If you need to make an international money transfer, you might well be tempted by one of the most familiar names in the world of online payment: PayPal.
Used around the world by millions, including in Australia, PayPal is a leader in online payments, so it’s no surprise that it also offers a way for people to transfer money internationally. In fact, you do it much like a regular PayPal payment - all you have to do is transfer the money to another PayPal account. But watch out: the fees for international payments are not the same as for domestic payments - in fact, you could face a really substantial markup as well as a high fixed fee.
So here’s a look at a few other options you have. Maybe they’re not as well known as PayPal, but there is a chance that you might be able to get a better deal.
Founded in 2010, TransferWise uses new technology to make international transfers in a more efficient way than the banks can manage. Its system of interconnected local bank accounts around the world enables it to always offer its customers the mid-market exchange rate - the only rate that it’s really fair to use.
That means that, unlike with many operators, the fees aren’t hidden - the simple fee charged by TransferWise is clearly stated in advance, so you can see exactly what sort of deal you’re getting well before you hit send.
Also, unlike with PayPal, the recipient doesn’t need their own account with TransferWise: the money can go straight into their bank account. If you want to store money with TransferWise, like you can with PayPal, a borderless account can take care of that for you - with the added bonus that it gives you virtual account details for Australian and US dollars, pounds and euros - meaning you can send and receive money in those currencies without having to treat it like an international payment at all.
CurrencyFair, founded in 2009, prides itself on offering a competitive exchange rate for its international transfers. While it isn’t as huge a global operation as PayPal, you can still send money from numerous countries (including Australia) into 15 currencies used around the world, including US, Canadian and New Zealand dollars, pounds and euros.
Rather than charging a fixed fee, CurrencyFair marks up the mid-market rate by an average of 0.4% - that’s how it makes money on your transfer. That’s a better rate than most banks offer, although of course it isn’t the real mid-market rate - it’s 0.4% higher. You also need to watch out for fees that might be charged if money is received into the “non-local” bank accounts CurrencyFair uses for various currencies, including US dollars. For any such transfers, there may be a substantial extra fee.
Still, check the sums and it could work out as cheaper than a PayPal transfer.
CurrencyTransfer is a slightly different sort of service: simply put, it’s a comparison site. Focused on high-value transfers - £5,000 is the minimum, so it’s not for the casual user - it compares various exchange services for you so that you can get a good rate.
It earns its keep from the companies it lists, rather than you - so you won’t have to pay a fee to CurrencyTransfer at all. Although you will, of course, have to pay the exchange service it helps you to select. CurrencyTransfer only lists FCA-regulated currency exchangers, which is great, although they don’t claim to list all your available options.
CurrencyTransfer comes into its own when dealing with very high-value transactions. If all you want to do is pay back a friend, it might not be what you’re after - but for businesses often dealing with large sums it could be a valuable service.
If you don’t know the name HiFX, you might nonetheless have heard of its sister companies Ria Money Transfer and XE: both are very prominent services in the world of international money exchange. They’re all owned by the same company, Euronet Worldwide.
How does it work? As it says on its website, “Like your bank we make our money in the difference between our buy and sell prices”. You won’t get the mid-market rate there either as they state “All figures [transfer estimates] shown are based on today’s mid-market rate. This rate is not available to private individuals”. But for transfers over AUD 10,000 there’s no additional transfer fee, and the exchange rates they offer may well be better than those offered by a bank - or, quite possibly, by PayPal but it’s always imperative to do your research.
With InstaReM, you can currently send money out of 7 countries, including Australia, as well as the countries using the euro. Their list of destination currencies is longer, though, meaning that the “to” and “from” routes are not exactly the same - you can send money from Australia to New Zealand, for example, but not the other way round.
InstaReM is definitely doing the right thing by offering the mid-market rate. If you know for sure that it covers all the transfer routes you’re likely to need, then it could be worth a look. They don’t offer a borderless account, so if you’d like to hold money internationally then you might have to look elsewhere.
Another money transfer company you can use from Australia is OrbitRemit, which was set up in 2008. It focuses all its efforts on transfers out of Australia, New Zealand and the UK, and into a larger selection of others. So, as with InstaReM, you’ll have to check carefully that all the transfer routes you might want are definitely covered.
Specializing on a few countries has allowed OrbitRemit to sort out a few extra features that are particularly useful for New Zealand expats who need to pay the government back home for whatever reason. That could certainly come in handy. However, OrbitRemit isn’t one of the few transfer providers that offers the mid-market rate, so expect to pay a little bit of a markup there. And there are fixed fees on most transfer routes, too. But it could still be just what you’re after.
TorFX proudly offers “bank-beating exchange rates”, although, as already mentioned, the exchange rates on offer from banks tend not to be so great in the first place. But the fact that they don’t charge any additional fees either means that you might end up with a decent deal.
What are those “bank-beating” rates? “As close to the interbank rate as possible”, they say. So… not the interbank rate itself, then. In fact, despite offering superior rates, TorFX makes its money in exactly the same way as traditional transfer providers, as they write on their site: the difference is simply that “TorFX works off smaller margins than most”.
So, TorFX relies on a marked-up exchange rate in lieu of a “fee”, making the true cost of your transfer slightly unclear. But still, as their rates are competitive, you might end up better off than if you’d used PayPal.
An Irish company with a friendly name, TransferMate offers international payments to individuals and businesses, with no fixed fees for high-value business payments and various useful business tools like batch payments. They say they can cope with “all major and exotic currencies traded globally, except for restricted currencies”, so you may need to check the currencies you need aren’t “restricted”.
As for exchange rates, unfortunately you’ll need to contact them to get an estimate. There’s a currency converter on their website which displays the interbank (mid-market) rate - but that isn’t a quote. “For a quote please phone our team”, they write. So, will you get a better deal than with PayPal? You may have to ask them in person.
As you’ll have seen, there’s no shortage of options for you if you’re not sure how to make your international payment. While few of these companies can boast the sheer scale of PayPal, they might be able to offer a better deal.
Which one to choose? It depends what you want, but whatever you do, don’t forget about the exchange rate. Compare the quote you get from these providers to a currency converter that uses the mid-market rate, and check you’re really happy with the deal. You can even send your money at the real mid-market rate with a couple of these providers, of course, which is certainly something to consider if you value transparency.
You should also consider which countries you might need to transfer money to (or from) in future, and check that those routes are covered by your chosen provider. And if you often need to send or receive money overseas, see if they offer an account where you can hold your money in foreign currencies.
All sources are correct as of 31 October 2018
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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