Transferring Money Overseas
There are a variety of ways in which individuals and businesses can send money overseas with numerous firms and entities competing for your business. Below we have listed the things to consider when making a foreign exchange transfer and some of the pros and cons of the methods available.
What should I consider when transferring funds?
To determine which method is right for you, you’ll need to take the following factors into account:
- How much money are you sending?
- Are you making a one off payment or will you be making regular repeat payments?
- How quickly do you need the payment to arrive?
- Who are you sending funds to and how do they wish to receive it?
Other key factors are:
- Cost– the cost of a transfer once fees, charges and exchange rates are taking into account may vary greatly; you should also consider if there will be any fees for the recipient of the funds.
- Safety– how secure are your funds and is your money protected if anything goes wrong?
Methods of sending funds abroad
Option A- Sending Money via your bank or building societies
Most banks and building societies allow you to transfer money to accounts overseas and for many people using their bank is the default option for making overseas transfers. Such transfers are easy to arrange as you can simply instruct your bank either in person or online, there is also often the choice to pay for an express service if you need your funds to arrive more quickly than a standard payment. Funds transferred through the bank are generally very secure and are covered by the Financial Services Compensation scheme (FSCS).
However, fees are often charged for overseas transfers which are usually between £15 and £30. Additionally the exchange rate used by the Banks for such transfers are often not as competitive as alternate providers and this is especially true for larger payments: for amounts above £5,000 you are far more likely to get a better exchange rate from a foreign Exchange Broker (Option C) and may also avoid the fees charged by the banks.
Option B- Online or High Street Money Transfer Firm
High Street and Online money transfer firms such as MoneyGram and Western Union provide a range of services for sending money overseas and are often used by individuals wishing to remit money to relatives overseas. Depending upon the amount of money that you wish to transfer you may not even require an account with the firm in order to send money. Some firms do not require identification on small transactions though these firms are few and far between owing to rising security concerns.
How it works is fairly simple: you give the firm cash to send, and they’ll give you a reference number that you can then pass on to your intended recipient. They’ll go to the online website or physical location of the firm near them and pick the money up using the reference number. It all sounds so easy, but the downside is that this method is not nearly as secure as using a bank is. These firms aren’t guaranteed by the Financial Services Compensation Scheme, so if they close their doors without warning, you may find your money has disappeared.
There’s also the matter of pricing. Services at each firm vary quite a bit. Don’t forget to compare prices before choosing a money transfer firm because you may not be getting the best deal at the first one you choose. You could find that the firm you go with charges hefty fees for next-day delivery or certain methods of transfer, so beware before you put your money down.
Option C- Money Transfers through a Foreign Exchange (FX) Broker
Different FX firms have different minimum transfer orders but providing that you are making a transfer above the minimum threshold you are likely to get a much better exchange rate than you’d find at a Bank or Money Transfer Firm. As well as providing better exchange rates FX Brokers often charge lower fees or no fees at all! Money can often arrive in the recipient’s bank account on the same or following day without the need to pay any additional fees.
You will need to register and open an account with the FX broker meaning that you will need to supply adequate identification documents to adhere to regulatory requirements. Unlike the Banks FX Brokers are not subject to the FSCS, however they must safeguard your money by segregating it from their own so in the event of the collapse of the firm you should get your money back.
Unlike most FX brokers, Indigo FX is authorised by the Financial Conduct Authority (FCA) under the Payment Service Regulations 2009 (594433) for the provision of payment services and holds HM Revenue and Customs Certificate of Registration for Money Laundering Regulation (12290784).
Their team of experienced professionals endeavour to understand the specific needs of each client, ensuring that they execute at the optimal price.
Choosing the Best FX Provider
In order to decide upon the best option you may wish to get a quote from the alternate providers to see which offers the best exchange rate and what the associated fees are. Online comparison tools are available to assist in this comparison. You should compare your quotes and consider the risks involved. If you are sending a large amount of money you should not use a firm unless it is authorised or regulated by the Financial Conduct Authority (FCA).