How to make an international money transfer
Step 1 – Customer ID check
All new customers will need an ID check due to financial regulations.
This only has to be once. Existing customers can skip this step.
Most ID checks for individuals are quick and easy. Your passport number and address is often all that’s needed.
Step 2 – Lock-in an exchange rate
Before you can transfer money internationally, you need to lock-in an exchange rate.
A bank or money transfer company will quote you a live rate based on the amount of currency you have and the currency you need to buy.
If you are happy to proceed, the exchange rate is locked-in, and you will be emailed a confirmation with the details of your transaction.
Step 3 – Pay for your transfer
Banks require your money upfront, but money transfer companies will agree an exchange rate before you send your money in.
This can be handy if you see a great rate and don’t want to miss it.
You will normally be given 1-2 working days to send your money in to pay for your transfer.
The confirmation email will include the amount you need to send in and where to send it.
Step 4 – Your money is converted into the currency needed
Once your money is received by your bank or money transfer specialist, they will convert it into the currency you need and transfer it to the foreign bank account you’ve requested.
How long does an international money transfer take?
It does vary depending on the country.
It takes 1-3 working days for international money transfers within Europe.
Outside of Europe, it can take between 2-5 working days.
The reason transfer times vary is due to factors such as different time zones, whether your funds arrive in the morning or afternoon, and the efficiency of the recipient bank.
Banks vs money transfer companies compared
A little over a decade ago, the banks pretty much had the foreign exchange market to themselves.
About the only competition they faced was from the likes of MoneyGram and Western Union – who specialised in smaller payments to overseas relatives.
Things have now changed for the better.
The banks have lots of competition from money transfer specialists.
Money transfer specialists use the same secure SWIFT payment system as the banks – but can undercut the banks on cost as they have far lower overheads.
The fact is banks are lumbered with enormous overheads, and there is not much they can do about it.
They’ve got a national branch network to pay for that is manned with staff, thousands more people sat in corporate towers, as well as high regulatory costs, sponsorship deals and mega-fines to pay for past indiscretions. It adds up to billions a year.
It’s pretty obvious why the banks won’t offer you the best deal on your international money transfers – they can’t.
If the banks matched the competition, they’d probably lose money.
What’s more, the banks aren’t really set up for international money transfers. Speak to anyone in a branch, and you’ll see they’re trained in mortgages and savings products – that’s what makes a bank most of its money.
International money transfers are a small sideshow that they’re not bothered about.
The bottom line is this: banks are known for high fees and poor exchange rates on international money transfers.
As a ballpark, the big UK banks are operating with a 3-4% exchange rate margin.
Money transfer specialists can charge way less than that.
It varies based on the bank and the amount you are transferring, but I’ll run you through an example.
On an international money transfer of say £50,000; you could end up paying your bank £2,000 just in exchange rate costs.
To find out the cheapest international money transfer, the best thing to do is request a few quotes and compare the amount of currency you would receive net of all costs.
How to avoid paying nasty bank fees
We all hate paying fees. Most of them are unnecessary.
Transfer fees are no different.
They are a flat fee added to the cost of international money transfers.
Most of the big banks continue to charge the fees – sometimes twice!
One for the sender, and one for the receiver (which is often you both times).
Here’s a summary of fees from the UK’s biggest banks:
- Barclays: £25 (standard) or £40 (faster) if you use a branch. There are no fees if do everything yourself online – how very generous! They also charge the recipient £6.
- Lloyds: £9.50 whether you use a branch or go online. The recipient is also charged £12.
- Natwest: £15 for amounts below £5,000, 0.3% of amount if over £5,000 (max £40).
- Santander: £25 flat fee for branch or online.
As you can see, it varies from bank to bank.
Like most charges, if they make the system complicated enough, some people will just give in and pay it.
While the transfer fees don’t look massive, I’ve found a lot of customers think that’s the only cost of their international transfer. They don’t realise the fee is in addition to the exchange rate costs.
The point is the transfer fee is an unnecessary expense. It shouldn’t even exist.
For those make regular international payments or sending a large amount over several tranches, they can add up very quickly.
Another important point for larger transfers is that the big UK banks often have daily limits for international transfers (in the region of £50,000 – £100,000).
This may force some customers to make multiple transfers – thus incurring more transfer fees not to mention the extra time and hassle.
There is a really easy way to avoid paying fees on international bank transfers – don’t use a bank.
Money transfer specialists, such as Key Currency, don’t charge any transfer fees at all. Sure, it’s a plug, but it’s also a genuine way to avoid the fees.
5 reasons to bypass your bank
- It’s not their area of expertise
- Their exchange rates are uncompetitive
- Banks charge transfer fees
- They won’t help you with timing
- You are not their priority
How safe is a money transfer company?
If you’ve never used a money transfer company before, you may want to understand what exactly happens to your money.
Fortunately, there are some clear rules and regulations that companies which are Authorised by the Financial Conduct Authority (FCA) must follow.
From a customer’s point of view, the most crucial regulation is to do with the ‘segregation’ of client money.
An FCA Authorised money transfer firm must use a separate and safeguarded client account when handling customer money.
Your money comes into the client account, is converted using a liquidity provider (usually a bank), comes back into the client account, and is sent on to the account you’ve nominated.
Safeguarding of client money is why I suggest you only deal with a company that is Authorised by the Financial Conduct Authority (FCA).
To find out if a company is Authorised just type their name into the Financial Services Register.
Getting the best rate on your international money transfer
For international money transfers, getting a great exchange rate is the best way to lower your costs.
Even tiny moves in the exchange rate can make a significant difference to the amount of currency you receive.
On a transfer of say £50,000, if the rate moved against you by only 0.5%, it would cost you an extra £250.
Moves of that magnitude are a daily occurrence.
Over the space of a few weeks, you can have swings of 3%, 4%, even 5%.
Before you know it, a 5% move against you has cost you £2,500.
You can see why timing is critical.
Most people have a window of time in which they can transfer their money.
In that time, there will be opportunities and risks.
I haven’t come across too many customers that have the time or inclination to watch exchange rates all day.
Nor do they can the knowledge or confidence to know when to lock-in a rate.
While no one has a crystal ball, I’ve found a lot of people find it useful to get some market guidance from someone who watches exchange rates every day.
A full-service money transfer specialist like ourselves can work with you to achieve a better exchange rate.
It could be a case of aiming for a certain rate. Imagine you’ve had a rate in mind for ages. One day it finally spikes up and hits it, and you’re out shopping or stuck in a meeting.
Or it may be that rates are volatile because of world events. One day there’s a big jump, and the rate is at 1-month highs. That’s information worth knowing.
Some money transfer specialists, such as Key Currency, can monitor the daily movements in the exchange rate and let you know when the rate moves in your favour.
Banks and online-only platforms certainly won’t entertain giving you any help on rates. You’re on your own – which can cause you a fair bit of stress.
Getting a great rate can sometimes be a bit of luck but being pro-active and alert to opportunities gives you a better chance of being in the right place at the right time.
Are money transfer companies all the same?
In a word: no.
While there are dozens of different names in the money transfer space, there are actually some important differences to be aware of.
A lot of money transfer companies sprung up to deal with the small, but many payments to relatives living in developing countries – namely India, Pakistan, Nigeria and Poland are the top four receiving countries.
You also have a brigade of online platforms and apps that are called ‘fintechs’. They are the do-it-yourself operators.
This group includes PayPal, Transferwise, Revolut and CurrencyFair.
They are popular with online merchants who need to make tonnes of regular payments or with younger people who find apps appealing.
It’s not really possible to speak to anyone. They do, however, offer webchat and email support.
The other type of money transfer specialist, which is where we fit in, deals with larger sums (over £5,000) and we seek to undercut the banks on costs and offer a much smoother, hassle-free process.
These companies are sometimes also called foreign exchange brokers or currency brokers. It’s all the same thing.
We provide you with direct access to an account manager and help you through the entire process.
For larger international money transfers, many customers prefer the peace of mind of having someone they directly speak with.
I’ve sent money internationally myself, so I’ve felt the tension. The more you transfer, the more you need some human contact to make sure everything is in order.
When you think of all the big financial decisions in your life, you don’t tend to make them by a few pressing buttons online and hoping for the best. People need more assurance than that.
I guess it comes down to the individual and what they are comfortable with.
- You can use a bank or money transfer specialist to make an international money transfer.
- Behind the scenes, both use the same secure SWIFT system.
- Money transfer companies tend to be cheaper and more efficient.
- You can avoid any transfer fees charged by banks by using a money transfer specialist instead.
- A money transfer company that is Authorised by the FCA will keep your funds in a safeguarded account.
- Not all money transfer specialists are the same. They serve different markets.
Key Currency is a money transfer specialist.
Our exchange rates are highly competitive, and we charge you no fees.
Over the past year, we’ve transferred money in 39 different currencies for over 4,700 customers.
As a result, we have attained a “5-Star Excellent” rating rating on the review website, Trustpilot. It’s the highest rating you can get.
As part of our service, we offer you as much or as little assistance as you need.
Everyone is assigned an account manager so you have someone you can speak to and who is directly responsible for your transfer.
That’s a real point of difference.
The way the world is going, a lot of companies now just push you onto a platform or app and make you do everything yourself.
They want to point the finger at you if something goes wrong – which is a poor way of doing business in my opinion.
Rest assured, we are an Authorised Payment Institution with the Financial Services Authority (No. 753989), so all money transfers we conduct are through safeguarded client accounts held with major banking institutions.
If you would like to find out our latest exchange rates or compare us to your bank or existing provider, simply request a free quote below.