These days there are liens of companies that can send your money abroad.
For a customer, it can be confusing.
Which company should you use? And why?
As someone who works in the industry, I will give you a clear and candid rundown of the main options you have available.
Broadly speaking, there are three main types of money transfer companies:
- Banks
- Money transfer apps
- Currency brokers
While banks and money transfer apps carry out international money transfers, only currency brokers provide a service where you can speak to someone about your money transfer.
Here’s my simple advice:
If you are looking for the cheapest money transfers, then I would suggest using a money transfer app for small amounts and a currency broker for large amounts.
Banks (best for convenience)
Banks are an obvious way to send money abroad.
They have the benefit of feeling familiar, and your money is likely to be held at your bank already.
While banks are a convenient option, their fees for international money transfers can be a lot higher than alternative providers.
And most banks offer very little service these days.
The problem now is the high street banks have reduced their service levels to the point where it’s hard to speak to anyone.
There are fewer and fewer branches left.
Most customers no longer have any kind of personal relationship with their bank.
From my own experience, I’ve also found that big banks have minimal knowledge of international money transfers.
Money transfers are simply not their priority.
Banks are focused on mortgages, personal loans, saving accounts, insurance, and investment products.
If you do queue up in a branch, you will probably find your bank will push you to go online anyway and do your international money transfer yourself.
And if it goes wrong, it’s on you.
Not only that, the banking sector has a well-earned reputation for high charges.
The UK’s high street banks offer some of the least competitive exchange rates on the market.
What’s more, the banks have the cheek to charge you fees too!
That can be outrageously expensive when you do the sums.
Given the lack of service, it’s like you are paying more for less.
As a tip, some of the new challenger banks are a lot more competitive than the high street banks. Monzo, PagoFX, and Starling are three names that are worth checking out if you want a bank that can also provide cheap money transfers.
Money transfer apps (best for regular payments and small sums)
Over the past decade, dozens of money transfer apps have popped up.
The biggest names in the world of money transfer apps are Wise, Revolut, CurrencyFair, Remitly, PayPal, and WorldRemit.
They all pretty much do the same thing, although some are more highly rated by customers.
Wise and CurrencyFair have higher Trustpilot scores than other apps.
Here’s how they work in a nutshell:
You open an account, enter your personal information, upload your ID, enter the beneficiary details (where the money needs to be sent), send them your money, pick the currency you need, agree on the exchange rate, and confirm everything is correct.
They essentially offer a ‘do-it-yourself’ system.
It’s not a service as such (if you associate service with human help).
Money transfer apps suit some people but not others.
For those making regular overseas payments or are more comfortable with tech-based applications, money transfer apps can be a really good option.
If words like “app” and “technology” raise your blood pressure, then you might want to give them a swerve.
Overall, money transfer apps are usually much cheaper than a bank and have more efficient systems behind the scenes. That makes them an attractive alternative to high street banks.
It’s hard to be specific on the costs because the leading apps charge a percentage of the money you send. The more you send, the lower the percentage.
If you’re new to money transfers or are sending a large amount of money, then a money transfer app can be a bit daunting.
There a quite a few steps to completing a transfer.
If you’re unfamiliar with the terminology and technology, it can be a frustrating process.
Plus, if things go wrong – well, you know whose fault it will be.
My observation is that the customer reviews of the leading money transfer apps reveal that a lot of people get wound up with the lack of human assistance.
I’ve looked at hundreds of Trustpilot reviews across the sector, and there are common issues that arise.
A lot of customer angst in any industry comes from poor communication.
This is where money transfer apps can struggle.
When processes get fully automated, it can feel like all common sense has gone out the window.
The computer says no.
The customer says aaaarrrgggghhhh.
Most of the leading money transfer apps have no phone number you can call.
If you have a problem, you have to email them with details of your issue or try to explain to a web robot what your problem is.
That’s a clear negative in my books, but money transfer apps are a cost-effective option, and some customers like the fact they can send money abroad from their phone while sipping a cappuccino.
It comes down to what you’re more comfortable with.
Currency brokers (best for large transfers)
A currency broker is a money transfer company with human support.
As a customer, you are assigned a person who will look after your transfer from start to finish.
Currency brokers can be the best way to transfer a large sum internationally – where costs, communication, and timing are so important.
A currency broker can help set up your account, sort out the payment details (the beneficiary), and discuss the timing of your transfer.
The aim is to take the stress away from the customer.
What’s more, I’ve found that currency brokers can match and even beat the exchange rates offered by money transfer apps when dealing with large sums.
Here are some typical reasons you might use a currency broker:
- Buying or selling property abroad
- Moving savings, pensions, or salaries
- Proceeds from foreign investments
- Selling a foreign business
- Overseas inheritance
For smaller transactions, it may be hard for a currency broker to compete with the money transfer apps on cost alone.
However, larger transactions often need greater care and assistance.
A currency broker can add the elements missing from other money transfer providers.
Yes – there is still a place for humans in this world.
Anyone sending a large sum of money naturally wants some reassurance that their hard-earned money is in safe hands.
Getting some assistance at each stage of your transfer takes the pressure off.
And I’ve found most people appreciate someone they can talk to about exchange rates.
For larger amounts, trying to decide when to exchange your money is often the most critical factor in the true cost of your transfer.
The daily volatility of exchange rates can easily dwarf the margins charged by any money transfer service.
In the last few years, we’ve had Brexit, Covid, the invasion of Ukraine, and an energy and inflation crisis.
All these events triggered massive swings in exchange rates.
You only have to look at a Pound to Euro chart over the last 5 years to see how extreme some of these moves have been.
Even the small daily swings can make a big difference to the money you receive.
The bottom line is timing matters.
Not surprisingly, a lot of customers aren’t sure when to exchange their money.
It could be you’re fairly new to currency markets or find the subject complicated or boring (sometimes both).
Exchange rates fluctuate every day. It’s not easy to know whether it’s a good or bad time to transfer your money – which is fair enough.
While no one has a crystal ball, it’s something a currency broker can help with.
As currency brokers are watching exchange rates every day, they are familiar with recent market trends, current news, and upcoming risks.
It could be that you have a specific exchange rate you would like to achieve or a timeframe you would like to work towards. This can be useful in getting the most bang for your buck (or Pounds or Euros).
It may just be a case of a currency broker letting you know when the exchange rate moves in your favour. That alone can be a godsend for someone living a busy life.
