1. How Safe Is It?
The most important part of any payment overseas is the security of your funds. When it comes to international money transfer, Australia is one of the most highly regulated countries in the world. This doesn't mean there are no scams but it does give you the opportunity to do your homework on the company first.
It terms of size, some of the money transfer companies are pretty big. Western Union has a market capitialisation of 9.3 billion, while OFX which is listed on the Australian Stock Exchange, is worth more than 400 million
2. So, What Are Your Options?
The strongest competitors to banks for highly regulated international money transfers are specialist companies like:
Each company will charge different fees and exchange rates depending on what currency you need and how much you are transferring.
It's important to compare the exchange rate and fees of each option to work out the total cost of your transfer.
3. Is Avoiding the Banks Worth It?
Banks charge between $18 and $32 for an international money transfer. They also offer exchange rates, no where near the wholesale or ‘interbank' rates you see on google or xe.com. Most of your options outside of a bank will offer significantly better exchange rates and a flat fee of between $0 and $10.
If you are sending less than, $1000 to a bank account overseas, you might choose a bank because although it's not the cheapest option, but it is quick and easy.
For anything more than $1000, the extra effort of avoiding the banks is well worth it.
4. How Does It Work?
There 3 steps to transferring money overseas
- Set up your account – Thankfully, you only have to do this once. You'll have to register your details like name, address email and provide some identification.
- Make your transfer – You'll need to enter the bank account details of the person you are transferring the money to. This is also when you lock in the exchange rate
- Pay for your transfer – Before the money is transferred overseas, you'll need to pay for it. All companies offer their bank account details for a direct bank transfer. Most companies offer Bpay and some even allow you to pay using a debit or credit card.
There are plenty of safe alternatives to the banks that are much cheaper.
The fees are lower, but most importantly the exchange rates are significantly better.
Using a specialist like OFX or Transferwise does require some time and effort, particularly setting up an account but can really pay off for amounts over $1000
How to Find the Cheapest Way to Transfer Money Overseas
Compare The Total Cost
The total cost of the transfer comes down to 2 things:
1. Transfer Fees
Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it’s between $10 and $32.
2. Exchange Rate Margin
There is no “standard” exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.
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