Venmo handled $17.6 billion worth of transactions in 2016. In fact, it’s so popular, the word Venmo is now not just a company name, but a verb - as in, “You forgot your wallet? No worries, just Venmo me your share of the bill.”
If you love Venmo, you might be wondering if the service can be used for payments to friends and family overseas. Here’s all you need to know.
Psst. Before you really get started, a word.
Banks and money transfer providers often give you bad exchange rates to make extra profits.
TransferWise is different. You could save up to 8x by using TransferWise rather than your bank when you send your money abroad. Check out how to make your first transfer with TransferWise. And give it a try.
Oh, and while you’re at it, check out TransferWise’s free borderless multi-currency account. Where you can manage and send dozens of currencies all from the same account. A borderless account allows you to have a virtual account in the EU, the UK, the US, and Australia, but reside in a different country.
We’ll talk a little more about TransferWise later. But, for now, back to what you came here to read.
To use Venmo, you have to fulfil certain requirements. Here’s how Venmo explains them, in their terms and conditions of use:
- You must be physically located in the United States 2.You must have a U.S. cell phone that can send/receive text messages from short codes (please note that this phone number can not be on file with another Venmo account)
If you want to take your money out of your Venmo wallet, that means you’ll have to link a US bank account.
Because your recipient also would need to be in the US, that means that you can’t send money outside of the US, using Venmo. At all. Bad news if you need your French friend to pay you back for that meal, or want to transfer money to your family abroad.
You’re not stuck without a solution, though. Keep reading to find out some good alternatives to Venmo for sending your money abroad.
So you can’t use Venmo for your international transfer - but what do you need to consider when choosing an alternative?
Making an international money transfer is never going to be free, although many businesses will tell you otherwise. Moving money overseas - and keeping it safe on its way - is a fairly complex process. There are costs involved, and the bank or money transfer service will also, naturally, want to make a profit on the transaction.
So, even if a service claims to offer zero commission or fee-free international money transfers, you can bet that one way or another the costs will be passed on to the customer.
Banks and other international money transfer services structure their pricing in a variety of ways. In some cases, there are upfront fees which you can check before you decide which service offers the best value.
But it’s usually even more important to check the exchange rates used by different international money transfer services. To make sure it’s a fair rate, you need to understand a bit about the mid-market rate, sometimes called the wholesale, spot, or interbank rate.
The mid-market rate is the only real exchange rate - it’s what banks use to trade money on global financial markets. You can find it with a quick Google search for your currency pairing, or by using a currency converter online.
However, most services don’t offer customers the mid-market rate when they make an international transfer. Instead, they wrap a bulk of their profit into the exchange rate they’re offering. That means they can claim that there’s no commission charged, yet still make a profit. That’s seldom a good deal for customers.
Don’t get ripped off by unscrupulous money transfer services - check the exchange rate being used before you commit.
Users love Venmo because it’s simple to use, convenient, and fairly priced. If you’re looking for an international transfer, you can’t rely on Venmo - but you’ll want a service which is just as customer friendly - and which doesn’t cost the earth. So what are your options?
- An alternative money transfer service (often faster and cheaper)
- Your bank (often slower, but at least familiar)
The costs of making an international transfer with your bank - either in person or online - will come as a shock for many Venmo customers used to getting a great service at a great price.
But there are alternatives out there. For example, you could try Venmo’s parent company, PayPal, for your transfer abroad. Although it’s possible to make international transfers with PayPal, it’s still important to understand both the fees and the exchange rates before you make a decision. With a currency conversion spread of 2.5%-3% added onto the wholesale exchange rate, and international fees running from 0.3-2%, and more for credit and debit card payments, PayPal international transfers can be costly.
Luckily, there are cheaper options out there.
TransferWise isn’t like your regular bank. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. So, you may be able to save up to 8x by using TransferWise rather than your bank when you send your money abroad.
TransferWise only ever uses the real, mid-market rate, and charges a small fee per transaction - which is set out upfront so there are no nasty surprises.
Nobody wants to get ripped off when making an international money transfer. For customers used to Venmo’s good value and convenient system, the fees and hassle associated with bank operated international wire transfers - and even services like PayPal can be a bit of an unpleasant surprise.
Many banks will allow you to make a wire transfer in person, by simply calling into your local branch with all the relevant details.
It’s a good idea to call your bank before you visit - both to check that you can make a transfer in person, but also to ask about the fees. It’s common for banks to charge more for wire transfers made in branch than they do for online transfers.
However, it’s useful to know that it’s not only your bank which could add fees and charges. There’s a high chance your transfer will be processed using the SWIFT network - in this case, intermediary banks, and the recipient’s own bank could add their own charges, too.
All in all, making a transfer in a branch is never going to be as convenient as using the Venmo app on your phone - and the costs could mount up pretty quickly.
A more convenient option for many people is to make an online transfer through your bank - also known as a wire transfer. Some banks will let you set these up online, but others won’t. So you may be stuck, even if this is the option you’d prefer.
Many banks have lower fixed charges for making international transfers on the phone or online, compared to an in-person service. However, you could still get stuck with the extra fees added by intermediaries and the recipient bank, thanks to the SWIFT process.
Verdict: It’s probably cheaper, and definitely more convenient than visiting your bank. But it’s certainly not cheap. It’s definitely worth checking out if there’s a better alternative out there which suits your needs.
If you love Venmo for sending cash to your US-based friends and family, TransferWise could be the answer for those times you need to send money to people based abroad. Do your research, and see what you could save - for many customers, TransferWise offers a better deal on international money transfers.
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