If you are thinking about finding the cheapest way to send money, you’re on the right track. Money transfer services will charge you a range of fees to facilitate your transactions. And in the end, you want to make sure you’re getting a competitive deal.
While doing things cheaply is important, it might not be the most important thing. There could be a few trade-offs involved if you want the features that are going to make your life easier. In any case, it’s good to be informed so you can make a decision for yourself.
Read on, and we’ll explore the cheapest way to send money, so you can find the right one for your needs.
Affiliate disclosure: If you sign up with a money transfer service after being referred from our website, we might earn a referral fee. Learn more.
Why focus on the cheapest way to send money?
What do we mean by the cheapest way to send money? When you send money abroad it’s going to cost you various fees and charges to get your funds to where you need it. For every dollar you are charged, it is a dollar less in your pocket. Therefore, it’s a good idea to reduce these costs where you can.
Consider the following types of transactions:
- Transferring money to family and friends
- Remitting funds back home
- Paying for holidays and experiences
- Purchasing a house or car
- Running a business
Conducting any of these activities internationally will require engaging with banks and other financial institutions. After all, the days of handling a lot of cash are almost over. However, the foreign exchange market is complex, and it’s easy to get caught out if you don’t know what’s going on.
So, let’s dive in and take a look.
How the foreign exchange market works
What is the best way to find the cheapest way to send money without being stung with a range of hidden fees and charges? It is a very good question that will take a few minutes to answer. But understanding the basics before getting started will save you a lot of time and money in the long run.
Let’s begin with how the foreign exchange market works. Banks and other money transfer services will buy foreign currency at a price very close to the mid-market rate. They will then sell this currency to you, the customer, for a higher rate than they bought it for, taking a margin in between – known as “the spread”.
The spread is essentially a hidden cost that is not disclosed to you during the transaction. Then, in addition to the spread, some services will charge a transaction fee on top – which is typically the fee that they quote to you. In any case, the total cost of the transfer for you, the customer, is the combination of the two; the spread + transaction fee.
Why you should use a money transfer service
Now that you understand how the market works, what should you do? Well, unfortunately, it is reasonable to assume that the institution that you are most likely to trust with your money – your bank – won’t be looking out for you on this one. A typical bank will charge up to 5% of the overall transfer value in spread and transaction fee to complete a transfer on your behalf. Not great.
Instead, we can look to a range of dedicated money transfer services that aim to close the gap on these costs. Not only are they probably the safest way to send money, but they’ll also provide a better experience overall. While it is important to acknowledge a money transfer service will never achieve the mid-market rate exactly, it is likely to be the cheapest way to send money.
So what is a reasonable cost for using a money transfer service? In our experience, if you can achieve a total cost of less than 1% of the overall transaction value then you are on the right track. However, it really depends on what your needs are and if you are willing to pay a little bit extra for additional features, advice, or research.
The cheapest way to send money: A list of services
Here is a comprehensive list of services that we consider to be the cheapest way to send money. Beside the name of each service, we have included its average cost, speed of transfer, receiving countries, and our review score – sorted from cheapest to most expensive.
To sort this chart by column, click its respective headings. If you are reading on mobile, you may need to scroll horizontally to view all fields.
|wdt_ID||Service||Ave. cost||Speed||Countries||Our score||Review|
|1||CurrencyFair||0.45%||2-4 days||157||5 stars||Read review|
|2||XE Money Transfer||0.54%||2-4 days||220||4 stars||Read review|
|3||WorldFirst||1.11%||2-4 days||243||4 stars||Read review|
|4||OFX||1.20%||3-5 days||226||4 stars||Read review|
|6||OrbitRemit||0.43%||1-3 days||43||4 stars||Read review|
|7||Ria Money Transfer||3.06%||1-3 days||158||2 stars||Read review|
|9||WorldRemit||1.35%||1-3 days||132||4 stars||Read review|
|10||TransferGo||0.84%||1-3 days||56||3 stars||Read review|
|11||TorFX||2.12%||2-4 days||176||3 stars||Read review|
|12||Currencies Direct||1.79%||2-4 days||188||3 stars||Read review|
If you would like to learn more about the rationale of our reviews, take a look at our review methodology.
How to compare money transfer services
Now that you know about the various services and the types of features they offer, what should you be paying special attention to when weighing up your options? Here are some of our suggestions.
Does the service offer a competitive rate?
Money transfer services earn their revenue by charging a fee on each transaction, a percentage of the value exchanged, or a combination of both. When comparing services, take a look at the total cost involved, and consider which one will provide you with the best value. If you would like to view the current mid-market rate for your preferred currency pairing, you can use this helpful tool at xe.com.
Does the service offer the features you require?
Not all companies offer the same features. Make sure that any service offers what you need before committing to the sign-up process. Think about the types of features that will make your life easier, such as:
- Spot contract
- Recurring payment
- Market order
- Currency forward contract
- Foreign currency options
- Multi-currency account
- Cash pickup
Is the transfer speed acceptable?
The time required for each service to complete your transfer will vary, and most provide an indication of this on their website. If you need a fast exchange, you may need for forego a better rate, while being prepared to wait a few days can result in a better exchange rate.
Is the service reputable?
Research a company’s reputation ahead of time can save you a lot of hassle in the long run. Take a look at a review aggregator website such as Trustpilot, to see what previous customers have said about their experience.
Does the service have a secure website?
Any company you choose to business with on the internet should have a secure website. To check that a company is complying with secure communication standards, check that their website URL begins with https://.
Is the service properly regulated?
Any reputable currency service should be registered with the relevant financial regulators in the countries from which it operates. For example, Wise is regulated in the UK by the Financial Conduct Authority (FCA), and in Australia by the Australian Securities and Investments Commission (ASIC).
Is customer support easily accessible?
Just in case you get stuck when using the online platforms of money transfer services, it is nice to know that help is easily available. Make sure that you can locate the telephone number for customer service to ensure that you have access to support if it’s needed.
If you’d like to know more about what to look for, read our guide on how to compare money transfer services.
How to get started with your service of choice
While each money transfer service offers a distinct range of features, most have a common onboarding process. Here is a summary of what to expect.
Step 1 – Sign up
Visit your service of choice and register for an account. Depending on the service, this process can take between 30 seconds and 10 minutes. You will need to provide some general information about yourself including your name, email, phone number, and address.
Step 2 – Verify your identity
Because money transfer services are subject to financial regulation, you will need to formally verify your identity. Typically this will require providing two types of documents:
- Photo identification, such as a passport or drivers licence
- Proof of address, such as a bank or utility statement
Step 3 – Commence your first transaction
Once you are registered and verified, you can log in to your account and set up your first transfer. You will need to specify the name and bank details of the recipient, what country they reside in, and the value of funds to be sent. You will then decide on how you would like to facilitate the transaction; either by bank transfer, debit or credit card.
Step 4 – Deposit money into local bank account
If you opted to facilitate the transaction by bank transfer, you will need to deposit your funds into a local bank account. Once the funds are received by the service, they will then carry out the required process to deliver these funds to your recipient. If you made payment by debit or credit card you will skip this step and move straight to Step 5.
Step 5 – Funds are delivered to your recipient
It will usually take a few days for the transfer process to be completed. The length of time will depend on its payment infrastructure; some have established their own while others rely on the SWIFT network. Most services will keep you updated along the way, so you have a reasonable idea of when delivery is expected.
A dedicated money transfer service is probably the cheapest way to send money – but they come in different shapes and sizes, and serve a variety of purposes. With some careful research and a little bit of patience, we have no doubt that you’ll find the right one for you.
If you have any questions or queries, let us know in the comments below.