A significant surge has been noticed these days in professionals undertaking business travel and living across borders. In the USA alone, millions of individuals are transferring money overseas every single day. If you happen to be one of them, the first thing to do is to take time out and dig deep to familiarise yourself with the practices adopted by the various money transfer specialists (foreign exchange providers) to conclude which one is best suited for your needs in terms of reliability, security, cost and speed of service.
If you are in the USA, and new to sending or receiving money from abroad, the transfer process can become quite tricky in no time at all. This is because there is a maze of hidden charges and obscure lines of financial fine print that hungry brokers take advantage of to make a fast buck behind your back. When deciding on which money transfer companies to choose from, there is one major factor that merits consideration as it can seriously affect your business.
1Currency Exchange effects
Companies conducting business in the USA are constantly affected by fluctuations in foreign exchange rates. This happens both when they receive money from customers from other countries or make remittances to suppliers abroad. US residents, for example, will need to pay in their home currency in American dollars and receive payments in Euro, GBP, or any other currency as the case may be.
Since exchange rates keep changing every moment, it is but natural that there will be a difference in the amount received when the deal ultimately goes through. If, for example, a seller in the USA makes an invoice of €2000 which is to be paid after 30 days, the euro-dollar rate may certainly change during that period, however insignificantly, with the seller either making a profit or a loss out of it, on expiry of the thirty-day deadline
2Choosing the best foreign exchange provider
There are around 180 currencies that are considered to be legal tender around the globe today. With trillions of dollars changing hands each month in markets the world over, there is a continuous conversion of one currency to another going on every second. This aptly demonstrates the importance of foreign exchange in the economy of any country.
Just like any other business, there has been a rapid growth of online money transfer services all over the world as well.
With inputs from technology experts, industrialists, and corporate heads, the best online money transfer providers in the business in the USA have been identified. The selection is based on market share, global coverage, simplified user experience, competitive rates, service, and incorporating innovative technologies, apart from a slew of other benefits
Before we go into comparing the relative merits or demerits of any money transfer company, certain points require careful consideration. Every service provider will have a different set of rules which will depend entirely on the requirements of the customer. Some companies may work well for small transfers, while others will be better suited for handling larger amounts. The speed and fees will also vary, as can the payment and withdrawal terms.
Another factor that will affect your final selection could be the destination country, the currency you are sending, and the source of the funds. The best service for your needs will vary accordingly. There are many good money transfer companies in the USA such as Wise and Currencies Direct, but to find one that will cater to all your needs you will have to consider several points.
3Different types of money transfer companies
There are scores of ways that exist to send money cheaper, faster, and conveniently in the USA, besides using a bank. These providers, generally, fall into three different categories, so understanding which transfer company will be best for you will give you a head start.
Remittance Companies: (less than $300).
Suitable only for sending small amounts to family and friends.
P2P or Peer to Peer Companies: ( less than $7000).
For transfers below $7000, P2P money transfer companies are unbeatable. They operate by pooling the funds together and matching the pools created with different countries. This transaction then becomes inexpensive which in return gives these companies good business. Again amounts below $10,000 attract fewer regulations, like anti-money-laundering laws, thereby making the whole process simple and efficient.
(Top pick: Our best selection for P2P transfers is Wise formerly TransferWise as they work directly on the mid-market rate. In fact, before you sign up they tell you the exact amount you need to pay which works out well in such a competitive market.)
Non-P2P and Large transfers: (over $7000).
The mode of working of such companies is that the more the amounts rise the fewer percentage charges you pay, which makes them the least expensive. Moreover, since they are aware of the large amount, the paperwork is done in advance and the service can even be handled on the phone in many cases. This comes in handy when you are dealing with different banks in different countries, each having different rules and regulations.
(Top pick: There are several good companies in this category, but those which are difficult to beat are OFX, TorFX, or Moneycorp.)
The exchange rate
As mentioned earlier, the rate at which you exchange the currency between two countries is a crucial element of your transaction. Banks frequently charge much above the inter-bank rate, even though stringent rules have been put in place, so it is important to re-check if you are getting an accurate quote before deciding to choose your money transfer company.
Make a call to different banks and alternative lenders to check what the exchange rate actually is. Once you are sure that all are quoting more or less the same rate, then go with the institution that gives you the best deal for your dollar.
(In general, you should not pay more than 0.5% to 2% in TOTAL fees for major currencies. This as against a bank where they charge 8% plus)
When companies claim ‘No Fees’ or ‘Zero Fees’ on their portal, many would believe that money transfer services come at nil cost. Nothing could be further from the truth as there are actually FOUR charges one should be aware of:
Sending fee: A bank or institution may charge you a sending fee which depends on where you have sourced your funds.
Transfer fee: This fee is fixed by the money transfer service and depends on the amount you transfer and mode of payment. Typically payments by credit or debit card attract this fee.
The time taken for the money to reach the recipient is a crucial factor. While this may take from a few hours to a couple of days it is best to look for services that have the best transfer speeds.
If you are making regular transfers, the ease of service will make the transaction seamless. Check beforehand if the company you choose has a proven customer service record by going through the reviews of customers who have availed of their services.
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