Are you investing in foreign property, making a charitable donation or perhaps paying international school fees? If so, do you know what you’re doing and are you confident in sending money overseas?
What are my options?
When it comes to making overseas transfers, most people opt to use their high-street bank account, but did you know it could prove more beneficial (and financially efficient) to use a foreign exchange provider?
The process for international payments is relatively similar regardless of which method you use to complete your transfer, but process time and fees differ.
Your high-street bank
Heading to your bank seems like the most logical option if you need to send money overseas, but it can be rather costly. In fact, World Bank Data shows that banks are the costliest type of remittance service providers.
Banks provide a simple, transactional service that allows you to make transfers, but they don’t provide additional support, so many individuals are exposed to currency risk.
The World Bank’s study showed that banks had an average charge for overseas transfers of 11.84% in quarter 4 (Q4) of 2023. This is much higher than the global average in Q4 2022, which was 6.24%.
The post office offers a range of money transfer services, including overseas transfers and had an average cost of 6.31% in Q4 of 2023. This average rate fell by 2% since Q4 of 2021. This is significantly less than using your bank and slightly higher than the Q4 average for Money Transfer Operators.
PayPal has a new service offering, that allows you to transfer money overseas. This is a transactional service and nothing more. You lose personal contact and the security that comes with speaking to someone fact-to-face or over the phone. There’s not an option to speak to a real person, as it’s an automated service, without reaching out to their help centre.
Foreign exchange companies
If you’re making a large or frequent payment to an international account, it’s worthwhile to use a foreign exchange company. A report on Remittance Prices Worldwide compiled by The World Bank revealed average cost of sending for money transfer operators (FX companies) was 5.38% in Q4 of 2022.
Alongside international transfers, FX companies like Smart Currency are able to offer specialist services for those wishing to send money overseas. These can be extremely beneficial, especially in the case of regular overseas payments or a large overseas purchase – a property, for example. Smart Currency offers risk management guidance to all its customers and businesses, by monitoring the markets on you behalf and helping you adjust strategy where needed.
Is your transaction secure and your money safe?
If you’re sending money overseas – regardless of the amount – but especially so for large transfers, you want to know if your transaction is secure and your money safe.
When using banks and building societies to send money overseas, your money is protected by the Financial Services Compensation Scheme.
Whereas financial exchange companies can be ‘authorised’ or ‘registered’ with the Financial Conduct Authority (FCA).
Authorised firms have more protection should the firm go into administration as they must keep client funds separate to company funds. Using a firm that’s just ‘registered’ with the FCA won’t have the same level of protection should the company go bust.
Perfect for large funds: I was converting USD to GBP for a home purchase. Smart’s forward contract saved me thousands of pounds as I was able to secure a great rate for 30 days.
View more reviews just like this on Trustpilot, where Smart Currency has a rating of 4.8/5.