How to compare money transfer services: A guide

If you’ve never had to compare money transfer services before, you’re in for a surprise. There are literally dozens of companies out there competing for your business. From simple one-off transfers to sophisticated corporate advisory, there is a service for just about everyone. But that doesn’t mean that it will be easy to find the right one for you.

Luckily, that’s exactly what we’re going to address in this post. How do you compare money transfer services and separate the wheat from the chaff? The world wide web is a great resource for researching the available options, but with a little bit of guidance, there is a much better chance that you’ll be happy with the end result.

Here are nine questions that you might want to consider when you compare money transfer services:

Is the service transparent about what they do?

A useful place to start is to try and make a rough judgement on the trustworthiness of a service. This may seem obvious, but it’s not a straightforward task if you don’t know what to look for. The first thing I ask myself is, does the service appear to be transparent about who they are and what they do? Is their website easy to navigate? Do they clearly articulate what products they offer and at what price? Are you able to preview their exchange rates before signing up?

I think we would all prefer to deal with a service run by people, rather than some faceless corporation. Well, is that the feeling that their website portrays? Do they try to make you more comfortable about using their service, or does it feel as if important information is being left out? If something is missing at the outset, there is a fair chance that you may experience further issues down the line.

As a bare minimum, there are a few details that I like to see to assure myself that the service is being run professionally and in good faith:

• The complete name of the legal entity. For example, Money Transfer Service Ltd. / Inc. / LLC, etc.
• Their physical operating address
• A phone number and email for contacting customer service
• An “about us” page that provides some general information about the company, its history and people. Ideally, there should also be a short profile on the service’s leadership team, so you know who exactly is behind the brand

I don’t consider these things difficult to do, and I wouldn’t recommend dealing with any company who isn’t willing to give so much. Think about it, if a person walked up to you on the street and asked you to part with your hard-earned money, without telling you who they are, what they do, and without providing sufficient contact details, how would you react? Walk away, I hope. All I suggest here is to maintain the same standards.

A company who sets a good example in this regard is CurrencyFair (review). They have a well-designed website that clearly displays all of their important information. They have an “about us” page which includes a photo and short bio of each staff member. It’s a service that knows what it’s doing and wants you to know it. It screams transparency and makes you feel more comfortable just by reading about it.

What currencies does the service support?

When you’re trying to move funds from one country to another, the capabilities of a money transfer service play an important role. Because the requirements of every person are slightly different, you’ll need to check to see that a particular service can facilitate what you need to get done. A little bit of time spent researching in advance can save you a headache in the future.

Service availability

Before you can begin using a service, you first need to verify that people in your country are eligible to use the service. Generally speaking, for a service to be able to accept funds from a particular country it must have an entity incorporated and licenced to transfer money in that jurisdiction. For example, if you live in the United Kingdom, you will need to use a company that has the appropriate licences to operate across the UK and/or European Union.

A good example of this is TorFX (review). They have a presence in the UK and Australia, so are suitable for transfers from the UK, European Union, and Australia, to the rest of the world. However, a resident of the United States could not use TorFX, as TorFX is not incorporated there. Instead, they may have to use a service such as Xoom (review), who has the required state licences to operate in the US.

Currency selection

Not all services have the ability to transact all currencies. The currencies in which they can receive will be largely based on the location of the service itself. For example, a service based in the UK should be able at the very least be able to receive payments in Pounds and Euro. The countries and currencies that it can deliver to will vary depending on the structure of its payment network.

Traditional money transfer services like Azimo (review) typically use an older form of payment network such as SWIFT. SWIFT is the largest network of banks in the world, and basically allows any service that is connected to make payments to anywhere in the world. It is quick but can be slightly expensive. Newer technology-focused services such as OrbitRemit (review) have built their own payment infrastructure, which has many cost benefits, but their deliverable currencies are often greatly reduced.

Transfer size

Consider whether your choice in service has adequate limits for sending the funds that you require. Many services that conduct transactions online will implement a minimum and maximum amount for each transfer. For example, WorldFirst (review) focuses on larger transfer amounts and sets their minimum transfer value at £1,000, but does not set a maximum value. Ria Money Transfer (review), by comparison, focuses on low-value remittances and has a maximum transfer value of £4,800.

Payment options

Each service will allow various methods of paying for your transfer. Most money transfer services will require that you fund your transaction with a bank transfer into their local account, as this is the most effective method of sending large amounts. For smaller transfers, some services may allow payment by debit or credit card, which can be more convenient and also reduce the time it takes to process a transaction.

Delivery options

Depending on the value and purpose of your transfer, you may have a preference of how the funds are actually delivered to your recipient. Most transfer services that deal with medium to large transfer values will usually only deliver funds to another bank account. However, many low-value remittance services such as WorldRemit (review), can offer a variety of flexible delivery methods such as:

• Cash pickup
• Door to door delivery
• Mobile money
• Airtime top-up

What is the overall cost of a transfer?

By using a money transfer service instead of your bank, you can save a lot of money when making cross-border payments. But this doesn’t mean you shouldn’t pay attention to the cost of each service. Not all money transfer services offer the same prices. In fact, most will mix and match their pricing to be harder to directly compare against one another.

Before you start to compare money transfer services, we first need to set a benchmark – something to compare each service against. The best benchmark available is what’s called the interbank mid-market rate. The mid-market rate is essentially the exchange rate of the wholesale market, where most money transfer services acquire currencies before on selling them to you.

The costs of using a money transfer service usually comprise one of the following, or a combination of both:

Transaction fee

A fee on each transaction conducted with the service, which is usually clearly disclosed. The fee may vary in price depending on the recipient’s country and currency, the value of the transfer, and method of delivery. For example, remittance services such as Remitly (review) often change a larger fee for having funds delivered to a cash pick-up location, compared with the same funds being delivered to a bank account.

Spread on the exchange rate

A money transfer service may offer you an exchange rate that is less competitive than the rate at which they buy funds at the wholesale market. The difference between the two prices – the price offered to you, and the price at which fund are acquired at by the service, represent the “spread”. The spread is the service’s profit on the transaction and is an expense ultimately incurred by you.

So which types of expenses should you keep your eye on? Both. In my opinion, you should try not to focus on either in isolation. Instead, try to compare money transfer services based on the overall cost of each service when compared to our benchmark; the mid-market rate. To find out the mid-market rate of any currency pairing, use this mid-market tool over at xe.com.

Practically speaking, it is unlikely that you will ever receive the equivalent exchange rate of the mid-market, as most services will add a profit margin to currency before selling it to you. However, it is useful to know the difference between the mid-market rate and the rate offered to you. That way, you can make a fair apples with apples comparison, without getting drawn into marketing and pricing games.

Let’s go through an example together. Say that I’d like to transfer £1,000 from the United Kingdom to Australia, and I’d like to compare the options available.

Here, the mid-market rate of 1.7398 results in a direct exchange of $1,739. As this is only a theoretical rate, there is no “cost” as such. Of the services available to us, Service 1 is the most competitive of the bunch. It offers the mid-market rate but charges a slightly higher transfer fee than Service 2. We receive $1,729 in Australia, therefore $10 has been lost in charges – which translates into an overall cost of 0.57%. A pretty good result, all things considered.

So what is a fair cost for using a money transfer service? In my experience, a cost of less than 1% of the overall transaction value is considered competitive. Some market leaders such as TransferWise (review) are trying to get this down even further, to around 0.5% of the overall transfer value. Over time, this should have an effect of pushing down average prices across the market, as services continue to compete for your business.

All in all, unless your transfer value is low – say, under £1000 as a general rule – don’t pay too much attention to the transaction fee. That is really the only time that it will have an impact on the overall cost of the transaction. Instead, it is much more effective to look at both costs combined. Check out our reviews to help guide you when you want to compare money transfer rates.

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 to forego a better rate. On the other hand, if you are prepared to wait a few days you can reduce your costs by a percent or two. Many services allow payment by debit or credit card for low values, which can speed up the process for urgent transfers.

Traditional remittance services such as Western Union (review) and MoneyGram (review) typically offer same-day money transfers, but you certainly pay for the privilege. If you would like a lower-cost alternative to these stalwarts, there are a handful of newcomers such as TransferGo (review) and SmallWorld (review) who also deliver payments to cash pick-up locations around the world.

Does the service offer the required features?

Not all companies offer the same features. Yes, pricing is important, but if the service can’t do what you need it to, you’ll have to go back to the drawing board. Before you go through the process of signing up with a service, first make sure it has the features you need.

Spot contract

Spot contract. A spot contract is a single transaction at the current available exchange rate. It is the most basic form of payment there is. Most services allow you to complete these through their online platform. For larger values, you might find it helpful for a foreign exchange dealer to assist you with the process.

Recurring payment

Recurring payment. A regular payment is a transaction that can be scheduled on a recurring basis. This can be suitable when you need to make the same transaction over and over again. For example, to satisfy mortgage repayments or paying school tuition. Some services allow you to manage this process online, while others can arrange this after speaking with customer service.

Forward contract

Forward contract. A forward exchange contract allows you to lock in the current exchange rate for a payment which you intend to make at a later date. It is an advanced tool used to hedge against future movements in the market that may be to your detriment.

Option

Options. An option is an advanced tool that provides you with the right, but not the obligation, to purchase a specified amount of foreign exchange in the future. It often requires the payment of a small premium to acquire the option and is useful when there may be a need for foreign currency in the future.

Market order

Market order. A market order allows you to set a preferred rate that you might like to buy or sell currencies in the future. It is essentially an alert that will notify you when a currency pairing reaches a specified rate. You then have the ability to enter into a transaction at that rate, or some services can even do this automatically on your behalf.

Multi-currency account

Multi-currency account. Some services can establish a virtual account for you in foreign currency denominations. This is most useful for entrepreneurs and businesses who accept payments from various parts of the world. A multi-currency account is a useful alternative to having a foreign bank account.

Whatever your needs, the features of a service should be balanced against its pricing. While there are services out there that provide market-leading exchange rates, they may not have all the bells and whistles that you’d like. Other services will offer advanced features and personalised customer service, but these benefits will result in a slightly higher cost.

Instead of focusing on finding a service with the best price or the best features, try and find a service that will provide you with the best value. Or, if your needs vary between two extremes, you may require an account with more than one service to achieve your desired workflow. For example, a Xendpay (review) account could be used for simple online-only transfers, while HiFX (review) could be used to complete more complex transactions.

Is customer support easily accessible?

Just in case you get stuck when using the online platform of a currency service, it is nice to know that help isn’t far away. Most services are pretty conscious of the fact, that for many of us, transferring money isn’t a common occurrence. So a service that is worthwhile using, will have a customer service team ready and waiting to answer questions when they arise.

General support

Take a look at their website and see if a telephone number can be easily accessed. If it is deliberately hidden a few pages away or missing altogether, it may be a sign that this service isn’t right for you. In addition to a phone number, its always nice to know that there are other contact alternatives, such as email or in-browser chat. A good company will emphasise their commitment to customer service by making the user’s experience as seamless as possible.

Personalised service

Some services offer generalised call centre support, while others provide a more personalised service. Currencies Direct (review) and RationalFX (review) aren’t necessarily the cheapest services on the market, however, they do take pride in offering a tailored customer experience. The customers of these services, as well as other full-service providers, will often be allocated private dealer to assist and advise on any foreign exchange requirements.

Is the service safe?

All the features in the world won’t do you any good if a money transfer service is not safe to use. There are no hard and fast rules to know exactly what your experience will be before getting started. However, there are some important security-related boxes that should be checked from the outset.

Licencing and regulation

All reputable services should be licenced to engage in money transfer activities, and be registered with the relevant financial regulators in the countries in which they operate. For example, XE Money Transfer (review) is licenced and regulated in the UK by the Financial Conduct Authority (FCA). But because it also operates in Australia, it also has an Australian Financial Services Licence (AFSL) and is regulated by the Australian Securities and Investments Commission (ASIC).

This stuff is pretty important. Being appropriately licenced and regulated means that a service has agreed to run their company to a predetermined government standard. It’s kind of like a drivers licence, but for financial services. You wouldn’t want to use an unlicenced money transfer service any more than you would want to be a passenger in a car driven by an unlicenced person.

Website security

Whichever service you choose to business with should have a secure website. To check that a service is complying with secure communication standards, check that their website URL begins with “https://”. If it is properly secured, there should also be small green padlock next to the address bar. If it doesn’t comply, it’s probably best not to provide the website with any of your personal information.

Is the service reputable?

When you compare money transfer services, it makes sense to do a little bit of research on their reputation. The internet be an incredible source of information, but it can also easily become overwhelming. There are, however, a few simple checks you can do to gauge the experiences of past customers.

Trustpilot

Take a look at a review aggregator website such as Trustpilot, to see what past customers have said about the service. Customers will often leave their feedback on what they think, and many services will actually respond to the comments raised on these forums. Some services may try to refer you to their Feefo profile as well, but I personally don’t rely on these reviews; as they can be too easily influenced by the service itself.

Social media

Many services use social media platforms, such as Facebook or Twitter, to communicate with their customers. Their social media account can be observed to see what types of conversations are being exchanged. If you’d like to gain a better understanding of a service’s attitude towards its customers, take a look at the interactions on these websites. But, like we explained in our guide to safely transfer money online, it’s not a very good idea to converse on these platforms yourself, as it can expose just a bit too much personal information.

Corporate culture

If you really want to put your investigator hat on, take a look at Glassdoor, to see what a service’s employees say about the business. In my experience, the performance of any business is very closely tied to its corporate culture. If you discover any unusual signs of animosity among the rank and file, it may be an indication of that there are deeper underlying issues that could effect the performance of the service.

Is the service easy to use?

Now, we get into the practical details of actually using a service. What is the user experience like? Is it easy to sign up? What do you have to do to verify your identity? After all, if you’ve gone to all this effort to refine your search to a couple of services, you’ll want to make sure that the user experience is a good one.

Online platform

Most services have at least a basic online web platform for conducting transactions to varying degrees. CurrencyOnline (review) was one of the original pioneers of this technology, which has now been adopted by the majority of the market. The registration and identity verification process will slightly differ between services, but you can usually be up and running within a day or two. If English isn’t your first language, you may want to check that you preferred language is supported their website.

Mobile apps

With more and more of us abandoning desktop computers for mobile devices, many services have developed apps for the Apple and Android ecosystems. While some services have attempted to bring the full online experience to the smaller screens, others provide limited features when compared to its desktop counterpart. OFX (review) is just one example of a service that has gone to great lengths to ensure that you are able to use its full suite of products, no matter what interface you choose.

Conclusion

With a bit of luck, this post has helped you to compare money transfer services. There are many services out there, so it certainly helps if you have an idea of what you’re looking for before you get started. While it would be great if one service could be all things to all people, it is generally not the case. Instead, try to find something that that is going to cater to your needs, and focus on the value it will provide you, rather than relying on any one metric.

Ask yourself some basic questions. Does the service offer the currencies you require? Will the funds reach your recipient in a reasonable time frame? How does the overall cost compare with the mid-market rate? Do you need access to advanced tools or advice? What do previous customers say? If you can tick a few of these boxes before you commit, you are more likely to have a pleasant experience with your choice.