Sending Money Internationally: Cheapest Ways
Sending money across borders has become increasingly common, whether you’re supporting family abroad, paying for international purchases, or managing business transactions. However, the cost of international transfers can vary dramatically depending on which service you choose. Traditional banks often charge fees that can eat into your transfer amount, while specialist money transfer services typically offer much better value for money.
Understanding the various options available and their associated costs can save you significant amounts on each transfer. The difference between the most expensive and cheapest options can be substantial, with some providers charging over 13% of the transfer amount while others offer rates close to the real exchange rate with minimal fees.
Why Avoid Traditional Banks for International Transfers
When most people think about sending money internationally, their first instinct is often to visit their local bank branch. Unfortunately, this instinct can prove costly, as traditional banks consistently rank among the most expensive options for international money transfers.
Traditional Banks Are the Most Expensive Option
Banks typically charge an average of nearly 13.40% of the amount sent for international transfers. This figure includes both upfront fees and hidden costs within poor exchange rates.
The high cost stems from banks’ business models, which often treat international transfers as premium services rather than routine transactions. They charge substantial upfront service fees and apply significant markups to exchange rates, sometimes adding 3-4% above the real market rate. This means that on a €1,000 transfer, you could be paying €30-40 in hidden exchange rate costs on top of the transfer fee.
Banks also tend to be slower than specialist providers, with international wire transfers often taking 3-5 business days to complete. This combination of high costs and slower service makes traditional banks an unappealing option for most international transfers.
Specialist Money Transfer Services Offer Better Value
Licensed money transfer companies and specialist foreign exchange providers have completely changed the international transfer market by offering faster, cheaper alternatives to traditional banks. These companies focus specifically on money transfers, allowing them to streamline their processes and offer more competitive pricing.
Specialist providers typically offer better exchange rates because they handle large volumes of currency exchanges, giving them access to wholesale rates that are much closer to the real market rate. They also tend to have more transparent fee structures, making it easier to understand exactly what you’re paying for your transfer.
An estimated €170 billion was lost globally to hidden cross-border fees in one year, highlighting just how much money people can save by choosing the right provider. Many specialist services can complete transfers within minutes or hours rather than days, and they often provide better customer service with dedicated support teams who understand the complexities of international transfers.
Factors to Consider When Sending Money Abroad
Choosing the right international money transfer service depends on several key factors that will influence both the cost and convenience of your transfer. The amount you’re sending plays a significant role, as some providers offer better rates for larger transfers while others specialise in smaller amounts.
The destination country is equally important, as different providers have varying coverage and partnerships in different regions. Some services excel in certain corridors, such as transfers to specific countries in Asia or Africa, while others focus on major developed markets.
The urgency of your transfer will also influence your choice. If you need the money to arrive within minutes, you’ll typically pay more than if you can wait a day or two. Your preferred payment method matters too, as funding transfers with bank accounts is usually cheaper than using debit cards, which in turn are cheaper than credit cards.
Consider how the recipient will receive the money. Bank deposits are common and usually cheapest, but cash pickup services might be necessary if the recipient doesn’t have a bank account. Some providers also offer mobile wallet transfers or even home delivery in certain countries.
Understanding International Money Transfer Costs
The true cost of an international money transfer isn’t always obvious from the advertised fees. Many providers use complex pricing structures that can make it difficult to compare options directly, which is why understanding how costs are calculated is essential for making informed decisions.
What Makes Up the Total Cost of a Money Transfer?
Every international money transfer has two main cost components that determine how much you’ll actually pay. The first is the upfront fee, which is the direct charge that providers clearly display for processing your transfer. This might be a fixed amount like €5, or a percentage of the transfer amount.
The second component is the exchange rate markup, which is often less visible but can be much more significant than the upfront fee. Most providers add a percentage markup to the mid market rate to generate profit. This markup means that the recipient receives less money in their local currency than they would if the transfer used the real exchange rate.
For example, if you’re sending €1,000 to someone in the United States, and the real exchange rate is 1.10 USD per EUR, the recipient should receive $1,100. However, if the provider applies a 2% markup, they might use an exchange rate of 1.078, meaning the recipient only gets $1,078. The €20 difference represents the hidden cost of the markup.
The Importance of the Mid Market Exchange Rate
The mid market rate, also known as the interbank rate, represents the real-time value of one currency compared to another. Exchange rates are free-floating and fluctuate constantly based on supply and demand in the foreign exchange market. Economic news, political events, and market sentiment can all cause rates to move throughout the day, sometimes by significant amounts.
When evaluating money transfer providers, always compare their offered rates against the current mid market rate. The smaller the difference, the better value you’re getting. Some providers, particularly specialist services like Wise and Xe, use the mid market rate directly and add only a small, transparent fee.
Top Money Transfer Services Compared
The international money transfer market includes dozens of providers, each with different strengths, weaknesses, and pricing structures. Understanding the key features and best use cases for major providers helps you choose the right service for your specific needs.
Wise: Best for High Limits and Transparent Pricing
Wise, formerly known as TransferWise, has established itself as one of the leading international money transfer services by focusing on transparency and competitive pricing. The company uses the mid market exchange rate and charges clear, upfront fees that are typically less than 1% for bank-funded transfers.
Wise operates on a transparent fee structure with no minimum transfer amounts, making it suitable for both small and large transfers. The company also offers multi-currency accounts that allow users to hold and manage money in different currencies, which can be particularly useful for frequent international transfer users.
OFX: No Fees, But Higher Exchange Markups
OFX differentiates itself by generally charging no upfront transfer fees, instead recouping costs through exchange rate markups that typically range from 1.35% to 4.50%. This pricing model can be advantageous for users who prefer to see all costs reflected in the exchange rate rather than paying separate fees.
The service covers over 170 countries and focuses exclusively on bank-to-bank transfers, which means you cannot fund transfers with cards or receive money via cash pickup. This limitation makes OFX less suitable for recipients who don’t have bank accounts, but it does help keep costs down for traditional bank transfers.
Transfer speeds are typically 1-3 business days, with no same-day delivery options available. OFX requires a minimum transfer of €135, but sets no maximum limits, making it suitable for both moderate and large transfers.
One notable feature is OFX’s forward contracts, which allow users to lock in exchange rates for future transfers. This can be particularly valuable for large transfers like property purchases, where rate fluctuations could cost thousands of euros over time.
Xoom: Fast International Transfers with Cash Pickup
Xoom, owned by PayPal, specialises in fast international transfers, with many transfers completing within minutes. The service offers low upfront fees, particularly when funded from PayPal balances or bank accounts, though exchange rate markups can exceed 3%.
One of Xoom’s key advantages is its cash pickup option, available in many countries. This feature is particularly valuable when sending money to recipients who don’t have bank accounts or prefer to receive cash rather than bank deposits.
The service covers nearly 160 countries and territories, with competitive rates to many popular destinations. Xoom integrates seamlessly with PayPal accounts, making it convenient for users who already use PayPal for other transactions.
However, the exchange rate markups can be significant, particularly for smaller transfers, so it’s important to compare the total cost against other providers. The speed and convenience often justify the higher costs for urgent transfers, but may not represent the best value for routine transfers where speed isn’t essential.
Western Union: Largest Global Network for Cash Transfers
Western Union operates the largest global network for international money transfers, with coverage in over 200 countries and territories. This extensive network makes it particularly valuable for sending money to remote areas where other providers might not operate.
The service offers same-day delivery for cash pickup when funded by debit card, credit card, or cash in person, though these faster options usually cost significantly more than bank-funded transfers. The cheapest transfers using bank accounts can take up to a week to complete.
Transfer limits vary considerably by destination country. For example, limits might be €4,500 to Mexico but €45,000 to India, reflecting different regulatory requirements and market conditions in various countries.
Western Union’s main advantage is its extensive network of physical locations where users can send cash in person and recipients can collect cash. This infrastructure is particularly valuable in countries with limited banking services or where recipients prefer cash transactions.
However, the costs can be high, particularly for faster delivery options, and the exchange rates often include significant markups above the mid market rate.
Revolut: Instant Transfers and Fee-Free Weekday Limits
Revolut offers an innovative approach to international transfers with fee-free transfers up to €900 on weekdays, charging only 1% at weekends. This pricing structure can provide excellent value for users who can time their transfers for weekdays.
Transfers between Revolut users are instant and completely free, regardless of the day of the week. This makes Revolut particularly attractive if both sender and recipient have Revolut accounts, as it eliminates both fees and exchange rate markups.
The service has a transparent fee structure with no hidden costs, though fees can become higher for larger transactions. Forward contracts are only available for business customers, limiting options for personal users who want to lock in rates.
Revolut’s mobile-first approach makes it convenient for users who prefer managing transfers through smartphone apps rather than traditional websites or physical locations.
Remitly: Extensive Global Coverage with First Transfer Free
Remitly provides transfers to over 3,000 banks and 350,000 pickup locations globally, offering extensive coverage particularly in developing markets. The service provides options for mobile wallet transfers and even home delivery of cash in some countries.
One attractive feature is the no-fee first transfer promotion, allowing new users to test the service without paying transfer fees. However, fees and exchange rates vary significantly depending on the destination country and delivery speed.
The service offers both economy and express transfer options, with express transfers typically completing within minutes but at higher cost. Economy transfers can take 1-3 business days but offer better rates.
Remitly’s strength lies in its global reach and variety of delivery options, making it suitable for sending money to countries where traditional banking services might be limited.
TransferGo: Low-Fee, Fast Transfers with Fee-Free Starters
TransferGo focuses on fast transfers at low fees, with many transfers completing within 30 minutes. The service offers a broad range of currencies and typically includes fees in the amount the receiver gets, simplifying cost calculations.
New users benefit from fee-free first two transfers, providing an opportunity to test the service without paying fees. The service sets no minimum or maximum limits on transfers, though card transactions are limited to €9,000 per transaction.
TransferGo’s transparent pricing makes it easy to understand costs upfront, and the fast transfer speeds make it suitable for urgent transfers. The service focuses primarily on European markets but is expanding its global coverage.
WorldRemit: Fast Transfers with Multiple Delivery Options
WorldRemit prioritises speed, with 90% of transfers authorised within minutes. The service offers bank-to-bank transfers, cash pickups, and mobile-to-mobile payments, providing flexibility in how recipients receive money.
The service sends SMS or email alerts to both senders and recipients upon successful transfers, providing peace of mind and helping recipients know when to expect their money.
However, fees can be high and are not always transparent, with maximum transfer limits sometimes below €9,000 for certain transfer types. WorldRemit may add margins to exchange rates that aren’t always clearly disclosed upfront.
Alternative Methods to Send Money Internationally
Beyond specialist money transfer services, several alternative methods exist for sending money internationally. Each option comes with different trade-offs in terms of cost, speed, convenience, and security.
Are Bank Transfers Ever Worth It?
Traditional bank transfers, despite their high costs, do have some situations where they might be worthwhile. The primary advantage is security, as banks are heavily regulated and insured, providing peace of mind for very large transfers.
Most banks use the SWIFT network and IBAN codes for international transfers, providing a standardised system that works globally. The median outgoing international wire transfer fee is around €40, which might be acceptable for very large transfers where the percentage cost becomes minimal.
For most transfers, however, the combination of high fees, poor exchange rates, and slow processing times makes traditional banks an expensive option compared to specialist providers.
Using Virtual Accounts for Multi-Currency Management
Virtual accounts are digital sub-accounts that allow you to send, receive, and hold multiple currencies without maintaining physical bank accounts in different countries. These accounts typically offer lower fees, better exchange rates, and faster settlement times than traditional banks.
The main advantage is reduced reliance on intermediary banks, which often add fees and delays to international transfers. Virtual accounts can provide local account details in different countries, making it easier to receive payments from local sources or make payments to local recipients.
Some virtual account providers support both major currencies like EUR, USD, and GBP, as well as exotic currencies in emerging markets. They’re often licensed and regulated, providing security similar to traditional banks while offering better rates and faster processing.
Virtual accounts can be particularly valuable for businesses or individuals who regularly deal with multiple currencies, as they eliminate the need to convert currencies for each transaction.
Cryptocurrency Transfers: Fast but Technical
Cryptocurrency offers a fast and potentially cheap alternative for international transfers by bypassing traditional banking intermediaries. Transfers can complete within minutes using blockchain technology, and fees are often much lower than traditional methods.
Popular options include Bitcoin, Ethereum, and stablecoins like USDT, which maintain stable values relative to major currencies. The process involves choosing a cryptocurrency, setting up a digital wallet, buying the currency, initiating the transfer, and the recipient receiving and potentially converting the funds.
However, cryptocurrency transfers require technical knowledge and comfort with digital wallets and exchanges. Price volatility can also affect the value of transfers, though stablecoins help mitigate this risk.
Regulatory uncertainty in some countries can also complicate cryptocurrency transfers, and not all recipients may be comfortable or able to handle cryptocurrency transactions.
Old-School Options: Bank Drafts, Money Orders & Cheques
Traditional paper-based methods remain viable for certain situations, particularly when digital alternatives aren’t available or suitable. These methods are often secure and widely accepted, though they’re generally slower than electronic alternatives.
Bank drafts are bank-guaranteed payments ideal for larger sums, with fees typically €5-25. The main drawback is speed, as physical mailing can take weeks for international delivery.
Money orders are available from banks, post offices, and retailers, with fees typically a small fraction of their value. For example, postal services might charge €2.10 for money orders up to €450.
Personal cheques drawn from your current account remain a cheap option for specific transactions, though they’re slower and less commonly accepted internationally. A box of cheques typically costs €5-15.
These methods work best when speed isn’t important and the recipient is comfortable with paper-based transactions.
Direct Bank Deposits Between Linked Accounts
If both sender and recipient have accounts at the same bank or partner banks, direct deposits can be a secure and straightforward method. International fees typically range from €9-45, and processing may take a few business days.
This method works particularly well for major international banks that operate in multiple countries, as they often offer preferential rates for transfers between their own branches.
The main limitation is that both parties need accounts at compatible banks, which isn’t always possible or convenient.
