5% if using Paypal or bank balance so it would be 10005 USD. If sending $1000 USD to the UK through your credit card there is a 3.9% fee so it would total $1039USD. Keep in mind paypal also applies their own currency exchange rate to a transaction as well.
Other popular online payment services:
- google wallet
- amazon pay
2. Money Transfer Operators
Money Transfer Operators are companies with ground locations that specialize in quickly moving money for clients from one location to another, even between countries. A money transfer operator service is ideal if you need to send or transfer money internationally very quickly. These usually offer both services online and at street locations through various office branches all around the world.
Transferring money abroad with these services can be performed both online and offline. They are especially ideal if the recipient does not have a Paypal account, which not everyone does. These services are very fast and efficient.
Western Union is a worldwide service that has 4000 locations around the world where you can send money. With Western Union you can send funds via: online website, at a location, through online banking and mobile. You can send money directly to a recipients bank account or the recipient can pick up money by visiting a Western Union location. There is also a toll free number you can call to set up a money transfer.
Best Suited For: This is ideal for someone who may need funds ASAP in an emergency situation. Also if someone needs actual cash asap rather then email money transfers etc. It’s also good to send people who don’t have access to the internet directly, as the person can just drop in to a location in person and pick up the cash.
Pros: You can choose if you want same day speed, next day speed, with other options available. This is a good service to use if the recipient does not have a Paypal or if they are on the move frequently travelling through different countries. You do not need to sign up or create an account to send money.
Cons: You have to have a lot of the recipients information and also need to tell them what the Money Transfer Control Number (MTCN) is which can be an inconvenience. Furthermore, the service charges tend to be very high, higher then that of Paypal. There is a higher chance of fraud, as it can be easy for fraudsters to intercept a Western Union transfer since sometimes all that is needed to claim money is the MCTN number.
The fees can vary depending on the country and the exchange rate of the country the money is being sent to. Sending money to a bank account ranges from $12-$40 dollars. Sending money to a pickup location can cost anywhere from a range of $10-$100. The Western Union website has an fee estimate calculator. Because of the fixed rate, this actually can make western union an attractive option for large money transfers between countries.
Cost per $1000 USD
The fee to send $1000 USD to another destination in the USA is $28 for a total of $1028 USD.
The fee to send $1000 USD to Europe is $58.00 for a total of $1058 USD. For the direct to bank which takes 3 days the fee is only $8.00 for a total of $1008 USD.
This service works very similar to Western Union as you can transfer funds anywhere in the world. You can transfer funds directly to the recipient’s bank account, mobile wallet, or have them pick it up in person. There are over 300,000 MoneyGram pick up locations around the world.
Best Suited For: Similar to Western Union, best in emergency situations or if the recipient needs actual cash rather then money transferred to their account
Pros: Transfer can be done very quickly often in the same day. Good for an emergency situation when someone needs funds ASAP.
Cons: Similar to Western Union this is a high target for fraud and scams, so be weary. Fees can get expensive compared to Paypal.
Like Western Union, the fees can vary depending on the country and the exchange rate of the country the money is being sent to. To send money to a bank account is only $5. Sending money for a in person pick up can range between $5-$100 based on the location. The website has an in depth fee calculator.
You can sign up for MoneyGram here.
Cost per $1000 USD
The cost to send $1000 USD to another USA destination would be $20 for a total of $1020 USD.
The cost to send $1000 USD Europe would be $58.00 for a total of $1058 USD
3. Bank (International) Wire Transfers
If you need to send money abroad another option to pursue is a bank wire. This can be done online or in person. A bank wire is a electronic transfer of funds from one bank to another where both parties involved need a bank account. To send a wire transfer there are specific details needed such as the recipients full name, branch number, transit number and bank account number. There is a specific form that you will have to fill out whether you do it online or in person.
Best Suits: This is ideal if someone specifically needs the funds to go directly into their bank account. If sending money for business purposes or directly to a business this may be the route that is preferred. It’s also a good method of getting money directly from one bank account to another. Keep in mind though international wire transfers from bank to bank is very high and not at ALL the best rate.
Pros: Can send large amounts of money at a time (which can be problematic with other methods) and is very secure as banks are handling the matter, as it is very difficult for hackers or fraudsters to intercept a wire, just be sure you know who you are sending it to. It’s very convenient to send a transfer from your own bank and the transfer is safe with the money covered by banking laws.
Cons: A bank wire is definitely not as quick as some of the other methods such as Paypal or Western Union. It can take 3-5 business days for a wire transfer to complete. Also can be more expensive then some other methods that are available, especially when you look at the fee charge and the often horrible bank exchange rate that’s given.
The fees range depending on the bank but the average range is usually $20-$40 for the wire transfer and often very high exchange rates.
Cost per $1000 USD
There is no fee based on the amount of money sent other then the fixed amount. But keep in mind the hidden fee associate with a bad exchange rate.
4. Money Orders
In today’s day and age there are a lot of alternatives ,however at times a money order can be the method of transfer that is required.A money order is a set amount of money prepaid at a bank or post office written to a specified individual or business. Money orders can be done online although there are not many reputable companies that offer this online. If you choose a money order it is recommended that you do it in person at a bank or a post office.
When you send a money order you pay in advance for the amount specified. The funds are guaranteed to be there for the recipient since the order was already pre paid.
Best Suited For: A money order is best suited for a situation when the funds needs to be guaranteed. Some business will prefer a money order over a cheque because the funds are guaranteed. For example, if you buy something online and the vendor does not take paypal or other online payment, you may be asked to send a money order for that amount.
Pros: A great advantage of a money order is the funds are guaranteed to be available when received where with a check the funds could bounce. Also money orders are traceable in case its gets lost or an issue of fraud.
Cons: Can take a days for the recipient to receive the money order, there are much faster options available. Certain locations may have a limit on the amount of the money order. You have to send the money order from a physical location so convenience is a factor.
The cost of a money order varies however they range from $10-$50.
Cost per $1000 USD
5. Foreign Exchange (FX) Broker
Another attractive option to consider when sending money abroad is a foreign exchange (FX) broker due to the money you can save on exchange rates.
We rate this as the SECOND CHEAPEST METHOD OF SENDING MONEY (of different currencies) ABROAD, right behind Peer to Peer Currency Markets.
FX’s brokers are on average 3-4% cheaper than sending money through a bank transfer/wire. So for large sums AND for a much better exchange rate than banks will give, the FX Broker is one of the best options.
You get a lot of currency conversion options with FX Brokers. You can also set a price watch so when a currency reaches a certain price you will get a notification. Further you can set up recurring payments to an international source using one of these services. You can even lock in exchange rates. There are options to make reoccurring large payments between countries (such as mortgage payments from one country to another) that are free even.
However, the cost here comes at convenience. You will need to set up an account and then move money into that FX account to be able to use this service. This may or may not bee too much of an issue for you.
A popular site where this can be done is Travelex.com. This is a great site that features a price promise, which claims they will match any fee you may find elsewhere. The transfers are quick as they can be completed with 1-2 days
6. Free International Bank to Bank Transfers
Some of the major banks offer free bank transfers as long as the recipient has an account with the same branch in two different countries. For example HSBC allows you to transfer money to anybody that has an HSBC account free of charge. With HSBC locations in different countries, you can see how advantages this can be. Many credit unions are known to offer this service for free as well.
Keep in mind that the following needs to be fulfilled:
- the sender must have two bank accounts with the bank, one in each country or
- the person receiving the money must have an account with the same branch as the sender
- optional: to avoid any bad currency exchange rate fees, both accounts should have the same currency accounts (i.e. both accounts are USD Currency accounts)
Not all of the major banks offer this as they instead just offer the email money transfers instead. Also note that even if you save on the actual bank transfer fees, you will still pay an over-inflated exchange rate IF you transfer from one currency to another currency. So this method best works when both accounts are in the same currency.
7. Peer 2 Peer Currency Exchange Markets
This is perhaps the most interesting method on the list and one that, given enough time, offers you the best transfer rates when transferring money abroad by far — even better than the Forex Broker option. You might call it the most technical savvy, web 2.0 way of getting around expensive transfer fees.
Note that THIS is the method used by the author of this article as it offers the cheapest conversion rates all round and the one he recommends most.
How It Works
The way it works is people set their own currency exchange rates and the market service either will match you up with a rate you are looking for, or give you a default rate (usually between 0 or .50 percent). This avoids the banking rates and can save you a huge amount on fees — especially if you transfer higher amounts of money.
The way these work is that you sign up for an account, then add your local currency to your account (you must have a bank account attached). You then ‘top up’ money in your account with whatever local currency you’ve added. You can then request a buyer (the software handles this) to sell that currency to a public rate set by other people (always lower than what banks give you). The software matches you up with a seller (or you can do it manually) and you sell whatever currency amount you have to the other person (basically you are converting your currency).
There are two big ones right now on the market:
An interesting option in that this company is not a currency seller but rather simply software hooking you up to a peer to peer marketplace where people set their own currency rates. Keep in mind that if you need an immediate transfer, you may not get the best rate possible. But if you are willing to wait a couple days, you may well get a better conversion rate than even the inter bank rate (the wholesale rate the banks use for each other). Read our review of CurrencyFair.
As such, we give CurrencyFair the CHEAPEST WAY TO SEND MONEY ABROAD award of all the options on this list. However, this is somewhat mitigated by the fact that you first need to a) set up an account, b) get said funds into that account c) sell / buy your currency at the cheapest rate (which can take a few days), d) make the exchange and then withdraw funds.
As such, CurrencyFair is NOT the best option for the quickest method of sending money, nor is it the most convenient to use. If you want the best rate, are willing to set it up, and have a few days, then you get the best rate.
However, at this time CurrencyFair only supports the EU, the UK, and Australians. You are out of luck if you are from another country (yes, this includes the United States as of now).
Another competing company to CurrencyFair. For instant transfers, you may get a better rate than currency fair, but if you are willing to wait a few days and are transferring larger sums, CurrencyFair gives the cheapest rate of all. However, Transferwise is a much larger company and a global company. You can send money to most countries in the world from most of the major countries. This means it services North Americans, Europeans, Australians, and various other countries. Read our review of transferwise
Alternatives to Sending Money Abroad
If you are not sending money abroad but rather, travelling abroad or giving financial means to someone who will be traveling abroad there are alternatives:
- credit card (particularly, specialist credit cards)
- debit card
- travel’s checks
Let’s look at the specialist travel credit cards option here as they can provide a very cheap way to travel without getting dinged by exchange rates and ATM fees when withdrawing cash abroad.
Specialist Credit Cards
Travel credit cards also known as specialist credit cards do not get enough credit(no pun intended) when it comes to spending or withdrawing money abroad. Basically how these cards work is you pay a prepaid amount for the credit card and that is it no extra fees or exchange rates. These specialist credit cards allow you to get the best possible exchange rate anywhere in the world.
A well known, recommended travel credit card is the Halifax Clarity Mastercard. Here are some of the features of this card
- There is a $0 withdrawal fee associated with this card.
- Interest rate on withdrawals 18.9%
- Representative APR on spending 18.9%
- You don’t get charged interest on spending internationally, as long as you pay the amount off in full by the date shown on your statement.
Another well known travel credit card is the Multi Currency Cash Passport card offered by MasterCard. Some of the card features include
- Chip and pin protection
- multiple currencies on the same card
- 24/7 global assistance
- move money from one currency to another
Best Suited For: This is great if your are travelling to multiple countries in a short amount of time as you can transfer between different currencies on the same card. This option specifically works for YOU as the traveler not as a means to send money abroad since you will be the one using the credit card.
Pros: The best advantage to using this service is the money you will save on exchange rates and withdrawing money using the card. There is also a lower interest rate on this card as compared to using traditional credit cards internationally.
Cons: The activation fee can sometimes be large. You have to ensure that you pay balance off by month’s end or you will incur the interest rate charges. Usually you have to go to a physical location such as a bank to acquire the card.
How to Decide On The Best Choice?
Once you know what options are out there, you need to actually decide on the best way to send money abroad for you.
Remember: Never throw away your receipts — keep them until the person you are sending money to actually has the money in hand. Having accessible records on hand in case something goes awry is a good idea and can save a lot of headache should the unthinkable happen.
First Step: Go to your bank and get a quote on a basic international money transfer. Be very specific and ask exactly what fees you will be paying and the exchange rate given. Banks often give some of the worst exchange rates, but it’s a good start and gives you something to compare against.
Second Step: Use the web to compare the exact rates given for the type of oversea money transfer service you are interested in. There are some sites such as FX Compared that we recommend that can do this for you. Keep the following three steps in mind:
- The total amount you will be transferring abroad
- How long the transfer will take before the recipient has access to it
- Note whether the transfer company is safe (is it covered by insurance and banking laws in case something goes wrong?)
Third Step: Think very deeply about how safe you want to be. For small sums, a site that’s ‘not as safe’ may be worth the risk for the convenience and speed. But for larger sums, you may want to play it safe and go with a company beholden to federal banking laws so your money is safe if the company goes belly up.
Fourth Step: Pick out the transfer method the best suits you. But make sure you compare it against the other options for the exact amount you want to transfer taking into account ANY hidden fees. If you are using an online service, you can often get a quote shown to you for the amount you will receive BEFORE initiating the transaction.
Fifth Step: When you are ready, make sure you confirm the bank, transfer operator, or online website can actually handle the amount you are sending. If it’s an online company, there should be plenty of information on their website. If it’s a bank or money transfer service, you can call them or go in person to the location. When everything is ready, initiate the transfer. You should receive a confirmation receipt of some sort
Sixth Step: Follow up on the money. Make sure the money has arrived at the given date it should. If not, you will need to contact the transfer company and sort things out. This is why you need to keep the receipt.
The Best Way to Send Money Abroad?
Again, this depends on what you are trying to do with the money, how much time you have to send the money, and how much you are trying to save.
In general, our #1 pick for the best way to send money, and one of the cheapest methods, is to use Transferwise. The flat .05% rate charged is cheaper than your bank (which may give you 2-3 percent!) and much cheaper than any currency conversion. It’s easy to use, streamlined, and offers service for most major countries in the world.
Unless you have a particular reason to use a bank transfer, paypal, Western union, Transferwise is the most convenient method and gives one of the best rates. A second pick goes to CurrencyFair, which is even cheaper than Transferwise, but may take longer to process and can’t be used by most countries.
The Final Word
We’ve done our best to give you the most thorough breakdown on the best methods of transferring money internationally. This is a topic close to our own hearts as several of the writers are expats living in another country and so use this specific information given to get the best transfer rates themselves.
The late piece of advice we can give is to compare ALL the methods and look at the fine print. We personally recommend CurrencyFair for people who are expats or have a week or two to get money. But for fast transfers or for emergencies, this is not a suitable option. So, your situation and the speed at which you need to transfer money are what determine the ‘best’ method, even if it’s not the cheapest!
Other articles of interest we’ve written that relate to this topic: