We now live in a borderless world when it comes to sending money from one country to another and there are many options available to us, we can process it via our desktop, laptop or mobile device, money can sent and received quickly, with low to no costs and efficiently if you know what to look for.
Over 80% of people are still using their banks to transfer money internationally, and there are many flaws in this system which has allowed for FX brokers, money transfer businesses and P2P transfers to have a place in the huge global landscape.
I wanted to share with you from my own experience 5 things to be aware of when sending money overseas.
1. BANK FEES: Your bank will generally charge you between $10-$35 per transfer, so if you're sending $1,000 home to family, you could potentially pay up to 3.5% just in a bank transfer fee.
Tip: Always look for a company that charges no fees, if you are a business and sending money overseas to pay invoices, even $10 per payment could add up if you're processing one per week, thats $520 per year that you don't have to pay.
2. FX MARGIN: When you google the AUD/USD rate it may show you 0.65c, this is what is known as the Market Rate, and it's unavailable to achieve this rate. What you will find is that your bank will provide you a rate of approx. 3-5% BELOW this, meaning you'll get 0.6175 - 0.6305 then you also get charged that fee from point number 1, this is now adding up to almost 8%.
Let's just say you've sold a house in Australia and want to transfer the money to the US. You have $500,000 to send, this means you could potentially lose up to $25,000 to the bank when sending your money.... Read that AGAIN!
3. DAILY LIMITS: This may seem like an unusual one, however consider this, you've booked a contract for say $100,000 AUD to GBP. A spot contract in the FX market means you have 48 hours to settle your contract. You login to transfer the money and find out that you have a $5K a day daily limit, it's now going to take you 20 business day to transfer those funds! Panic set's in, what do I do now?
Most money transfer companies will cancel the contract, then it means you lose your rate and now have the volatility of the market to worry about.
My suggestion is to try and rise you limit online before you enter any contracts, this can also be very difficult to do if you're out of the country, so if you're heading overseas before you send your money, make sure to arrange it beforehand.
4. INTERMEDIARY FEES: A really annoying subject! An intermediary bank is a bank that acts on behalf of the bank sending money in order to facilitate international financial transactions if they don't have a direct relationship. Most common when sending money into the USA, and the costs is approx. $50USD. Sometimes when sending USD into China this also happens, you'll normally find that the Chinese supplier you deal with will add that to their invoices "Bank Fees" as it can be common there too.
5. REGULATORY: Always ensure the company you are dealing with are regulated in that country, for example, in Australia our companies are regulated by ASIC & AUSTRAC and the financial company will be working under and AFSL (Australian Financial Services Licence) in the UK, the are regulated and monitored by the FCA (Financial Conduct Authority) also ensure that your "client funds" are held in segregated accounts, which if they are working under the correct licence should be. This means that even if the company you're dealing with go out of business or cease to trade, your money will be held in safe guarded accounts and won't be lost.
**Please note that these 5 tips above are from my own personal experience, for nearly a decade I have assisted both personal and business clients send over 20,000 transactions overseas and these are some of the things I have learned to be aware of, and I hope this helps when you have to send money overseas.